Academy/Developer / Declarant Transition
Statutes of limitation/repose
The two deadlines that can end your association's right to sue a developer, and why they don't wait for turnover to happen.
A statute of limitations starts running when a defect is, or reasonably should be, discovered. A statute of repose starts running on a fixed event, usually substantial completion, and bars claims after that period no matter when the defect is found. Both can permanently end an association's right to sue a developer. Exact periods and which event starts the clock vary by state; confirm both with a construction defect attorney licensed where your property sits.
Two clocks, and you can miss either one
Boards tend to think of a claim deadline as one countdown. It is usually two, and a construction defect claim has to clear both to survive.
The declarant's attorney and your association's attorney are checking different questions. A statute of limitations asks when the owners actually found, or should have found, the problem. A statute of repose asks how long ago the building was substantially finished, and does not care whether anyone noticed anything by then. A defect discovered inside the limitations window can still be dead on arrival if it surfaces after the repose period has closed.
One state's repose rule, as a worked example
California's Right to Repair Act shows what a repose statute looks like in practice.
"No action may be brought to recover under this title more than 10 years after substantial completion of the improvement."
Source: California Civil Code, section 941, California Legislative Information
Read that ten years as an example of the shape a repose statute takes, not as your association's number. Other states set different repose periods and may start the clock on occupancy or a certificate of completion instead of substantial completion. Find your state's construction defect statute before you assume any deadline.
Why transition boards get caught by this specifically
A board seated at transition is often years behind the clock already. Units may have finished construction long before the board gained a majority, and a declarant that transfers its remaining rights to a successor is not released from liability for problems that arose while it was still in control. That liability does not disappear at turnover; it just becomes the new board's job to pursue it, on the same deadline that has been running the whole time.
That is the practical argument for commissioning an engineering condition assessment soon after turnover rather than waiting for a visible failure, and for asking a construction defect attorney, early, whether any deadline is close. Waiting for an owner to report a leak is waiting for the clock to run out.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Your association discovers a leaking roof twelve years after substantial completion, in a state with a ten year repose period like California's. What happens to a claim against the original builder?
A new board's attorney is asking about both a discovery date and a substantial completion date for the same roof problem. What is the attorney checking?
Turnover happened two years ago and nobody has checked whether any construction defect deadline is approaching. What is the board's best next step?
Sources
- California Civil Code, section 941, California Legislative Information
- Understanding the Difference Between Statutes of Limitations and Statutes of Repose, Matthiesen, Wickert & Lehrer, S.C.
- Nevada Revised Statutes Chapter 116, Nevada Legislature
Developer / Declarant Transition
Next, see what an engineering transition study looks for before either deadline runs out.
Whether your state's deadline is a statute of limitations, a statute of repose, or both, which event starts the clock, and how many years it runs, all vary by state and by the type of claim.