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Proposed Legislation Could Help Construction Industry

W^H? The Holmes Murphy Blog

  • Proposed Legislation Could Help Construction Industry

    Think about this for a minute. If you’re in the construction industry (a contractor/design professional) and you were asked what kind of construction projects you worked on and completed in 2002, would you remember? Maybe you have a great memory, so your answer is “Yes!” Let’s take it a step further. Can you remember the exact blueprint of each job, what materials you used, how many crew members were on the site, and what assignments each of those crew members had? It’s tricky, I know. After all, 15 years have passed. Now imagine being sued today as a result of one of those jobs…how frustrated would you be? Construction standards and practices weren’t the same then as they are now. So you not only have to defend your project from 15 years ago, but you also have to try and think about why you may have done the work the way you did.

    Right now, a lawsuit within the timeframe I just mentioned in Iowa is a possibility, as Iowa has the longest statute of repose (the amount of time after defect improvements are made to real or personal property that result in damage or injuries) of any state at 15 years. And keep this in mind, it may not be just contractors or design professionals in Iowa who are affected. The statute issue ripples fairly large because there are firms/companies that do business in Iowa or have a branch office in Iowa…even though they may not be based in Iowa. Now think about it, a decade and a half is a long time. But that could all be changing.

    The Iowa Senate recently passed a bill that would limit the ability to file a lawsuit over construction defects. The decision is NOT final. It’s now in the hands of the House, and we could have a final decision in the next couple of weeks. Here’s what we know. If the bill passes, it will reduce the statute of repose to:

    • 8 years for most improvements to commercial real estate
    • 10 years for improvements to residential real estate

    Defects in nuclear power plants, on the other hand, will still fall within the 15-year limit, as would cases connected to intentional misconduct or fraud. Additionally, if an unsafe or defective condition on a property is discovered within one year prior to the expiration of the applicable period of repose, the period of repose will extend an additional year.

    Part of the reason this has become such a hot-button topic in Iowa is that those opposed to the current law say the standard is too lengthy, given that owners change uses, conduct maintenance, or create uses not contemplated, causing problems for which the contractor/design professional has no control.

    Again, at this point, there is no final decision on this. However, we are watching this very closely and will let you know what unfolds. If you have any questions in the meantime, don’t hesitate to reach out!

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Proposed Legislation Could Help Construction Industry