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An Overview of Minnesota Statutes of Limitation and Repose in Construction Defect Lawsuit – Septembe
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Minnesota Community Living September/October 2012

An Overview of Minnesota Statutes of Limitation and Repose in Construction Defect Lawsuit

By Alex Nelson

The Statutes of Limitation and Repose outline the time frames within which a construction defect action must be brought. A claim not filed or properly asserted within the applicable time period is considered "time barred," or "stale," and is subject to dismissal in its entirety. A few important things to remember about Statutes of Limitation and Repose are that:
Time periods are short and often ambiguous.
Always consult an attorney if you are not positive about how to calculate them. Any reputable attorney will do a free, initial statute of limitation analysis for you.
My law firm turns down more cases than we take, and the primary reason is missed Statutes of Limitation and Repose.

Statutes of Limitation
Four main types of construction defect claims are brought in Minnesota, each with its own Statute of Limitation requirements:

1. "327A” Statutory Warranty Claims for homes or condo/townhome units: A homeowner has only 6 months within which to give written notice of the defect to the builder once the defect has manifested itself. An action must be commenced within two years of when the defect was known, or should have been known.

2. "515B” Express and Implied Warranty Claims under the Minnesota Common Interest Ownership Act:
a. On homes or condo/townhome units, the statute runs (regardless of anyone’s knowledge of the claim) 6 years from the earlier of:
(i) Transfer of title to the first purchaser; or
(ii) The time the purchaser takes possession of the unit.
b. On common elements in a condo/townhome community: The statute runs (regardless of anyone’s knowledge of the claim) 6 years from the later of:
(i) Completion of the common element;
(ii) The first unit sale; or
(iii) Termination of Declarant control.
These time periods can be shortened by the Declarant to as little as 2 years, so complete review of the CC&Rs, purchase contracts, etc., is needed.

3. General Negligence or Breach of Contract Claims:
a. Negligence: 2 years after the manifestation of the defect.
b. Breach of Contract: 2 years after the builder fails to fulfill the warranty.

4. Fraud or Misrepresentation: 6 years after discovery of the facts constituting the misrepresentation.

A few more general principles to consider when calculating and evaluating Statutes of Limitation:
The clock typically starts when you "knew or should have known” of the defect. That is, when the damage starts to manifest, even if you don’t know the cause yet.
You may or may not get a separate 2 year limitation period for each defect, or even for each location of the defect.
"Working with the builder” may, or may not toll (pause) the Statutes of Limitation.

Statutes of Repose
Statutes of Repose apply to bar a claim whether you know about the defect(s) or not. The Statute of Repose is considered an "absolute” time bar. Again, each type of legal claim comes with its own calculation:

1. Breach of Contract or Negligence claims: 10 years from "substantial completion” – when the improvement could be occupied or used for its intended purpose. This period can be extended an additional 2 years, up to a total of 12 years, when the defect manifests in year 9 or 10. 

2. "327A” Warranty claims: The various statutory warranties start running upon unit purchase or occupancy, and expire on a staggered schedule. The warranty time periods are: 
1 year – general workmanship and materials.
2 years – electric, plumbing, HVAC, etc.
10 years – "major construction defects”
If these 1, 2, and 10 year time periods expire without a defect manifesting, "327A” claims will be forever time-barred. 

3. "515B” Express and Implied Warranty Claims under the Minnesota Common Interest Ownership Act: 
a. On homes or condo/townhome units, the statute runs (regardless of anyone’s knowledge of the claim) 6 years from the earlier of:
(i) Transfer of title to the first purchaser; or
(ii) The time the purchaser takes possession of the unit.
b. On common elements in a condo/townhome community: The statute runs (regardless of anyone’s knowledge of the claim) 6 years from the later of:
(i) Completion of the common element;
(ii) The first unit sale; or
(iii) Termination of Declarant control.


These time periods can be shortened by the Declarant to as little as 2 years, so complete review of the CC&Rs, purchase contracts, etc., is needed.

Some of the limitation periods in Minnesota are extremely short, giving property owners as little as six months to take action against their builder when they discover a construction defect. If a limitation period expires before a claim is filed or otherwise asserted, the legal claim is subject to dismissal in its entirely. So, if you suspect significant or pervasive construction defects in a community you manage, don’t let your association drag its feet…time is always of the essence! Keeping track of any applicable limitation periods, and acting within them (or having your attorney do so for you) will protect not only your association, but also your management company from potential liability if action isn’t taken in a timely manner.

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