ADDITIONAL TIME TO WORRY FOR SUBCONTRACTORS1) during the one-year period from and after the warranty date the dwelling shall be free from defects caused by faulty workmanship and defective materials due to noncompliance with building standards; 2) during the two-year period from and after the warranty date, the dwelling shall be free from defects caused by faulty installation of plumbing, electrical, heating, and cooling systems due to noncompliance with building standards; and 3) during the ten-year period from and after the warranty date, the dwelling shall be free from major construction defects due to noncompliance with building standards. It is important to understand the distinction/interplay between the statute of repose/repose period and the statute of limitations. The repose period essentially refers to the period of time covered by the warranties above. In order for a homeowner to have a statutory warranty claim, they must discover the problem within the repose/warranty period. Any claims under Minn. Stat. § 327A.02 brought against a contractor must be brought within two (2) years of the discovery of the breach of warranty. Therefore, as long as the warranty defect is discovered within the repose period, the homeowner then has two (2) years from the discovery date to bring their claim. For example, a homeowner could discover a defect the last day of the tenth (10th) year of the warranty period, and have another two (2) years to actually sue their builder. More often than not, a contractor that is sued based upon a statutory warranty claim would then seek to hold its subcontractor(s) responsible for the specific work complained of by bringing a claim against the subcontractor(s) under a theory of indemnity and/or contribution. The time period for a contractor to bring an indemnity and/or contribution claim against its subcontractor was and is still governed by Minn. Stat. § 541.051. This session, the Minnesota Legislature has changed Minn. Stat. § 541.051 in response to a 2006 Minnesota Supreme Court case, Weston v. McWilliams & Associates, Inc. In Weston, the homeowner sued the general contractor on a claim for damages under the 10-year statutory warranty for water intrusion problems and mold. The home built by the general contractor was substantially completed on July 20, 1993, when the certificate of occupancy was issued. The homeowner brought suit against the general in May of 2003, within the 10-year statutory repose period. The general answered the Complaint and brought claims against three of its subcontractors for indemnity and contribution in January of 2004, beyond the ten-year statutory repose period. Based upon the Court’s plain reading of the previous version of the statute, the Court dismissed the general contractor’s indemnification and contribution claims against its subcontractors based upon the fact that the claims were not brought within the 10-year statutory repose period. Therefore, the general contractor could not hold the subcontractors responsible for any of the damages claimed. To summarize the problem in the Weston holding, a homeowner could discover a problem covered by the ten (10) year warranty in the ninth (9th) or tenth (10th) year after the home was completed and sue the general contractor within two (2) years, however, if the homeowner did not bring their claim until the eleventh (11th) or twelfth (12th) year as allowed under the statute, the general would be unable to hold the subcontractor liable for damages with an indemnification or contribution claim. The What does this mean for subcontractors who work on new home construction or remodeling jobs? It means that a subcontractor may not be sued for its alleged defective work until fourteen (14) years after its completed. Consider the following scenario: Homeowner discovers major construction defect the last day of the warranty period (ten years) and then waits two (2) years to bring suit against the builder. Now, under the statutory revisions, the general contractor does not have to bring its claim(s) for indemnification or contribution against its subs for another two (2) years. The impact is more waiting and worrying for subcontractors. In short, the statutory revisions have increased the time for a contribution or indemnity claim against subcontractors from ten (10) years to up to fourteen (14) years. While the legislative changes do not in any way change the warranty coverage under Minnesota Statutes Chapter 327A, they do impact the timing in which certain claims can be brought by a contractor against its subcontractors. It is important as a subcontractor to be mindful of how long the liability cloud will loom over your work. If you have questions regarding your liability, you should always contact your attorney.
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