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The Latent-Defect Time Bomb

By Kari Santos | Nov. 2, 2013

Expert Advice

Nov. 2, 2013

The Latent-Defect Time Bomb

Every California homeowner is bound by a powerful statute of repose, which prohibits the filing of claims based on latent construction defects ten years after the building was completed.

In construction litigation, one of the most powerful procedural mechanisms available is a provision of the California Civil Code that places a ten-year time limit on filing claims related to latent construction defects. (See Cal. Civ. Code § 337.15.) This law bars any latent defect claim brought

more than a decade after the building in question is completed. Although many lawyers refer to this section as a "statute of limitations," that reference is not quite right. It is a statute of repose, utterly cutting off any right to file a claim after the deadline. The application of the section does not depend on any accrual date; rather, it sets an outer limit. (See Inco Dev. Corp. v. Superior Court, 131 Cal. App. 4th 1014 (2005).)

Section 337.15 becomes all the more important in light of the housing boom that dominated California in the early years of this century. Indeed, that now-historic economic surge means hundreds of thousands of this state's homeowners are running up against the ten-year time limit. Once it passes, any latent defects they discover would have be corrected using money from their own pockets.

Given the importance of this deadline and the sums potentially involved, it is critical that homeowners and their counsel fully understand how to take action within it.

Patent v. Latent Defects
There are two basic types of construction defects. The easiest to deal with are so-called patent defects: those that are readily observable and detectable. Any claim based on such a defect must be filed within four years of the date the structure was substantially completed. (See Cal. Civ. Code 337.1.)

The second class of construction defects involves latent deficiencies, which generally lurk behind walls or underground. These problems are especially dangerous because they may cause catastrophic damage before they are even detected. Therefore, the law allows a far longer period after substantial completion (ten years) in which to begin a lawsuit based on this type of defect.

Just what constitutes a latent defect? One common example is persistent water intrusion that could stem from leaky roofs, windows, or decks. Many latent defects stem from errors made during the course of construction, such as the failure to install a waterproofing membrane, or the use of improper or low-quality building materials.

Identifying hidden construction defects presents serious challenges for homeowners. A latent problem may go undiscovered for many years - perhaps even beyond the ten-year statute of repose.

Presuit Procedure
Even if a homeowner discovers the problem before the deadline, procedural prerequisites must be satisfied before a suit can be filed.

One of the primary presuit procedures involves complying with the "right to repair" statute. (See Cal. Civ. Code §§ 895-945.5.) This law requires the owner of a single-family residence to notify the builder in writing of the claimed defects, which in turn gives the builder the opportunity to attempt to repair the defect. However, if the builder abandons or ignores this statutory prelitigation protocol, the homeowner can proceed immediately with a lawsuit without having to complete the right-to-repair process. Condominiums and buildings with 20 or more residential units are subject to similar prelitigation requirements. (See Cal. Civ. Code § 1375.)

Stay Alert
Homeowners who have purchased a seven- to nine-year-old home should stay especially alert to the presence of any potential defects, especially if they intend to file a claim under the right to repair statute. Hiring a licensed contractor to do a walk-through is a simple and effective first step that homeowners can take. Licensed contractors can determine the quality of home construction, check for signs of water intrusion or foundation or structural damage, and expose any other hidden potential problems that could be disastrous if left unattended. Additionally, attorneys practicing in this area may refer clients to reliable contractors who can double as expert witnesses and whose work product can be used throughout the course and scope of litigation.

It is essential that homeowners understand these procedural requirements and take action before the statute of repose bars them from seeking legal redress against those involved in the construction of the structure they inhabit.

Alan I. Schimmel is managing partner of Schimmel & Parks in Los Angeles, where he handles complex civil litigation.


Kari Santos

Daily Journal Staff Writer

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