Statute of Repose or Statute of Limitation ~ What’s the Difference and How Do I Handle This Risk?

July 7, 2015

Statute of Limitation BooksIf you are in the building business, chances are you have become familiar with your state requirements and the statutes that apply to construction standards and defect claims. We touch on the subject of two statutes to help enlighten builders on a critical need for risk management. There is also an opportunity to protect your assets through a written home warranty which relieves builders of timeline worries.  In construction law, there are two limitation periods that become a critical aspect of your risk management action plan: the Statute of Limitation and the Statute of Repose.

Statute of repose

Statute of Limitation.

The Statute of Limitation is a period of time from the occurrence of an event, within which a homeowner or plaintiff may file a claim against his builder. “The Statute of Limitations is a time-barring statute which gives you a set time within which to bring an action (i.e., lawsuit) against another party.  If you do not bring your lawsuit within that period of time, the court will kick it to the curb. The reasoning behind the statute of limitation (often, ironically, abbreviated as “SOL” in legal circles) is that people need to have some certainty in how long they can be sued for an event that happened in the past.” (1)  Additionally, the Statute of Limitation typically has a caveat in many states which includes “if there is a “latent defect” the time runs from the date the defect is discovered or should have been discovered.” (2)  A latent defect is defined as one that is not apparent with normal use, but instead is generally considered to be a hidden or concealed defect.  It may not be readily discoverable until a failure occurs.

Statute of Repose.

Unlike the Statute of Limitation, this statute starts its course whether you are aware of it or not!  It is the unseen.  It begins at the time a defect would have begun to occur which is the time the contractor had substantially completed his work.  It protects the builder in that it is designed to limit potential liability for a set period of time.  Each state has its own set requirements for the process and number of years a builder is held accountable to the Statute of Repose.  You should be able to contact your local HBA or Home Warranty Representative to educate yourself about this state mandated timeline.


How do you protect your company from these catastrophic possibilities? By offering an insurance-backed structural Builder Warranty, you protect your company and your consumers.  A structural warranty provides reduced liability coverage and meets the standards of the state required Statute of Repose for the builder.  Knowing the legal landscape and your responsibility to it is too important to ignore. Simply crossing your fingers and hoping that nothing goes wrong is not the way to sleep at night or to ensure your future success. These are several reasons to put your Warranty Specialist to work for you!  Need more information?  Find a PWSC Sales Director in your state!