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REAL ESTATE 59: Concluding that the one-year period contained in the parties’ home purchase agreement was not a statute of limitations, but rather akin to a statute of repose, and that it was plain and unambiguous, the court held that it barred plai

BACKGROUND

On March 12, 2016, the parties entered into an agreement for the purchase of defendants’ home. The purchase agreement contained the following clause: TIME FOR LEGAL ACTION: Buyer and Seller agree that any legal action against either party or against Broker(s) or their agents related to the condition of the Property or arising out of the provisions of this Agreement or any service rendered or not rendered must be brought within the shorter of (a) the time provided by law or (b) one (1) year after the Closing, or be forever barred.

Before closing, the property was appraised. The appraisal revealed multiple problems with the house, including water damage to the ceilings and a “failing” roof. Nevertheless, the parties closed on the sale of the property on June 21, 2016. On August 2, 2018, plaintiffs filed a six-count complaint against defendants. Defendants moved for summary disposition under MCR 2.116(C)(7), arguing that the contractual one-year period of limitations in the purchase agreement barred the lawsuit. The trial court agreed, granting defendants’ motion for summary disposition. The trial court subsequently denied plaintiffs’ motion for reconsideration. Plaintiffs now appeal.

STANDARD OF REVIEW

We review de novo a trial court’s decision on a motion for summary disposition. Questions involving the proper interpretation of a contract or the legal effect of a contractual clause are also reviewed de novo. We likewise review de novo issues of statutory construction. Under MCR 2.116(C)(7), summary disposition is appropriate when a claim is barred because of a “statute of limitations[.]  Contractual language is interpreted according to its plain and ordinary meaning, and we must avoid technical or constrained constructions. A contract is ambiguous when the words can reasonably be understood in different ways. We initially conclude that the one-year period referenced in the purchase agreement is akin to a statute of repose and not a statute of limitations. “A statute of repose prevents a cause of action from ever accruing when the injury is sustained after the designated statutory period has elapsed[,]” while “[a] statute of limitation . . . prescribes the time limits in which a party may bring an action that has already accrued.” The period of repose in the purchase agreement is plain and unambiguous. Again, the parties closed on the property on June 21, 2016; therefore, under the terms of the purchase agreement, plaintiffs were required to bring any suit by June 21, 2017.  In sum, we hold that the one-year period of repose barred the lawsuit. 

MOTION FOR RECONSIDERATION

Plaintiffs also argue that the trial court erred by denying their motion for reconsideration. “This Court reviews for an abuse of discretion a trial court’s ruling on a motion for reconsideration.” A trial court abuses its discretion when its decision falls outside the range of reasonable and principled outcomes. We conclude the trial court did not abuse its discretion by denying the motion for reconsideration. As discussed above, a statute or period of repose cannot be tolled pursuant to MCL 600.5855. In sum, we conclude that the trial court did not abuse its discretion in rejecting the motion for reconsideration.

ASSISTANCE WITH PROPERTY ISSUES

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If you are facing a residential or commercial real estate issue, seek the advice of an experienced and skilled real estate litigation attorney at Aldrich Legal Services.

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