The Sticky Statute of Limitations in NC

sticky notesIf you are not a lawyer, but you play one on TV, you may have a passing understanding of the legal concept of a statute of limitations.  This is post is to provide you just a little more information about the concept, and how it applies to your North Carolina construction project.

What is a statute of limitations, and why is it important?

The Statute of Limitations is a time-barring statute which gives you a set time within which to bring an action (i.e., lawsuit) against another party.  If you do not bring your lawsuit within that period of time, the court will kick it to the curb.  The reasoning behind the statute of limitation (often, ironically, abbreviated as “SOL” in legal circles) is that people need to have some certainty in how long they can be sued for an event that happened in the past.  Witnesses die or forget, papers are destroyed, and in general it is extremely difficult to try a case years after the fact.  The law has, therefore, established a somewhat arbitrary deadline for when you can sue or be sued, and it is vital that you do not go past that deadline if you hope to bring a lawsuit.

What is the statute of limitations on a construction project?

The answer, as always, is:  it depends.  The statue of limitations is governed by whatever state’s law will apply to your case—usually, but not always, the state the project was built in.  The statute of limitations is also determined by what type of lawsuit you are trying to bring (or defend against).

 In North Carolina, the statute of limitations for most construction disputes (breach of contract, professional negligence, implied warranty of plans) is generally 3 years from the date time when you knew or should have known about the issue.   N.C. Gen. Stat §1-52.1  ABL Plumbing and Heating Corp. v.  Bladen Co  Board of Education, N.C. App. 623 S.E.2d 57 (2005). See also AIA A201 para. 13.7.   As always, there are exceptions.  If a contract is “under seal”, a claim can be brought for up to 10 years. (N.C. Gen. Stat. §1-47).

 If the contract involves merchandise and falls under the Uniform Commercial Code, the statute of limitations is 4 years. N.C. Gen. Stat §25-2-725.  However, where a defect in merchandise results in bodily injury or damage to real property, the shorter 3 year statute still applies.  Hanover Ins Co. v. Amana Refrigeration, Inc., 106 N.C. App. 79, 415 S.E.2d 99 (1992). In Hanover, a defective HVAC unit caused a fire, which destroyed a building. The court held that the shorter 3 year statute of limitations applied because the defective merchandise caused damage to the real property.

Therefore, it is best practice to assume that the Courts will find that the statute starts running at the first inkling of a problem, and bring your action accordingly. Also, regardless of the length of any warranty period, contractors can still be liable until the statute of limitations period expires.

What happens to claims after the owner accepts the project?

Once a project has been accepted by an owner, the owner waives his right to claim damages for all but latent defects. Acceptance by the owner with knowledge of a defective performance may be deemed a waiver of the defective performance.

Where, however, the defect is unknown (or “latent”), the owner’s acceptance does not waive the defective performance. Tisdale v. Elliott, 13 N.C. App. 598, 186 S.E.2d 685 (1972).   If a defect is a “latent” defect, hidden or not readily discoverable, the statute of limitations starts running from the date of discovery. Under AIA A201 para 13.7, any statute of limitations is deemed to have accrued in any and all events not later than the date of Substantial Completion.   This section may shorten the statute of limitations in some cases of latent defects.

Can the Statute of Limitations be lengthened or shortened?

Yes.  But, as they say on television, “don’t try this at home.”  Carefully drafted agreements for a shorter or longer period of time can be executed.  Consult your attorney before you do so, however.  You may also want to check with your insurance carrier to make sure you have sufficient insurance coverage for a longer warranty period.

What if the parties are working together to fix construction problems?

If the parties are working to fix problems, but the statute of limitations is fast approaching– run, don’t walk, to your attorney to discuss a tolling agreement to stop the running of the statute, or otherwise enter into legally enforceable agreements concerning the statute of limitations.  Just because the parties are all working together to solve a construction issue now doesn’t mean that the finger-pointing won’t begin once the bill is presented.

Have a question about the statute of limitations?

Comment below, drop me an email, or find me on twitter @melissabrumback .

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Photo (Public Domain):  “brightly coloured sticky notes and tags” by Adrian van Leen via OpenPhoto.


Tues Tip: “Business” of architecture & engineering

Love your work but hate the “job” portion of it? You know, quoting scope of work, dealing with fees, and getting paid?  If so, check out Milton Gregory Grew’s great article about setting fees that can realistically account for your overhead and other indirect costs, “The Business of Architecture (Oxymoron?)”.

Of  the tips Greg discusses, step #2, “Put it in writing” is key,  as I’ve discussed earlier here.

Moreover, for fee issues, a written agreement is the gold standard.  In a written agreement you can even account for collection costs, higher interest charges, and “reasonable” attorney fees if you later (heaven forbid) have to sue a (former) client for payment of services.  Without a written agreement, you are stuck with statutory limits on what you can recover.

As they say, an ounce of prevention is worth a pound of cure.Gold 1 oz

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Photo “Gold1oz” by Olegvolk via Creative Commons Attribution 2.5 license.  

Universal Design-Part 2: Current Challenges

Ed. note:  This is the second of a two part series on Universal Design by Guest Post author Dick Duncan.  “Universal Design-Part 1: Beyond ADA and Fair Housing,” can be found here

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Current Challenges

Partially due to success of accessibility implementation and compliance in recent years, the term “accessibility” and the ideas about an “accessible” built environment are commonly known, if imperfectly understood. For example, to many people “fully accessible” means primarily usable by people who use wheelchairs, losing the inclusionary aspect of responding to the needs of people with other disabling conditions. One result of this pervasive consciousness about and misunderstandings of accessibility is confusion about the nature of universal design.

 Common myths include: 

  • That universal design is really “just accessibility that is dressed up to look good.”  If this were true, a new paint job might suffice.
  • That universal design is just fully accessible design but with the addition of characteristics that makes it usable by other people too. Well-engineered functionality is crucial to a universal outcome but will always fall short if the design is not integrated or mainstreamed. Often misused in this regard is the term universal access.
  • That universal design is an umbrella term that now covers all things accessible and assistive. This lacks recognition of the broad beneficiary groups, the integrated and mainstreamed aspects of universal design, and the differences between accessibility, assistive technology, and universal design.
  • That universal design is the new age or current term for accessible design. It is “what we are calling it” now. This suggests the notion that universal design is merely the politically correct term that one must be careful to use in polite company. With this thinking, universal design is grouped together with code compliance and other efforts.

There is legitimate confusion between universal design and more similar concepts or concepts, such as visitability (an US-based approach, limited to housing, that promotes limited usability features), Design for All (a similar idea to universal design, principally in use in Europe), Life Span Design (used in the US, principally reflecting age sensitive design), Transgenerational Design (an idea formed in the US that good design now must accommodate people of all ages), Flex Housing (developed by Canadian Housing and Mortgage that includes features of accessibility as well as other innovative design ideas), and Lifetime Homes (developed in the UK, broadly applied standards with specific usability features). The variety of concepts and common misunderstandings regarding universal design highlights the need for continued educational activities and suggests the need for international communication and collaboration.

An important component of a universal approach to design challenges focuses on the process of design. In this manner, an appropriate outcome can be assured through the process itself. Termed  ‘universal designing’ , a broad and inclusive design process includes many perspectives and is mindful of the ergonomic, human factors, and social equity considerations.

Global Universal Design Code

A national effort is now underway to develop voluntary universal design standards that will cover all domains of the built environment, initially retail, community and housing. The Mace Institute is an active participant with the Global Universal Design Commission (GUDC) and AARP in efforts to bring these new standards to life over the next several years.

 

summit

Universal Design Summit 4 

To obtain excellent education on UD issues, consider attending Universal Design Summit 4 this fall.  The Summit, entitled “Creating Livable Homes & Communities” will be held October 10-12, 2010 in St. Louis, Missouri. 

 

RL Mace Universal Design Institute

To learn more about the RL Mace Universal Design Institute, download this Executive Summary (pdf) or visit the UDI website.

Universal Design- Part 1: Beyond ADA and Fair Housing

Most construction professionals in America are well aware of the Americans with Disabilities Act (ADA) and the changes in design which have resulted in an effort to accommodate disabled persons in public places.  Far fewer construction professionals, however, are aware of the concept of “universal design”.  The international nonprofit RL Mace Universal Design Institute , which is based in Chapel Hill, NC, is aiming to change that and to educate the construction professional on why building to a UD standard will add value to all built environments. [Full disclosure: I am the current Vice President of the RL Mace UDI and member of the Board of Directors].

The Institute’s Mission Statement :

“The Institute’s work manifests the belief that all new environments and products, to the greatest extent possible, should and can be usable by everyone regardless of age, ability, or circumstance.”

I asked Richard (“Dick”) Duncan, Executive Director of the Mace UDI, to explain a little about the need for and concept of universal design.  What follows is the Part 1 of the first ever Guest Post on this blog:

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Richard Duncacn

Universal Design Part 1: Beyond ADA and Fair Housing

by Richard C. Duncan, MRP, Executive Director

Adapted and revised from: Universal Design – Clarification and Development: A Report for the Ministry of the Environment, Government of Norway, Richard Duncan, NC State University, March 2007

 

“The intent of universal design is to simplify life for everyone by making products, communications, and the built environment more usable by as many people as possible at little or no extra cost. Universal design benefits people of all ages and abilities. “

Ron Mace, 1988

Emergence of Universal Design

It is generally agreed that the term universal design first entered into usage in the mid-1980’s by United States (US) architect, Ronald L. Mace, FAIA Since then the concept of universal design has spread worldwide and has influenced and joined related concepts such as Design for All, Life Span Design, and Inclusive Design. In its 20-year history in the US, universal design has slowly gained acceptance but has seen an uneven adoption. Universal design still remains a strategy that has been implemented by different sectors of the private and public domains, selectively and for fairly narrowly framed purposes. From the perspective of more usable and supportive environments, the US remains principally focussed on accessibility: developing regulations, codes, standards, policies and procedures to provide societal inclusion to people with disabilities.

The emergence of universal design depended substantially on many years of work on accessibility and the lessons learned from those activities. Accessibility efforts and the fundamental values of the disability rights movement in large part formed the foundation on which universal design concepts were built. But, universal design came into being partly because of the nature of accessibility that existed in the US by 1985; it was neither commonly found nor was it creatively applied. However, the appearance of universal design did not herald the end of accessibility. Two of the most significant American federal laws requiring accessibility were yet to be enacted by the time universal design began to emerge: the Fair Housing Amendments Act was signed in 1988 and the Americans with Disabilities Act passed in 1990. Universal design and accessibility have continued to develop in a connected yet parallel manner, during the time of the greatest activity in the realm of accessibility code compliance. To be sure, the philosophical basis for the accessibility movement and universal design are quite similar: inclusion, full participation, and social equity. Universal design extends beyond the confines of accessibility to include all persons and creates that inclusion by promoting integrated and mainstreamed products, environmental features, and services.

The national expansion of accessibility provisions into private buildings, multifamily housing, and beyond, has continued the dominant role of accessible design to this time. This has presented a challenge for advocates of universal design in their promotion of conceptual, policy and practical distinctions. While the great advantage of 50 years worth of work on accessible design has been the creation of a markedly accessible non-residential built environment, it has also carved a large space in the collective psychology of people in the US. For example, universal design as a distinct idea is often confused with, if not subsumed by, the more narrowly targeted concept of accessible design. Broadening the beneficiary group of more usable designing to include all of society is a significant practical and symbolic step that still requires much more effort.

The accessibility field in the US has been part of the civil rights movement for people with disabilities that began after World War II, and was related to the larger worldwide human rights movement principally identified with the United Nations. The US disability activities paralleled other similar civil rights movements by disenfranchised groups in the US at that time, for example women, African Americans, and Native Americans. During the 1960’s and since then, the disability community in the US has vigorously advocated for the creation of civil rights legislation and building regulations that provided accessibility features, e.g., curb cuts, stepless entrances, and lever door hardware. The initial major push into accessible building design came after the publication of the American National Standards Institute’s (ANSI) A117.1 standard in 1961, the first US accessibility design standard.

When Universal Design arose 25 years later, accessibility work in the intervening years had made great progress by appearing in some federal and state policies with respect to programs and services, architecture, transportation, public rights of way, public spaces, and to a lesser extent, housing. Although not uniformly applied or consistently rendered, by the mid-1980’s accessible design was becoming more of a reality for the design and construction industry across the US. Standards such as ANSI A117.1, and its many later revisions and other accessibility provisions that were based on it were a great steps forward in the field, yet had similar flaws. Those flaws revealed the limitations of a code-based approach. Later analysis showed that the codes and standards “… have been developed by an approach of modifying the norm through the use of a few specially designed features and products to accommodate the ‘few’ who vary from the norm.” This approach led to an ‘after-the-fact’ implementation of access features (even in new construction) which resulted in “…  facilities which have their own ‘functional limitations’ and aesthetic problems.”  Other code-based challenges were also noted. Too often, segregated accessible features were ‘special,’ more expensive, and usually ugly.

The twenty-five years of work on accessible design in the US, from 1960 – 1985, formed the body of work from which universal design emerged. Continued progress in the realm of accessibility since then has firmly established accessible design as a fundamental discipline and outcome that has benefited many. Done well and creatively, good accessible design can be truly universal. As was said nearly 10 years ago, “The demographic, legislative, economic, and social changes that brought us to this point are increasing the momentum that will propel us into the 21st century that will need to be more accommodating of individual differences. Universal design provides a blueprint for maximum inclusion of all people.”

Tomorrow’s Post:  Universal Design Part 2- Current Challenges in Universal Design

 

“Substantial Completion” on the Construction Project: How is it defined? (Law note)

Substantial completion is another one of those “terms of art” that lawyers love.  What does it mean when your project is substantially complete? If you are an owner, you really are only interested in one thing: when is it done? Right? Well, not exactly.  Particularly on larger projects, there may be a big difference between when a project is substantially complete and when it is finally complete, so it’s good to know what the difference is and what your contract provides.

Substantial completion is generally a defined term in a contract, but regardless of exactly how it is defined in essence it means that the owner can use the building as intended.  It usually indicates that only minor, punch list type work remains.

In the AIA general conditions, substantial completion is defined:

 § A.9.8.1 Substantial Completion is the stage in the progress of the Work when the Work or designated portion thereof is sufficiently complete in accordance with the Contract Documents so that the Owner can occupy or use the Work or a portion thereof for its intended use.

While this is standard language found in most form contracts, it can–and should–be altered to fit any unusual circumstances you anticipate on your project.

Note that the AIA general conditions do not state that either a temporary or permanent certificate of occupancy must be issued for substantial completion to occur.  For example, in the case of an office building, once the building is able to be used for upfitting purposes by the owner it is substantially complete, even if the building is not yet able to be occupied.  This can be signficant if the owner is self-performing much of the upfit work, and the acceptable degree of finished work may be something altered by the parties at the time of contract negotiation.

Whatever the defined date of substantial completion in your contract, however, it is extremely important.  This is the date that triggers:

  • retainage release
  • the warranty period
  • determination of any actual or liquidated damages
  • the running of the statute of limitations and repose

Therefore, it is important that you read your contract and understand what the date of substantial completion will be for each of your projects.

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Photo courtesy of constructionphotographs.com.