When is a Construction Contract Completed?
“Am I done with this job?” is a question often asked by contractors and design professionals upon completing their work. Well, until just recently, this was not an easy question to answer.
First, there are those periods of continued responsibility spelled out in the warranties that may be requested or provided. These are generally for one year, but some could be as long as three years.
Then there are certain statutes, commonly referred to as statutes of limitations, which define the period of time someone has to file suit. When it relates to some flaw in the design or construction of an improvement to real property that period is 4 years. Easy enough you think, but when do those 4 years begin to run. The statute reads date of actual possession by the owner, the date of issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion or termination of the contract, whichever is latest.
And then there is the statute of repose. This comes into play when the defect or problem being complained about is not immediately discoverable – something called a latent defect. This extends the period of time for a lawsuit to be filed to 10 years after the date of actual possession, the date of issuance of a certificate of occupancy, the date of abandonment of construction if construction is not completed, or the date of completion or termination of the contract, whichever is latest.
The part that gave folks some heartburn was figuring out the actual date the contract was completed. A recent case had found that this could be the date the owner made final payment to the contractor, and as we all know, that could be both an uncertain and lengthy timeframe.
So just a few weeks ago, Florida’s Governor Scott signed a Bill which made clear that this date – the date that the contract is completed – is the later of the date of final performance of all contracted services or the date final payment becomes due (not when payment is made).
Certainty is always a good thing, especially so when it comes to any continued responsibility or liability for work done.