ARE 5.0; Statute of Repose vs. Statute of Limitations

What is the difference? Inquiring minds want to know.

There’s a lot of confusion among ARE 5.0 candidates regarding the Statute of Repose vs. the Statute of Limitations. One reason is that each state sets its own limits on the start date, duration, and end date. Furthermore, these change over time as each state sets a new precedent and updates the law. There is no absolute time limit for each statute; they generally range from 1 to 10 years depending on the state, and there isn’t a specific date when the clock starts ticking on the repose period. Although each statute’s purpose is consistent, the interpretations, types of claims, and rules vary across the country. For example, New York does not have a statute of repose for construction, and Vermont’s only applies to condominiums. 

Statute of Repose

Statute of Repose is a time limit imposed by law (time varies by state) within which a claim/cause of action can be filed against the person(s) who performed the services (architect, designer, contractor). It starts on a specified date, usually the date of substantial completion, the date of occupancy, or the date of receipt of the Title. Usually, the time limit is ten years, but it varies significantly among states. If both parties agree, they can specify an alternate time limit for either statute in their contract. However, the agreed-upon statute can be overruled if the court considers the time limit unreasonable.

For example, if a client discovers a defect in the work and wants to sue for damages, they can bring a suit within the statute of repose - let’s say 10 years. If something happens in year eleven, it is too late; a suit cannot be brought. The time is up.

Statute of Limitations

Statute of Limitations is a time limit imposed by law that falls WITHIN the statute of repose, when a claim/cause of action can be filed against the person(s) who performed the services (e.g., architect, designer, or contractor). The time starts when an occurrence is discovered or should have been discovered, or when the damage occurs. The state determines the time limit, which is shorter than the statute of repose – 4, 6, 8 years. The statute of limitations expires on the same date as the statute of repose if no claim is filed.

For example, suppose the statute of repose is 10 years, and the statute of limitations is 6 years. In that case, if damage occurs or is discovered in year 5, then 5 years remain, not 6 (the duration of the statute of limitations), in which to file a claim before the statute of repose ends. If the statute of limitations is 9 years and the damage occurs or is discovered in year 8, then 1 year remains to file a claim before the statute of repose expires. The legal battle may extend beyond the statute of repose once a lawsuit is filed.

In Simpler Terms

Statute of Repose starts at a predetermined time–substantial completion, certificate of occupancy, receipt of the Title (varies by state).

The Statute of Limitations starts at the occurrence of an injury or damage, or at the time it is discovered by the claimant.

Let's Break Down the History

In the mid-1960s, architects and contractors were liable for the life of the building because there was no statute of repose. They put pressure on states to adopt a time limit on their liability. Slowly, states began to enact their own laws, though they were vague and varied more than they do today. Therefore, the AIA adopted provisions limiting the architect’s exposure to liability, imposing their own statute of limitations and repose in the contracts' 1987 and 1997 editions. Owners complained that the contract language limited their remedies and unfairly favored the architect. In 2007, enough states had adopted a statute, and in turn, the AIA dropped the provisions.

Since the 2007 edition, AIA contracts have deferred to the limits established by applicable law. When discussing the statute of limitations vs. the statute of repose, look to the state to determine the applicable limits. Although you can modify the contract and set agreed-upon limits that differ from the state, a court could choose to ignore those contract limits if it deems them unreasonable.

Let's Break Down the Contracts

In AIA B101-2017, Standard Form of Agreement Between Owner and Architect, Article 8.1.1, the wording still tries to limit the statute of repose to 10 years, which is already the maximum in most states. In essence, the wording is there as a “just in case” scenario and may not hold up in court. Additionally, Article 8.1.1 refers to Substantial Completion as the date that starts the clock on the statute of repose. However, some states use the date of occupancy or the receipt of title. Ultimately, it is up to the court to determine whether to uphold the agreed-upon start date in the contract.

The same language appears in A201-2017, General Conditions of the Contract for Construction, Article 15.1.2. Additionally, the bold text in Article 15.4.1.1 defers to the laws in the state where a claim would be filed. A101-2017 Standard Form of Agreement between Owner and Contractor, Article 6.2 refers back to A201 and adds that a claim would be resolved in the court having jurisdiction. 

B101-2017 Standard Form of Agreement between Owner and Architect

§ 8.1 General

“§ 8.1.1 The Owner and Architect shall commence all claims and causes of action against the other and arising out of or related to this Agreement, whether in contract, tort, or otherwise, in accordance with the requirements of the binding dispute resolution method selected in this Agreement and within the period specified by applicable law, but in any case not more than 10 years after the date of Substantial Completion of the Work. The Owner and Architect waive all claims and causes of action not commenced in accordance with this Section 8.1.1.” 

A201-2017 General Conditions of the contract for construction

Ҥ 15.1.2 Time Limits on Claims

The Owner and Contractor shall commence all Claims and causes of action against the other and arising out of or related to the Contract, whether in contract, tort, breach of warranty or otherwise, in accordance with the requirements of the binding dispute resolution method selected in the Agreement and within the period specified by applicable law, but in any case not more than 10 years after the date of Substantial Completion of the Work. The Owner and Contractor waive all Claims and causes of action not commenced in accordance with this Section 15.1.2.” 

“§ 15.4.1.1 

A demand for arbitration shall be made no earlier than concurrently with the filing of a request for mediation, but in no event shall it be made after the date when the institution of legal or equitable proceedings based on the Claim would be barred by the applicable statute of limitations. For statute of limitations purposes, receipt of a written demand for arbitration by the person or entity administering the arbitration shall constitute the institution of legal or equitable proceedings based on the Claim.” 

A101-2017 Standard Form of Agreement between Owner and Contractor

Ҥ 6.2 Binding Dispute Resolution

For any Claim subject to, but not resolved by, mediation pursuant to Section 15.3 Article 15 of AIA Document A201–2007, A201–2017, the method of binding dispute resolution shall be as follows:

(Select one)

Arbitration pursuant to Section 15.4 of AIA Document A201–2017 

Litigation in a court of competent jurisdiction

Other (Specify)

If the Owner and Contractor do not select a method of binding dispute resolution or do not subsequently agree in writing to a binding dispute resolution method other than litigation, Claims will be resolved by litigation in a court of competent jurisdiction.” 

One More Thing

As practicing architects, the most important thing to understand about Statute of Repose vs. Statute of Limitations is that it tells you how far in the future you can be sued and how long you should maintain PLI on a project. Unfortunately, maintaining insurability can require an Extended Reporting Period (ERP) or Tails Coverage policy. You can learn more about insurance and other essential ARE 5.0 topics by studying with CLARE. Subscribe Now.