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Real Property & Development Review

No Discovery Rule For Construction Defect Claims

Posted in Construction

Much to the delight of original builders and/or building owners (and the chagrin of some subsequent ones), the discovery rule is not recognized in Oregon in breach of contract cases involving construction defects.  The statute of limitations in those situations runs 6 years from the time of breach.  If shoddy work is not discovered within that 6 year window, the subsequent owner is a different kind of SOL.

The discovery rule typically applies in negligence cases.  As such, the time to file suit doesn’t begin (or accrue) until a person realizes it has been injured.  So why not try that argument in a breach of contract context?

Plaintiff in Waxman v. Waxman & Associates, Inc., 224 Or App 499, gave it a shot with the help of a somewhat ambiguous statute addressing the accrual of negligence and contract actions.  Unfortunately for Plaintiff, the Court squarely put to rest any prior debate over whether the discovery rule applies in this context.  The rule is yes for negligence, no for contract actions.

This ruling might be good incentive for subsequent builing owners to purchase appropriate insurance and/or warranties for any construction defects that might be discovered beyond the 6 year window….