The Nebraska Court of Appeals threw a wrench into the calculation of your warranty earlier this year in Adams v. Manchester Park, LLC and Southfork Homes, Inc. In that case, the court found that the statute of limitations for a warranty claim started running after the homebuilder’s warranty expired. So, the four year breach of warranty statute of limitations did not begin until after the one year homebuilder warranty expired.
In this case, the homeowner purchased a home from Southfork in September, 2007. The purchase agreement provided for a one-year New Home Limited Warranty which covered material defects in workmanship and materials. The homeowner noticed cracks in the drywall and problems with windows within 6 months of the purchase. The builder told the homeowner to keep track of all the problems and they would be fixed at the yearend walk through.
The homebuilder brought in contractors at the yearend walk through and cosmetically fixed the problems. Afterwards, the homeowner continued to experience settling problems with the house, but the builder refused to fix the problems.
In September, 2011, slightly more than four years after closing on the house, the homeowner sued the builder, alleging breach of express and implied warranties. The builder moved to dismiss, arguing that the four year statute of limitations for bringing a breach of warranty claim had run because the lawsuit was not brought within four years of the house being completed. The trial court agreed and dismissed the case.
On appeal, the court of appeals found that the four year statute of limitations had not run. With very little analysis or explanation, the court of appeals concluded:
[after] the expiration of the 1–year limited warranty . . . the statute of limitations pursuant to § 25–223 commenced for an action based on an “alleged breach of warranty on improvements to real property or based on any alleged deficiency in the design, planning, supervision, or observation of construction, or construction of an improvement to real property” between [the builder] and the [homeowner].
So, the homeowner had, in essence, five years to file it claim—the one year homebuilder warranty plus the four year statute of limitations.
This is certainly an interesting development for Nebraska builders. The homebuilder in this case had asked the Nebraska Supreme Court to look at this issue, but as of the date of posting this blog, the court has not indicated whether it would take the case. While we wait for this matter to work it’s way through the courts, builders are well advised to consider that their express warranty may be adding years to the time by which property owners must sue for poor workmanship.