Recent Oregon Supreme Court Case Brings Some Needed Clarity to the Statute of Limitations for Oregon Construction Defect Claims.
How long does an owner or community association have to bring claims for negligent construction in Oregon? The answer, surprisingly, remains unsettled. But the Oregon Supreme Court’s decision earlier this year in Rice v. Rabb lends very strong support for those of us who have long been advocating that the statute of limitations is at least six years from the date that construction defects were discovered or should have been discovered.
Many community associations we have met with over the years are surprised to learn that Oregon statutes are unclear with respect to how much time a party has to bring its negligent construction claims. For years, trial courts were all over the map due to ambiguities in the statutes. Many trial courts concluded that the statute of limitations was just two short years from discovery of a problem. Others concluded that the limitations period was six years from discovery. A few trial courts even ruled that other periods applied. This uncertainty created much confusion, affecting the rights of many owners and the resolution of their claims. Some homeowners even lost claims in close cases where courts applied the two-year rule.
For years, we waited for the right construction defect case to wind its way through the appellate courts to provide a definitive answer. No luck. Then came Rice v. Rabb, a seemingly unrelated but entertaining case involving the conversion (or theft) of the dress of the “Queen of the Pendleton Roundup.” In the case, the Oregon Supreme Court defined how claims “accrue” (or arise) under a statute similar in meaningful ways to those applicable to construction defect disputes. The reasoning in the decision is highly technical. Suffice to say for this discussion that the case has been viewed by attorneys as a sea change in finally resolving the limitations issue. And the trial courts are agreeing in recent decisions. Prevailing wisdom now is that the statute of limitations is six years from the date construction defects were discovered or should have been discovered. Some trial courts have even concluded that Rice v. Rabb overrules prior appellate case law and that breach of contract claims for construction defects now run six years from discovery (as opposed to six years from completion).
Be aware that because Rice v. Rabb construed statues only similar to those applicable to construction defect disputes, it is still possible for a court to conclude that the decision is not binding on a construction defect case. Rice v. Rabb is simply the best case we have at this point. Please also note that nothing in Rice v. Rabb affects the statute of repose, the well-settled time period after which no claim may be brought regardless of when it is discovered. The repose period remains ten years from the “substantial completion” of a building.
Despite the decision in Rice v. Rabb, and its endorsement of a relatively longer limitations period, the best practice is to act on claims soon after they become apparent. Be aware that defendants will seize on any evidence of construction defects, leaks, mold etc. to persuade a court that claims were known or should have been known, and that the limitations period has been triggered. An association need not necessarily have completed a building investigation to “know.” A single complaint from an owner about a window leak may be all a court will require. To be safest, assume that the clock is ticking on claims from the very first indication of a problem.
Feel free to contact me or one of the other attorneys at Barker Martin if you have a question relating to your rights and the time you or one of your communities has to bring claims. And please continue to look for updates on this site as courts continue to consider pending statute of limitations issues and the implications of Rice v. Rabb.