In one context or another, we often hear or utter the words “time is of the essence.” But what does this actually mean for property owners who wish to sue a contractor for construction-defects on their property? In short, it means that the aggrieved property owner must file a lawsuit within a specific timeframe or risk having the case dismissed. Not to worry, however, as these statutes provide a relatively generous amount of time in which to bring an action. A brief breakdown of the relative statute of limitation and statute of repose is helpful in determining whether time is really of the essence in your particular case.
1. What is the Statute of Limitations for Construction-Defect Claims?
In New Jersey, the statute of limitations for construction-defect lawsuits is generally six years. From this rule flows a popular question: six years from when? In other words, when does the clock on this six-year period of limitation begin to tick? The answer is: it depends. Pursuant to N.J.S.A. 2A:14-1, which governs construction-defect claims, a party must sue the defendant-contractor within six years after the cause of such action “accrues.” The simplest answer is that you should file suit within six years of the date the bad work is done. However, if you miss that date, you could invoke what is known as “the discovery rule,” which provides that a cause of action accrues when the property owner, exercising reasonable diligence, discovers or should have discovered that he or she has been injured by another. So, if the bad work is “latent,” (say, behind the walls), and you either couldn’t discover it or it didn’t actually result in damage until sometime after the work was done, then your six years does not begin to tick until the date on which the damage was done or discovered.
2. How is this Inquiry Impacted by the Transfer of Ownership?
These matters can be further complicated by the transfer of ownership of the property at issue. In these cases, too, a “construction-defect lawsuit must be filed within six years from the time that the building’s original or subsequent owners first knew or, through the exercise of reasonable diligence, should have known of the basis for a cause of action.” New Jersey courts will not allow a subsequent owner to fare better than prior owners for purposes of statute of limitation calculations. For that reason, the statute of limitation in construction-defect cases is triggered at the moment any owner in the chain of ownership discovers or reasonably should have discovered the alleged defect. Unless the prior owners were entirely unaware, a subsequent owner is barred from resurrecting a statute of limitation that has since lapsed.
3. What About the Statute of Repose? How Does it Affect my Claim?
The statute of repose applies only to “construction and designs of improvements to real property that result in unsafe and defective conditions.” This statute provides a kind of ten-year backstop from substantial completion of the construction project. Therefore, regardless of the discovery rule’s application, architects, builders and contractors are immune from defect suit ten years after the project is done. Therefore, if, for example, an action accrued eight years after a project’s substantial completion, a party would merely have two years left to file an action before his or her claims are time barred.
Additionally, the calculation of the ten-year limitation period will be impacted by whether the defendant performed limited services or possessed supervisory responsibilities throughout the completion of the entire project. In cases involving a defendant who merely provides limited services and does not assume a supervisory role, the limitation period starts running when the defendant completes his services. Whereas, in cases involving a defendant who assumed a supervisory role, the limitation period begins the date the project is certified as substantially complete.
4. The Big Takeaway – Time may be of the essence
In short, the big takeaway is that a plaintiff must bring a construction-defect suit within six years of the cause of action’s accrual. This six-year limitation may be extended under the right circumstances. However, in all cases, it is important to remember that the lawsuit must be filed within ten years after construction was substantially complete. Failure to adhere to these rules may prevent you from bringing an action.
Ultimately, whether time is of the essence in your particular case really does depend on various factors. If you suspect that you may have a cause of action against a contractor for a construction defect, it is better to act now and contact the experienced attorneys at Cohn Lifland Pearlman Herrmann & Knopf. Let us help you better understand your rights and obligations.