The statute of repose is a defense that we often assert as a defense in design and construction cases that we handle because cases are often brought, or our clients are added as a defendant in a case that has been pending for years, long after a construction project has been completed.  A statute of repose is a law that requires that a lawsuit be brought against each defendant within a certain number of years following a specific date – usually the date of substantial completion.  South Carolina’s statute of repose is found at S.C. Code Ann. §15-3-640.   South Carolina’s statute of repose provides that a lawsuit for damages based upon a defective or unsafe condition of an improvement to real property must be brought within eight years after substantial completion of the improvement.

 

What does this mean? This means that a lawsuit for a design or construction defect must be brought within eight years after substantial completion.  The statute contains a list of the types of lawsuits that are covered by the statute of repose.  It includes claims for breach of contract, breach of warranty and negligence claims.  The statute of repose applies to design errors by an architect or engineer and claims for defective construction against a contractor or subcontractor. 

South Carolina’s eight-year statute of repose applies to most lawsuits, although there are claims that are so old that South Carolina’s prior thirteen-year statute of limitations applies.  The eight-year statute of repose applies to projects where substantial completion occurs after July 1, 2005.  If a claim is brought for a project where substantial completion occurred before July 1, 2005, the old thirteen-year statute of limitations applies.  Unbelievably, even in 2017, claims are being asserted relating to projects completed prior to 2005.

What is the date of substantial completion?  For new construction, the statute provides that substantial completion is the date that a certificate of occupancy is issued.  For changes to an existing structure, the date of substantial completion is the date of a final inspection.  The statute also provides that the owner and contractor can agree upon a different date of substantial completion, which is often stablished by a certificate of substantial completion prepared pursuant to the contract documents, often issued by the project architect.

So if substantial completion occurred more than eight years ago, we have nothing to worry about, right?  Not so fast.  The South Carolina legislature weakened the statute of repose by enacting certain exceptions in Section 15-3-670.  The exceptions include:

  1. Cases where the owner or tenant in possession knows, or reasonably should have known, about the defective or unsafe condition.
  2. Cases where the defendant is found guilty of fraud, gross negligence, or recklessness in his design, construction, or development of the project. 
  3. Cases involving personal injury where the defect is latent.

As you can imagine, if a project was completed some time ago, most plaintiffs will try to avoid application of the statute of repose by alleging that the defendant was grossly negligent.  Because gross negligence is a high standard, this does not mean that the statute of repose will not apply, but it will make the lawsuit last longer.

If you have any questions about design and construction claims or other risk management issues, please call us at (864) 327-5000.  We would be happy to assist you!