Common interest communities in New Jersey likely have more time to assert construction and design defect claims under the New Jersey Legislature’s 2022 amendment to N.J.S.A. 2A:14-1. Condominium associations, cooperative corporations, and other real estate development associations now have six years from transfer of control of the association from the developer to the unit owners - rather than from substantial completion of the project - to bring a claim for construction and design defects.

This opinion, by Justice Albin for a unanimous Court, involved a lengthy construction defect litigation. The issue was when the plaintiff condominium association’s claims “accrued” for purposes of the six-year property damage statute of limitations, N.J.S.A. 2A:14-1. That statute states that a case must be commenced within six years “after the cause of any such action shall have accrued.”Each of the two courts below took a different approach to that question.

It made no difference to the Appellate Division that the prior owners had known of defects in the project. Instead, the Supreme Court held that a current owner stands in the shoes of a prior owner for statute of limitations purposes, and has no right to revive what may have been a lapsed claim simply because of a change in ownership: “The statute of limitations clock is not reset every time property changes hands… A cause of action, for purposes of N.J.S.A. 2A:14-1, accrues when someone in the chain of ownership first knows or reasonably should know of an actionable claim against an identifiable party.” Rejecting plaintiff’s argument and that of its amicus curiae supporters, the Supreme Court explicitly held that a condominium association is not exempt from that rule: “Old Palisade took title subject to the rights of A/V Acquisitions, and the plaintiff Condominium Association took title subject to any limitation on the rights of the two predecessor owners.”

In New Jersey, construction defect claims are subject to a six-year statute of limitations, N.J.S.A. 2A:14-1, which is subject to the discovery rule, and a separate ten-year statute of absolute repose, N.J.S.A. 2A:14-1.1, after which potential causes of action no longer exist.

Like most jurisdictions, New Jersey allows parties to an insurance contract to shorten the six-year statute of limitations for contract actions. See N.J.S.A. 2A:14-1 (“Every action at law . . . for recovery upon a contractual claim or liability . . . shall be commenced within 6 years next after the cause of any such action shall have accrued.”).

The Association sued Benfatto in December 2009 and Forsa in April 2011. After discovery, AJD, Forsa, Benfatto, and Luxury moved for summary judgment based on New Jersey’s six-year statute of limitations, N.J.S.A. 2A:14-1. The trial court granted the motion, explaining that in construction cases, the cause of action accrues at the time of substantial completion of a party’s work, in this case May 1, 2002.

Several months ago we wrote about a then-pending challenge before the New Jersey Supreme Court over the question of whether the New Jersey Spill Compensation and Control Act (the “Spill Act”), N.J.S.A. 58:10-23.11 et seq. was subject to New Jersey’s six year statute of limitations for property damage under N.J.S.A. 2A:14-1. In August 2013 the New Jersey Superior Court said yes.

Defendants seeking to avoid contribution must be able to prove one of the enumerated act or omission of war, sabotage, or God defenses, or prove that they were not responsible for the hazardous substance or discharge in the first instance, in order to avoid liability.Notes:[1] (A-38-13 (073248) (N.J. Jan. 26, 2015).[2] N.J.S.A. 2A:14-1.[3] N.J.S.A. 58:10-23.11f(a)(2)(a).

Over the next three years, Morristown Associates filed three amended complaints, adding the owners and prior owners of the dry cleaning business and several other oil companies as additional defendants. The defendants moved for summary judgment on the ground that the plaintiff’s contribution claims, based on the Spill Act, were time-barred by the general six-year statute of limitations for property damage claims (N.J.S.A. 2A:14-1), arguing that the plaintiff should have been aware of the leaking UST by at least 1999, when another UST in the strip mall was investigated and found to be leaking. The trial court agreed, finding that the six-year statute of limitations applied to Spill Act claims for contribution and, as such, claims against the defendants for damage that occurred more than six years before a defendant was brought into the case were time-barred.

This case came before the Superior Court of New Jersey, which disagreed with the plaintiff’s claims. They maintained N.J.S.A. 2A:14-1, which establishes a six year limitation period for “…any tortuous injury to real or personal property…”. The court also said that the plaintiff should have discovered the contamination in 1999 when the leaky UST had to be removed, and the lack of knowledge implies a lack of diligence of care for personal property and carry out the responsibilities associated with land ownership.