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Residential Sellers and Purchasers Beware: One Year Limitation to File Suit Under a Residential Construction Contract Held Unenforceable

Posted on February 13, 2023 by Joseph Evans

This past fall, in a split 5-4 decision, the Washington Supreme Court ruled that a one-year limit to file suit under a residential construction contract was unconscionable and, as a result, void and unenforceable. Tadych v. Noble Ridge Construction, 519 P.3d 199 (2022). The Court articulated that a one-year limitation period “unduly benefits the contractor at the expense of the homeowner’s right to bring a legitimate claim,” since homeowners are afforded a six-year statute of limitations to bring such an action under RCW Ch. 4.16, et. seq. This seminal decision serves as a warning for both contractors and homebuyers alike.

In Tadych, the plaintiffs/homeowners entered into a written contract with the defendant/general contractor to build a custom home located in South Seattle. The general contractor prepared the 14-page contract. Shortly after moving in the plaintiffs discovered a litany of problems with their new home including unlevel flooring, water intrusion, and code violations, among other defects. After a year of back-and-forth negotiations in an attempt to avoid litigation, the plaintiffs filed suit. The King County Superior Court dismissed the homeowners’ complaint on summary judgment, which the Court of Appeals for Division I affirmed. Upon review the Supreme Court reversed, finding that the one-year limitation period was substantively unconscionable, meaning it was too “one-sided” and fundamentally unfair. The supreme court determined that it eliminated otherwise established statutory rights and that it benefitted only the contractor. Interestingly, in a strongly worded dissent, authored by Chief Justice González, four of the supreme court justices argued that there was nothing inherently unreasonable about a one-year limitation period.

The Tadych decision did not explicitly hold that all one-year limitation periods for construction defect actions are unconscionable and unenforceable. As a result, the decision creates uncertainty when it comes to enforcing a limitation period greater than one year but less than six. In light of Tadych, general contractors should be both careful and reasonable when drafting agreements for the purchase of residential properties and should always consult an attorney when facing uncertainty. Likewise, homebuyers should be wary when entering into residential construction contracts and consult an attorney when necessary.

Bottom line, each situation needs to be evaluated in light of the Tadych decision and there is potential applicability of the decision to remodeling contracts. If you are a contractor or homeowner that has an issue with a contract, or would like help reviewing/negotiating a construction contract, the attorneys in Lasher’s Business Litigation practice group are available to assist.