Oregon Ct. Says HOA Had Six Years from Discovery to File Action for Construction Defects

A homeowners association brought suit against the original developer and general contractor for damages resulting from alleged faulty construction. The homeowners association alleged claims based on theories of negligence during the construction of the condominiums, nuisance, concealment of known defects, and mismanagement of the association before it was turned over to the unit owners. The trial court dismissed the homeowners association’s claims based on statutes of repose and limitations (the claims were filed too late).

Construction was completed on the buildings in question in May of 2000. The association was formed and the CC&Rs were adopted in July 2000. The first unit sold in August 2000. The association first obtained knowledge about leaking windows and water intrusion problems in early 2003. In late 2003, some repairs were made and the contractor who performed the repairs commented that there were improperly installed windows that were going to create problems. Subsequent similar problems occurred in different units between 2004 and 2007. The association retained a consultant to investigate the problem in 2008 and received the report in November 2008 which indicated problems with the exterior siding and water intrusion. The association filed its lawsuit on July 22, 2010.

The appellate court ruled that the association’s construction defect claims were governed by ORS 12.080(3), which provides for a six year statute of limitations and also incorporates a “discovery rule” that provides that the limitation period begins to run on the earlier of: (1) the date of the plaintiff’s actual discovery of injury; or (2) the date when a person exercising reasonable care should have discovered the injury, including learning facts that an inquiry would have disclosed. The court further stated that application of that standard is generally a factual question for the jury, but in a case where the only conclusion that a reasonable jury could reach is that the plaintiff knew or should have known the critical facts at a particular time and they did not file suit within that time, the court may make the decision as a matter of law. Applying this standard, the court concluded that it could not find, as a matter of law, the specific date that the association knew or should have known the critical facts concerning the claims. Accordingly, the appellate court ruled that the trial court erred in granting summary judgment on the association’s construction defect claims.

See case decision: Riverview_Condo._Ass’n,_an_O