New Oregon appellate decision on construction defect statute of repose

By Allen Eraut, Claude Bosworth and Kevin Clonts

In Shell v. The Schollander Companies, Inc., the Oregon Court of Appeals clarified which of two statutes of repose apply when a home or other structure is sold to a buyer and the buyer did not contract to have the structure built. Both ORS 12.135 and ORS 12.115 provide for 10-year statute of repose. However, under ORS 12.135, the repose period begins to run from the date of substantial completion, and under ORS 12.115, the repose period begins to run from the time of “the act or omissions complained of.”

The court held that the ORS 12.135 statute of repose – in which the repose period begins to run from the date of substantial completion – only applies when a contractor enters into a construction contract with a customer. Except in those cases in which the buyer contracted with the builder to have the structure built, ORS 12.135 does not apply when a new residence or other building is sold to a buyer. In those cases, the ORS 12.115 statute of repose applies. Under ORS 12.115, the repose period begins to run from the time of “the act or omissions complained of,” not the date of substantial completion of the entire structure.

In Shell, a contractor finished a house’s exterior envelope by June 22, 2000, but continued work on other portions of the house until past July 7, 2000. The buyer served a statutory notice of defect on the contractor on June 25, 2010. When the contractor filed for summary judgment based on the statute of repose, the buyer argued that ORS 12.135 applied and that the repose period did not begin to run until the buyer accepted the house, on July 12, 2000. The court rejected this argument and held that ORS 12.115 was the applicable statute of repose. Because plaintiff’s allegations of defect involved the exterior envelope, and because the work on the envelope finished by June 22, 2000, “the act or omissions complained of,” for purposes of ORS 12.115 began to run on that date, and plaintiff’s claim was time barred.

In summary, so long as the contractor did not contract to perform the construction with the buyer, any work completed outside the 10-year statutory period should be time barred, even if no certificate of occupancy was issued by that date and even if the contractor continued work on other portions of the structure that are not the subject of the complaint.

The case can be found here: http://www.publications.ojd.state.or.us/docs/A150509.pdf.



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