Pennsylvania, like most states, has what is referred to as a statute of repose. This statute limits the time within which to file a claim arising from a construction contract to 12 years after completion of the construction. The question often arises as to what is meant by the phrase “completion of construction.” Does it mean substantial completion? Final Payment? Completion of all punch list work? What if the contractor returns to make repairs to correct the defects? Does the 12 years begin to run again?
In a recent Superior Court case, Venema v. Moser Builders, Inc., 2022 PA Super 171, 2022 WL 4860130 (2022), the Superior Court held that a contractor’s repairs did not toll the 12-year Statute of Repose pursuant to 42 Pa.C.S. § 5536(a). In 2003, a developer (Moser) built a home in Pennsylvania and put it up for sale. A certificate of occupancy was issued on August 13, 2003, and the home was then purchased by a couple (Appellant) in October of 2004. The Appellant filed their complaint on March 10, 2020, alleging 13 counts of construction defects. As part of the complaint, Appellant alleged that Moser had conducted several inspections and repairs on the residence from 2004 to 2008 that failed to remedy defects which lead to significant water infiltration. Moser argued that Appellant’s claim was barred by the Statute of Repose because it had been over 12 years since the date the residence was “completed” before Appellant’s complaint was filed.
Moser argued that as a matter of law the “completion” date was determined by the certificate of occupancy issued on August 13, 2003, prior to the purchase of the home. The trial court agreed, holding that completion occurred in 2003. On appeal, the Superior Court agreed as well, and in doing so, it held that the 12-year period did not begin to run upon Moser’s repairs to the residence which were completed in 2008; rather, it simply ran from the date the certificate of occupancy was issued. The Court explained that:
Residential building such as Appellants’ residence may not be used or occupied until a certificate of occupancy is issued. The issuance of the certificate hinges on a satisfactory “final inspection” showing that the construction of the residence comports with the governing building codes.
See Pennsylvania Uniform Construction Code, 34 Pa. Code § 403.65(a)-(b) (“A residential building may not be used or occupied without a certificate of occupancy issued by a building code official. A building code official shall issue a certificate of occupancy after receipt of a final inspection report that indicates compliance with the Uniform Construction Code[.]”).
There can be no satisfactory result to a final inspection, nor a certificate of occupancy, until construction of the residence is “completed.” See id. at § 403.64(f) (“A construction code official shall conduct a final inspection of the completed construction work and file a final inspection report that indicates compliance with the Uniform Construction Code.”)
What about non-periodic, sporadic, curative, and remedial repairs? Could these extend the 12 years?
In Fetterhoff v. Fetterhoff, 512 A.2d 30, 33 (Pa. Super. 1986), nearly 30 years after an elevator was installed on a homeowner’s property, the homeowner sued the elevator manufacturer (defendant), and the defendant argued that the suit should be barred as it was far more than 12 years after the improvement was completed. The Superior Court first noted that the 12-year period begins to run “when the entire construction project is so far completed that it can be used by the general public.” However, the homeowner argued that the defendant had “actual possession or control” of the elevator because the defendant made periodic repairs to the elevator, thus it never relinquished control, making Section 5536(b)(2) applicable. Section 5536(b)(2) states that the 12-year limitation in Section 5536(a) is not applicable by way of defense “by any person in actual possession or control, as owner, tenant or otherwise, of such an improvement at the time any deficiency in such an improvement constitutes the proximate cause of the injury.” The Fetterhoff court held that the defendant never had actual possession or control of the elevator; therefore, Section 5536(b)(2) did not apply. The homeowner then argued that each periodic repair visit made by the defendant during the 30-year period “revitalized” the 12-year limitation period, and that the failure to correct the defect during that period rendered the improvement incomplete. The Superior Court disagreed, explaining that “the arrangements, to periodically service the improvement, cannot be enlarged to extending the design and construction period for over thirty years.”
In light of Fetterhoff‘s holding that the 12-year period begins to run when “the entire construction project is so far completed that it can be used by the general public,” it seems odd for the Venema court to couch the “completion” date on the issuance of a certificate of occupancy. Certificates of occupancy can be issued for a portion of a building; thus, the entire construction project may not be complete when a certificate of occupancy issues for one portion of a building. See 34 Pa. Code § 403.65(c) (emphasis added) “[a] building code official may issue a certificate of occupancy for a portionof a residential building if the portion independently meets the Uniform Construction Code.” If one portion of a residential building is granted a certificate of occupancy, and another is granted a certificate of occupancy two years later, when does the Statute of Repose period begin? Does each section of the building have a different time-period? The point is, a certificate of occupancy could certainly be one factor to consider when determining “completion,” especially when that word is not defined in the statute, but it may not be a proper bright line point in time when “completion” occurs.
Moreover, not all municipalities require a certificate of occupancy. See What Is a Certificate of Occupancy? Proof Your Home Is Safe (realtor.com). Thus, for those municipalities that do require one, homeowners there may be disadvantaged by a system designed to protect them. These concerns aside, real issues arise with the effect of this holding. If the 12 year “completion” mark is coming up soon on a construction project, and a contractor wishes to simply run the clock out, a contractor can continually make promises to repair or make repairs it knows will fail after the 12-year time limit has passed.
Contact a Pennsylvania Construction Litigation Lawyer Today
If you have had deficient improvements or improper repairs made to your property and wish to explore your options, the legal team at Reager & Adler, P.C. can help. We have extensive experience in construction litigation, along with a deep understanding of how to protect your interests. Contact us today for a confidential consultation and to learn more.
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