Statutes of limitation exist in every state and in Federal law as well. Statutes of limitation are laws that define the time limits for filing a civil action (as opposed to a criminal action). Once the statute of limitations has passed, or “run”, the right to file a lawsuit no longer exists and the claim cannot be brought. Therefore, it is critically important to be aware of the statutes of limitation that apply to any action, and in particular to actions that arise in real estate contracts, transactions and litigation. Any time there is a dispute over a real estate purchase or transaction, including seller non-disclosure of defects or material facts that affect the value or desirability of the property, or the discovery of defects anywhere in the building, or adjacent areas to the building, one needs to be attentive to the statutes of limitation and the time frames that could result in the claim being lost simply due to the passage of time.
The 4 Primary Statutes of Limitation For Real Estate Sales Transactions and Litigation in California
The four primary statutes of limitation to be aware of in the context of real estate transactions, disputes and litigation in California are the 4-year statute of limitations for breach of contract, Code of Civil Procedure § 337, the 3-year statute of limitations for fraud, the 2-year statute of limitations for actions against a broker, the statutes of limitations for breach of fiduciary duty of a broker or agent in California under Code of Civil Procedure §§ 338(d) and 343, and finally, a collection of various statutes of limitation that govern actions for construction defects.
4-year Statute of Limitations for Breach of Contract in California
The 4-year statute of limitations for breach of contract in California, Code of Civil Procedure § 337 is a primary and critically important statute of limitation for all real estate sales, contracts and transactions, which potentially applies to every real estate transaction in California since all such transactions are required to be in writing. The statute of limitations typically starts to run from the date of the breach or injury. However, in instances where the breach is not apparent or concealed through intentional non-disclosure, such as fraud, the Discovery Rule may apply and the statute of limitations would start to run upon the discovery of the facts relating to the wrongdoing and would begin running, no necessarily from the date of the injury or breach, but from the date upon which the wrongdoing or suspicion of wrongdoing was suspected or discovered.
3-year Statute of Limitations for Injury or Damage to Real Property in California
The 3-year statute of limitations for injury to real property in California, Code of Civil Procedure § 338(b) is another critically important statute of limitation which would apply to situations where there an injury or damage to real property occurs, as is the case where defects exist which cause damage to the structure or building in any way, such as damage to any of the components of the structure, including water intrusion, water damage, cracks, and separations, retaining wall failures and land subsidence, stucco and plaster failures and cracks, and damages to windows, doors, patios, decks, roofs, foundations and other elements, to name just a few, or diminish the value of the property. The statute of limitations for negligence in California is generally 2-years, Code of Civil Procedure § 339. However, when there is damage or injury to real property, one would proceed under the 3-year statute of limitations in § 338(b) or the 3-year limitations period for fraud under § 338(d).
3-year Statute of Limitations for Fraud in California
The 3-year statute of limitations for fraud in California, Code of Civil Procedure § 338(d) very often applies to real estate sales, purchases and real property transactions. Fraud encompasses deceit and deception of every kind, including misrepresentations, concealment, which typically occurs in the form of silence where the seller has a duty to disclose, and false promise. Fraud is often involved in the transactional representations and communications to such an extent that it is an unavoidable feature of many disputes and wrongdoing. Fraud is also frequently intertwined with fiduciary duties that brokers have to their client, such that a failure to disclose or inform or protect the interests of the client, often the purchaser, can amount to fraud and constructive fraud. The timing of the statutes of limitation on these causes of action would also be affected by the Discovery Rule, where the statute of limitations would accrue, or start to run, upon discovery of the facts, or reasonable suspicion of the facts giving rise to the claim, and in the context of a fiduciary or someone with superior knowledge, the circumstances and information known, given or withheld and manipulated by the wrongdoer or fiduciary are critical to the analysis. It’s also important to bear in mind that a breach of fiduciary duty amounting to fraud by a broker in a real estate transaction may start to run from the close of escrow, so a full analysis of the facts and circumstances, which may affect and alter the time when the statute of limitations starts to run, and/or is discovered, are critical. The statutes of limitation for breach of fiduciary duty are 3-years for fraud,
2-year Statute of Limitations for Actions Against a Real Estate Broker Agent in California
The statute of limitations for actions against a broker to the buyer in California is 2-years. These statutes are found in the California Civil Code § 2079 (a), defining the duty of a real estate broker and salesperson to a prospective buyer of residential real property, and § 2079.4, setting out the 2-year statute of limitations for breach of the duty under that Article at 2-years from the date of possession, meaning the date of recordation, the close of escrow or date of occupancy, which ever occurs first.
Statute of Limitations for Actions for Breach of Fiduciary Duty Against a Real Estate Broker Agent in California
In California, a broker and real estate agent is a fiduciary to the client, owing a duty of the highest good faith and undivided service and loyalty, and must inform the client of all information it possesses that are material to the client’s interests. And, a failure to inform may constitute constructive fraud even where actual the conduct is not fraudulent. Therefore, one must also look the statutes of limitation for fraud, 3-years under § 338(d) and 4-years for the non-fraudulent variety, under § 343.
Statute of Limitations for Actions in California
There is somewhat complicated and overlapping series of statutes of limitations for construction defects in California. While the outside limit is 10-years in the Right to Repair Act, beginning with Civil Code § 895-945, there are specific statutes of limitation within the Act that are considerably shorter, such as for fit and finish items, for example, like cabinets and other items, which can be one-year, depending on the circumstances and useful life of the product. Further, the statutes of limitation for fraud, injury to real property and breach of contract discussed above, are exempted from the Act, and those specific statutes of limitations, as outlined above, would still apply.
Consultation & Advice on Statute of Limitations in Real Estate Disputes: California
In sum, the statutes of limitation that apply to real estate disputes, transactions and contracts are complex and interrelated, and may apply in many ways depending on the specific facts and circumstances of your case, when you discovered the injury and the nature of your relationship to the other parties.
If you have a real estate issue, dispute or claim, or if you suspect you may have a claim, do not delay. Your rights may be affected. Get advice and consultation from an experienced real estate litigator, Timothy Norton, today.
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