Introduction.
In the past, contractors and developers could feel secure that any claim arising from a construction contract would be barred after ten years from completion of the project. A recent line of Oregon appellate court decisions issued in 2014 cast doubt on that long-standing assumption.
Statute of Ultimate Repose (ORS 12.135).
ORS 12.135 establishes a ten-year statute of ultimate repose for any claims relating to the construction, alteration, or repair of any improvement to real property. This means that any claim relating to a construction project, including claims related to latent defects, must be brought within ten years. The ten-year period begins to run from the time of “substantial completion,” which the statute defines as the date on which the owner accepts the project in writing as “substantially complete” or the date on which the owner accepts the completed construction.
Recently, the Oregon Supreme Court determined that in the absence of a written acceptance, the limitations period under ORS 12.135 “begins to run on the date on which the contractee accepts the construction as fully complete, as opposed to accepting the construction as ‘sufficiently complete for its intended use or occupancy.'” In that case, the owner brought claims against the contract more than ten years after it had moved into a newly constructed church and after it had begun holding services. That alone, however, was insufficient to invoke the statute because the owner offered evidence that some construction work had continued after the move-in date. In a similar way, the Oregon Supreme Court also held that in the absence of a written acceptance, the construction must be fully complete for the statute-of-repose period to accrue.
Therefore, in the homeowner example above, the homeowner’s negligence claim against the contractor for defective installation of the windows will not begin to accrue until the homeowner accepts the project in writing, or until the home is fully complete. If the contractor does not get written acceptance from the homeowner, the homeowner can defeat summary judgment based on the statute of ultimate repose merely by offering evidence that some work continued past the date of substantial completion (as established by the architect’s certificate).