S.C Code §15-3-640, provides, in pertinent part:
No actions to recover damages based upon or arising out of the defective or unsafe condition of an improvement to real property may be brought more than eight years after substantial completion of the improvement…. This statute, commonly referred to as South Carolina’s statute of repose, also provides that a certificate of occupancy is proof of substantial completion of a project, unless the parties otherwise agree, in writing.
The United States District Court recently analyzed the application of selected portions of the statute in Hampton Hall, LLC v. Chapman Coyle Chapman & Associates Architects AIA, Inc., 2017 WL 6622508 (December 27, 2017).
1. Date of substantial completion
In the absence of a written agreement that establishes a different date of substantial completion, the date of the certificate of occupancy establishes substantial completion. Emphasizing the portion of the statue that specifically limits actions from an unsafe condition of an improvement to property, the court rejected Plaintiff’s argument that the statute would not accrue until the condition of the property has been determined safe.
2. Lack of notice
15-3-640 provides a building permit for the construction of an improvement to property must include, in bold type, notice to the owner of his rights under this statute to contract for a guarantee that the improvement is free from defective or unsafe conditions beyond eight years after substantial completion. Here, such notice was not included in the building permit. The court refused to assign any responsibility to Defendant for that omission. Instead, the court found if such an omission resulted in harm, Plaintiff should pursue a claim against the issuing entity.
3. Warranty claims
Plaintiff argued the express and implied warranties were not foreclosed pursuant to the statute of repose. The statute applies to all actions resulting from the defective or unsafe condition of any improvement to property. Finding Plaintiff’s warranty claims necessarily arose from allegedly defective or unsafe improvements, the court found those claims were also not timely made. While the statute specifically allows parties to reach agreement as to warranties beyond the eight-year statute of repose, there was no evidence of such an agreement in the present case.
4. Gross negligence
S.C. Code §15-3-670(A) specifically excludes claims for fraud, gross negligence or recklessness from the protection of the statute of repose. Consequently, Plaintiff was allowed to proceed with its claim for gross negligence.
The court’s approach to the four areas of the statute of repose reviewed offers no surprises. The approach does serve as a reminder that the court will apply a practical, reasonable and fair interpretation of a statute.