On January 15, 2020, in Village Lofts at St. Anthony Falls Ass'n v. Housing Partners III-Lofts LLC, the Minnesota Supreme Court ruled that for purposes of Minnesota's 10-year statute of repose for statutory breach of warranty claims, the warranty date for a condominium building is the date when the first buyer occupies or takes legal or equitable title to any unit in the building. The Court also clarified the test for determining when buildings in a multi-building development are considered independent improvements under Minnesota's 10-year statute of repose on common law construction defect claims, which runs from the date of "substantial completion of the construction" of an "improvement to real property." ( (Minn. Jan. 15, 2020).)

Village Lofts at St. Anthony Falls (Village Lofts) is a condominium development consisting of two buildings referred to as Building A and Building B. In 2001, the developer, Housing Partners III-Lofts LLC (Housing Partners) entered into an agreement with Kraus-Anderson Construction Company (Kraus-Anderson) as the general contractor to build Building A. Kraus-Anderson hired Doody Mechanical, Inc. (Doody) to design and build the plumbing and HVAC systems for Building A. In 2003, Housing Partners entered into a second agreement with Kraus-Anderson to build Building B. Kraus-Anderson entered into a second contract with Doody to perform the same services for Building B. Doody hired two different subcontractors to provide the same mechanical-engineering services for Buildings A and B.

In January 2014, a resident of Building A notified the property manager that her floor was discolored, which led the Village Lofts at St. Anthony Falls Association (Association) to hire an engineering firm to investigate the cause. In March 2014, the engineering firm issued a report identifying a problem with the fan coil stack and later discovered the same type of problem in other units in Building A. The engineering firm assumed Building B would have the same defect, which was discovered in April 2015. The Association repaired pipes connected to the fan coil stacks in every unit in both buildings.

In May 2015, the Association provided written notice of the problem to Kraus-Anderson, and in August 2015 brought common law and statutory construction defect claims against Defendants on behalf of the condominium unit owners. Kraus-Anderson, later joined by certain other defendants (but not Housing Partners), moved for summary judgment, arguing that the Association's claims were barred by the applicable statutes of repose. Specifically, Kraus-Anderson argued that:

The district court granted summary judgment to all defendants on all of the Association's claims, finding that the claims were barred by the statutes of repose in Minn. Stat. § 541.051 subds. 1(a) and 4.

The Association appealed, and the Minnesota Court of Appeals affirmed in part and reversed in part the district court's ruling, finding that:

(Village Lofts at St. Anthony Falls Ass'n v. Housing Partners III-Lofts LLC, 924 N.W.2d 619 (Minn. Ct. App. 2019).) For more details of the Court of Appeals' ruling and reasoning, see Legal Update, Minnesota Court of Appeals Clarifies Construction Defect Statutes of Repose for Multi-Building, Multi-Unit Developments.

Housing Partners and Kraus-Anderson petitioned the Minnesota Supreme Court for review of the Court of Appeals' ruling on the Association's breach of warranty claims, arguing that each building has only one warranty date. The Association sought review of the Court of Appeals' dismissal of its common law claims, arguing that for purposes of the statute of repose the two buildings are a single improvement. The Minnesota Supreme Court granted the petitions for review and cross-review.

The Minnesota Supreme Court reversed the Court of Appeals' ruling on the Association's statutory breach of warranty claims and affirmed the Court of Appeals' ruling on the Association's common law claims.

First, the Supreme Court reversed the Court of Appeals' ruling that, for purposes of a statutory breach of warranty claim, each unit in a condominium building is entitled to its own warranty date. The Supreme Court agreed that the statutory warranty's definition of "warranty date" is ambiguous with respect to condominiums. After extensive discussion of textual clues, the statute's stated purpose and legislative history, and the legislature's implied intent in enacting statutes of limitation and repose, the Supreme Court held that for these statutory warranties, the warranty date for a condominium building is the date on which the first buyer occupies or takes legal or equitable title to any unit in the building.

Second, the Supreme Court affirmed the Court of Appeals' ruling that the 10-year statute of repose on common law construction defect claims barred the Association's common law construction defect claims because:

Specifically, the Supreme Court held that a building or project is a separate improvement that triggers the repose period under Minn. Stat. § 541.051 when:

The Supreme Court then agreed with the Court of Appeals' finding that, based on the facts in this case, the two buildings were independent improvements for purposes of the statute of repose.

In this closely-watched case, the Minnesota Supreme Court has laid to rest the concerns of developers, contractors, and their insurers regarding the potential for uncertain exposure to ongoing liability extending for years after completing construction projects.