In Shell v. Schollander Companies, Inc., the Oregon Supreme Court affirmed a line of appellate decisions distinguishing between defect claims arising out of construction performed for an owner and defect claims arising out of an owner’s purchase of an existing structure. In Schollander, the homeowner sought recovery for defects in the construction of a spec home she purchased by way of a purchase-sale agreement. Although the builder agreed to perform some minor finishing work as part of the purchase-sale agreement, the majority of the substantive work was completed before the parties entered into the agreement. The homeowner sought to recover damages relating to defects in the work performed before she purchased the home. Although she filed her claim less than 10 years after the builder “substantially completed” the work on her home, the work causing the defects was performed more 10 years before she filed suit. Because the homeowner had contracted for the purchase of the home but not the work, the Oregon Supreme Court determined that the general negligence statute of repose, which runs from the date of the act or omission complained of, and not the construction-specific statute of repose, which runs from the date of substantial completion, controlled.
Moral of the story? You can’t always rely on the date of substantial completion when determining the timeliness of a defect claim. Be careful to fully assess the facts of each case.
For a copy of the entire opinion, click here.