In a matter of first impression, a California Court of Appeal upheld and enforced standard AIA contract language effectively shortening to four years the ten year time limit for bringing claims for latent construction defects. California now joins other states in allowing sophisticated parties to agree on when a claim accrues, limiting the “delayed discovery rule” and shortening the deadline for bringing construction claims.
Under California law, a claim for defective construction must be brought within four years after substantial completion of an improvement, if the construction deficiency is patent (apparent by reasonable inspection). However, if the deficiency is latent (not discoverable by reasonable inspection), the “delayed discovery rule” extends the accrual of a claim until the defects were, or could have been, discovered. This extended deadline is capped by statute at ten years after substantial completion. As a result, the time limit for bringing claims for construction deficiencies in California is typically ten years after substantial completion of an improvement.