Construction Trades Find Protection in Shortened Statute of Limitations
On September 28, 2012, the Ohio Revised Code 2305.06 was amended to reduce the statute of limitations from 15 years to 8 years. In the past, a contracting party had 15 years to file suit for breach of a written contract.
For those in the construction industry, that meant their obligations in their written construction contracts could last for 15 years or more after the completion of a project. Naturally concerns and complaints were raised given the overwhelming task of proving or defending a decade old project in which many of the companies and individuals who worked on the project were long gone.
In response, this new amendment provides protection by nearly cutting in half this deadline. Under this new amendment, breach of contract claims that accrue after September 28, 2012 must be brought within eight years. Further, unlike many statutes that only apply to future claims, however, this amendment applies retroactively. For a cause of action that accrued before September 28, 2012, the statute of limitations runs as of the earlier of: (i) eight years from September 28, 2012, or (ii) the expiration of the limitations period in effect prior to the amendment.
As a result, the relevant factor to determine the statute of limitations is when the cause of action accrues. In Ohio, a cause of action for breach of contract does not accrue when the contract is signed, but rather when the breach occurs or when the complaining party suffers actual damages. Thus, for a cause of action that accrued prior to September 28, 2012, the deadline to file suit is the shorter of either 8 years from September 28, 2012 or 15 years from the date of the breach.
Other considerations for the determining of the deadline to file suit are the statute of repose and the exact language of the contract. For the construction trades, the statute of repose was enacted to protect architects’ and builders’ exposure to liability by barring suits brought more than ten years after performance on any improvement to real property. In other words, the statute of repose served as a bar to third-party claims that arose ten years after the completion of the project. Thus, the statute of repose will likely have no affect on this new statute of limitation since generally these breaches of contract actions are dealing with contracting parties – not third parties. The contract language can also affect this deadline by specifying a shorter warranty or limitations period.
Practically speaking, for the next eight years during this transition period, careful attention must be paid to when the statute of limitations will or did expire, and legal counsel should be sought if there is any question or doubt.
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C. Michael Shull, III focuses his practice on construction law and litigation. Michael's client representations range from casinos and ENR Top 400 contractors to design firms and subcontractors.