Contract’s Definition of “Substantial Completion” Does Not Apply to Third Party for Purposes of SOL, Holds Court of Appeal

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The 4th District Court of Appeal examined whether the term “substantial completion” can be defined by the parties’ contract and applied to third-parties.

June 15, 2020
Garret Murai - California Construction Law Blog

Those of you in the construction industry know that the two primary statutes of limitation are the 4-year year statute of limitations for patent defects and 10-year statute of limitations for latent defects. Both statutes begin to run on “substantial completion.”

In Hensel Phelps Construction Co. v. Superior Court of San Diego, Case No. D076264 (January 22, 2020), the 4th District Court of Appeal examined whether the term “substantial completion,” as used in Civil Code section 941, which applies to residential construction, can be defined by the parties’ contract and applied to third-parties.

The Hensel Phelps Case

Hensel Phelps Construction Co. entered into a prime construction contract with the owner and developer of a mixed-use project in San Diego. Hensel Phelps was the general contractor on the project. The project included a residential condominium tower which would eventually be managed and maintained by Smart Corner Owners Association. Smart Corners was not a party to the contract.

Mr. Murai may be contacted at gmurai@nomosllp.com



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