Statutes of limitation establish the period in which a lawsuit may be filed. These statutes vary from state to state and can range from one year to several years from the date the cause of action accrues. Some states consider that date to be the point in time when the defendant actually did something wrong, for example, installing defective work. Others consider it to be the date when a party actually discovers that it has been injured, as might be the case when a wall falls down. The legal doctrine that bases the statute of limitations on the date of discovery is commonly referred to as the discovery rule. The discovery rule creates major challenges for the construction industry, since the date an injury is discovered may occur long after a project has been completed and the project team disbanded. Defendants face challenges in locating documents and witnesses to support their positions, making a lawsuit a risky proposition. While virtually all states have enacted statutes of repose, which place an absolute end date on the period during which a claim may be brought (such as 10 years from the date of project completion), the potential exposure remains for many years after a project has been completed in discovery rule states.
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