The passage of too much time is generally considered a bad thing when it comes to fish, houseguests and construction negligence claims. Unlike the first two items, we have laws that specifically govern construction negligence claims—statutes of limitation and statutes of ultimate repose. Both operate to bar claims after the passage of a designated period of time. The difference is that a statute of limitation is triggered by an injury, while a statute of repose is triggered by the completion of an act.
The statute of ultimate repose for residential construction negligence claims in Oregon is 10 years. This means all negligence claims must be brought within that period or else they are forever barred. Until recently though, we did not know when the 10-year repose period began to run for claims involving “spec” homes, which the court defined as “a house built without preexisting construction contracts in anticipation of eventual sale to the public.”
In February 2016, the Oregon Supreme Court determined that for spec homes, the statute of ultimate repose will begin to run based on the date of “the act or omissions complained of” even if the contractor continues to work on the house. So, for defectively installed windows, building paper, siding, or roofing, the time would begin to run on the date of when the item was installed. In making this decision, the Court rejected the argument that the 10-year repose period runs from the date of substantial completion.
The case in question was Shell v. Schollander Companies, Inc., 358 Or 552 (2016). In that case,
the contractor began construction on a spec house in 1999. In May 2000, before the house was finished, Mrs. Shell decided to purchase it. On June 22, 2000, the contractor recorded a notice of completion. By this time, the house’s exterior weather envelope was complete; however, the contractor continued to work on other portions of the house until sometime after July 7, 2000. The sale of the house closed on July 12, 2000. On June 25, 2010, Mrs. Shell served a Notice of Construction Defect, asserting negligent construction claims.
The contractor moved for summary judgment, asserting that the 10-year statue of ultimate repose had run and that the claim was barred under ORS 12.115. Mrs. Shell argued ORS 12.135 applied so the repose period did not begin to run until she accepted the house as substantially complete on July 12, 2000, when she closed the sale. The trial court rejected that argument, ruling that ORS 12.115 was the applicable statute of repose because Mrs. Shell did not have a contract to build her home, and concluding that, because the alleged “acts or omissions” that gave rise to Mrs. Shell’s negligence claims occurred before she purchased the home, her claims were barred by ORS 12.115. The Oregon Court of Appeals affirmed the trial court in 2014, and now the Oregon Supreme Court has done the same.
By contrast, in the case of a custom home built specifically for a buyer under contract, the Court found that the 10-year statute of repose in ORS 12.135(1)(b) would apply and would run from the date of “substantial completion” of construction, which the legislature has defined as the date that the “contractee” (the purchaser) accepts the construction as complete.
The bottom line is that the 10-year period of repose will begin to run sooner for spec homes than for custom homes built under contract.
Steven L. Shropshire is the Shareholder-in-Charge of Jordan Ramis PC’s Bend office. He practices water and environmental law and was recently named a “Lawyer of the Year” in water law by Best Lawyers. You can contact Steve at 541-647-2979 or steve.shropshire@jordanramis.com.
Jacob Zahniser is an attorney in Jordan Ramis PC’s Dirt Law practice group. His practice focuses on construction and real estate litigation, as well as handling insurance coverage disputes arising from construction defects. He can be reached at 503-598-5546 or jacob.zahniser@jordanramis.com.
