Community associations must be careful to preserve construction defect claims. All too often, our firm is approached by associations to handle construction defect litigation at the eleventh hour, or worse, when the time has already passed to bring an action. Because of the significant costs typically associated with repairing construction defects, community associations must be proactive in their pursuit of construction defect claims.
Georgia has a relatively short window of time to assert construction defect claims, including negligent construction claims. Thus, it is important for associations to investigate potential defects and then take immediate action based on the findings. For example, if an owner reports significant cracks in a common element wall, the association should arrange for an engineer to inspect the property and then discuss the results with legal counsel.
Generally speaking, construction defect claims are subject to a four-year statute of limitation in Georgia. That means that in most cases a plaintiff must file a lawsuit for such claims within four years from the date that the claims could have first been pursued, which is generally the date of substantial completion. Otherwise, the claims will be barred by the statute of limitation.
The statute of limitations is not the only hurdle that associations must clear. The statute of repose imposes absolute limits on the period during which a construction defect claim can be asserted—even if it has not otherwise been barred by the statute of limitations.
The statute of repose provides that all construction defect-type claims, however characterized (whether as negligent construction, fraud, breach of fiduciary duty, or indemnity), must be asserted no later than eight years after substantial completion. There is one limited exception for damage to property that occurs during the last two years of the eight-year period.
Community associations must always be aware that the clock is ticking with respect to the statute of limitations and the statute of repose. If construction defects are suspected, it is critical that they are evaluated and discussed with legal counsel as soon as possible. Otherwise, claims—and money—may be lost.
This article was authored by Bill Gourley, an associate attorney with NowackHoward. Gourley is a member of the firm’s Community Association practice who works with condominium associations, homeowner associations and property managers on both general counsel and litigation matters. He has extensive experience assisting community associations in covenant enforcement actions and delinquent assessment collection lawsuits.