As is typical with the passing of any July 1st, the Iowa Code tends to get a makeover. These changes can go unnoticed, or they can be total game changers. Naturally, all of that depends upon where your interests lie.
One significant change may not have made many headlines, but it has certainly grabbed the attention of the state’s developers, contractors, insurers, attorneys, and buyers in the commercial and residential markets alike. This was the amendment to the statute-of-repose period set forth in Iowa Code §614.1.
Iowa Code §614.1 was amended to reduce the statute-of-repose period for any real property improvement project that begins after July 1, 2017. This limits the window for bringing suit against a real property contractor if that contractor’s work negligently results in an unsafe or defective condition to the property. The previous statutory period for bringing suit was 15 years for single-family and two-family residential dwellings. That period has been reduced to ten years. Additionally, most other structures, including larger residential dwellings and commercial buildings, have seen this window reduced from 15 years to eight years.
In recognizing the application of this changeover, one must first distinguish between a Statute-Of-Repose (SOR) and its more widely recognized cousin, a Statute-Of-Limitations (SOL). Both are time constraints that limit the time period in which a person is allowed to bring a lawsuit against another party. The key difference between the SOR and SOL is when the clock starts ticking. The SOL begins running on the date a party is injured or discovers their injury. This date otherwise is known as the event that gives rise to a cause of action. An SOL applies in instances of physical injury and in many criminal matters. By contrast, a SOR begins running the moment a specific event occurs, namely the completion of a construction project or property improvement.
How significant is this change? Well, if you ever find yourself on the plaintiff’s side or the defendant’s side of pending litigation, the very first thing either attorney checks is whether or not the statutory period to bring suit has expired. Someone who would otherwise have a perfectly good legal claim against someone else is going to be barred from bringing their lawsuit once the expiration date on that time restriction passes. In that sense, it is quite literally a deal maker or deal breaker.
Hence, the smaller the window someone has to sue over their claim, the less likely a possible defendant is going to get tied up in costly litigation and the more likely a possible plaintiff will need to recognize their position and plan accordingly. As always, it comes back to perspective.
The benefits and risks of this change are best met with a thorough assessment of your position in these hierarchies and how the more nuanced factors of this law relate to that perspective. Chances are this shift directly affects your business, your contractors, your sub-contractors, your insurance costs, and it might be as intimate as how it affects the very place you call home.
We invite you to plan accordingly.
(SF 413, pgs 60-61)
SENATE FILE 413 – Improvements to Real Property – Unsafe or Defective Conditions – Limitations on Actions BY COMMITTEE ON JUDICIARY. This Act reduces the statute-of-repose period in cases arising out of the unsafe or defective condition of an improvement to real property for certain types of property. A statute-or-repose period differs from a statute-of-limitations period in that a statute of repose establishes a time period after which a lawsuit cannot be filed regardless of whether an injury has occurred. A statute-of-limitations period begins at the date of the injury or upon discovery of the deficiency.
Under prior law, a case arising out of the unsafe or defective condition of an improvement to real property was subject to a 15-year statute of repose. The Act provides that for actions arising out of a nuclear power plant or interstate pipeline, the period remains 15 years. For actions arising out of the construction on single-family or two-family dwellings occupied or used primarily for residential purposes, the period is reduced to 10 years. For actions arising out of any other kind of improvement to real property, the period is reduced to eight years. However, for actions arising out of intentional misconduct or fraudulent concealment, the period for the statute of repose is 15 years, regardless of the type of real property. If the unsafe or defective condition is discovered within the final year prior to the expiration of the applicable period of repose, the period is extended for an additional year.
The Act does not reduce the statute of repose for real property improvements in existence prior to July 1, 2017, or to improvements to real property, whether construction has begun or not, that are the subject of a binding agreement as of July 1, 2017.