Construction contracts statute of limitation bill advances

January 29, 2019

Procurement legislation introduced by Senator Tommy Norment seeking to change the statute of limitations on actions on construction contracts has advanced out of the Senate Courts of Justice Committee with a substitute.

As originally introduced, SB 1369 (Norment) provided that no action may be brought by a public body on any construction contract unless such action is brought within five years after substantial completion of the work on the project and that no action may be brought by a public body on a warranty or guarantee in such construction contract more than one year from the breach of that warranty, but in no event more than one year after the expiration of such warranty or guarantee. The bill also sought to limit the time frame during which a public body may bring an action against a surety on a performance bond to within one year after substantial completion of the work on the project.

Under current law, a public body is enabled to bring such an action within one year after (1) completion of the contract, including the expiration of all warranties and guarantees, or (2) discovery of the defect or breach of warranty that gave rise to the action.  Thus, SB 1369 represented a sweeping departure from the status quo.

When introduced, the bill saw substantial opposition and concerns from the Northam Administration, numerous state agencies including the Department of Transportation and the Department of General Services, the higher education community, and local government representatives from VACo and VML.  Ultimately, Senator Norment agreed to amend the bill and offered a substitute. As amended, the bill now prohibits action on any construction contract unless such action (1) is brought within five years of completion of the work; (2) in the case of latent defects, is brought within five years of discovery of a latent defect but not more than 10 years from completion of the work; or (3) in the case of a warranty in such a construction contract, is brought no more than one year after the expiration of such warranty.

SB 1369 reported from the Courts of Justice Committee, 13-0-1, and was rereferred to the Senate Finance Committee.  A House counterpart to the bill, HB 1667 (Kilgore), was introduced earlier in the session and will be reheard on Wednesday, January 30.

VACo will continue to analyze SB 1369 and HB 1667 as they move through the General Assembly.

VACo Contacts: Chris McDonald, Esq. and Phyllis Errico, Esq., CAE

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