A recent decision by the Oregon Appeals Court allows property owners to file negligence lawsuits against contractors for building-code violations. In a construction defect case brought eight (8) years after the construction was substantially complete, the Court ruled that the breach of contract action against the contractor was barred by the six (6) year statute of limitation, however, allowed the homeowners to sue the contractor on a negligence cause of action which has a two (2) year statute of limitation with a “discovery” proviso (the cause of action must be commenced within two (2) years of discovery). Though the discovery of the alleged construction defect occurred well after the contract statute of limitations had run, the lawsuit was brought within two (2) years of the date of the discovery of the alleged defect. The Court reasoned that because the water leakage, which was at the heart of the allegation, involved possible violations of the Oregon building-code, the homeowners were allowed to bring a negligence cause of action against the contractor.
This case has far reaching implications for commercial contractors (and their insurers), involved in construction defect disputes. Since most “construction defects” involve some violation of some provision of the building code, an owner now has two (2) years from the date of discovery of the defect (irrespective whether the contract statute of limitations has expired) to bring a cause of action against builders and their insurance companies.