Minnesota Supreme Court Clarifies the Statute of Repose with Respect to Multi-unit Housing Project

In Village Lofts at St. Anthony Falls v. Housing Partners III; Lofts, LLC, et al, decided January 15, 2020, the Minnesota Supreme Court issued an opinion clarifying application of the Statute of Repose to a multi-unit project.  The statute of repose (Minnesota Statute § 541.051 (2018)) generally bars any claims that are asserted more than 10 years after completion of construction.  Application of the statute is simple for a single-family home.  However, if a construction project includes multiple units (such as a condominium or townhome project), does the statute of repose begin to run at the same time for the entire project or each individual unit?

Village Lofts is a condominium project in northeast Minneapolis.  The project includes two buildings (Building A and Building B).  Building A was substantially completed in November 2003 with the first individual unit occupied in late 2002.  Building B was completed in October 2004.  The sale of individual units in both Buildings continued into 2005 and later.

In January 2014, the tenants of Building A noticed water problems caused by a faulty HVAC system.  Similar problems were identified in Building B in June 2015.  Village Lofts’ HOA asserted claims in August 2015.

The district court dismissed the HOA’s common law claims as time barred under the 10-year statute of repose.  Village Lofts argued on appeal that every unit should have its own 10-year statute of repose that begins to run when that specific unit is sold.  Village Lofts also argued that the two buildings were part of the same project.  Therefore, Building A wasn’t completed until October 2004 and the defects were identified in Building A in January 2014 – less than 10 years later.

The Court examined the legislative history of the statute of repose and determined that applying different accrual dates for each unit was contrary to the intent of the statute. It further held that Building A and Building B were subject to separate statutes of repose.    In short, the Court concluded that Building A was completed in November 2003 and the first defect identified in January 2014 – more than 10 years later.  Similarly Building B was completed in October 2004 and the first defect identified in June 2015. As such, claims were barred with respect to each building.

The decision of the Minnesota Supreme Court provides clarity to contractors and their insurers. The statute of repose for townhomes and condominiums begins to run at the same time for the entire building regardless of when individual units are sold or occupied.

If you have any questions, please contact Jacob M. Tomczik at jmt@mccollumlaw.com.

 

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