New York presently has no statute of repose applicable to claims of negligence in the construction industry. Instead, the only time limitation is found in the statutes of limitation for breaches of contract – six years from project completion – and for personal injury or property damage to third parties – three years from the date of such injury.
However, the New York Legislature is considering legislation which, if enacted, would create a statute of repose limiting the number of years after completion of a construction project in which a legal action could be asserted against a contractor. New York is in a very small minority of states that lacks any statute of repose altogether for claims against contractors and other parties making improvements to real property. Bills S04128 and A01706, pending in the Legislature, could change that. If enacted as written, they would create a ten-year period of repose in which an injured party would be able to bring suit against a design professional and/or a contractor for bodily injury or property damage resulting from a construction defect.
Presently, contractors and design professionals have exposure to bodily injury and property damage claims resulting from construction defects for an unlimited period of time after completion of a project. If enacted, the pending legislation would limit the repose period to ten years from completion, which would be deemed to occur upon “substantial completion” of the work, or upon acceptance of the work by the owner. An additional one-year grace period would be provided for an injured party to file suit where bodily injury or property damage occurs in the tenth year after completion. The pending bills notably limit the applicability of the ten-year statute of repose to third-party actions, and thus preserve the existing three-year and six-year statutes of limitation applicable to actions asserted by an owner or client for professional malpractice and for breach of contract, respectively.
The Legislature has cited the continued increases in the cost of insurance in New York as a primary motivation for the proposed legislation. These bills are also intended to bring further certainty to the scope of post-operational risk that design professionals and contractors are exposed to, and in turn, reduce the high cost of insurance for construction projects in New York. Although there is clear support in the New York Assembly and the State Senate for enactment of such legislation, the bills were only recently referred to committees for further review, and remain in the early stages of the legislative process.
For more information on this topic, or on construction litigation generally, please contact Timothy Parlin.