The term “statute of limitations” is common in the legal world. You may have heard that term in relation to criminal law (there is no statute of limitations for murder, for example, in most states), but what does statute of limitations mean and how does it apply in civil law? This guide to statute of limitations will explore everything you need to know about the legal term.
Since civil law varies between states so commonly, we will also explore the differences between the following:
- Statute of limitations – California
- Statute of limitations – Texas
We will explore statute of limitations examples, like the statute of limitations real estate owners and buyers need to know about. We will even explore the statute of limitations on breach of contract in California and Texas.
Guide to Statute of Limitations
What does statute of limitations mean?
A statute of limitations is the maximum time allowed for a person to wait before they file a legal proceeding. It is a law that restricts how long a person has to take legal action. These laws vary from state to state and are even situationally dependent. Some of these statutes are straightforward and simple to understand others incredibly complex.
If something bad happens, you must decide within that statute of limitations period to file a lawsuit, or you waive your right to do so. In essence, when the statute of limitations period is up, your time has run out.
You will find these statutes in both criminal and civil law. The details vary by jurisdiction and by the nature of the case too. Some criminal cases aren’t restricted by a statute of limitations. Meanwhile civil suits are bound extensively by statutes of limitation.
What is the purpose of statute of limitations in civil lawsuits?
Statutes of limitation exist to help society, as a whole, be more efficient and to allow people to move on from disputes/incidents. If you have a minor dispute with a friend/neighbor/business partner, you should not have to wonder for the rest of your life whether that person will wake up one day and decide to sue you over the dispute.
Perhaps more importantly though, evidence – the key to helping the judge or jury determine the case – is lost over time. Memories fade, documents are lost, and witnesses move away. The odds of a trier of fact hearing the case and making a fair and equitable determination diminishes over time. So, we tell people that when a bad thing happens, they have a certain amount of time to file a legal claim about it, or they must let it go.
Statute of Limitations California vs. Statute of Limitations Texas
Statute of Limitations California
Most statutes of limitation in California can be found in California Code of Civil Procedure Sections 312-365. Some common ones are:
- Breach of an Oral Contract – 2 years
- Breach of a Written Contract – 4 years
- Personal Injury – 2 years
- Damage to Personal Property – 3 years
If you have been sued or believe you have grounds to sue someone, it’s essential to determine when your statute of limitations begin to run. In other words, when did your legal claim come into existence? For example, in a claim involving a breach of an oral contract, you generally have two years from the date the claim accrues to file a lawsuit (and the same applies if someone is suing you).
Statute of Limitations – Texas
Most statutes of limitation in Texas can be found in the Texas Civil Practice and Remedies Code. Some common statutes of limitation in Texas include:
- Breach of an Oral Contract – 4 years
- Breach of a Written Contract – 4 years
- Personal Injury – 2 years, with a “discovery rule” exception
- Damage to Personal Property – 2 years
So, as you can see, the statute of limitations Texas businesses and individuals must keep in mind differs slightly from the statute of limitations California businesses and individuals must consider.
Statute of Limitations Examples
Simple Statute of Limitations Examples
Some claims are quite easy to determine. For example, in an auto accident, the claim accrues on the date the accident occurrs. This date is undisputed, and all parties involved are typically aware that the accident happened.
Other claims, however, are trickier to date, which is where the discovery rule comes into play. The statute of limitations accrues when a party discovers the wrongdoing or when a reasonable person in their position should have discovered it. The statute of limitations is tolled (in other words, paused) until the basis for the legal claim is discovered – that discovery date is when the claim accrues.
For example, let’s say Sally, a California resident, loans Bob $10,000 on January 1, 2020, and Bob orally agrees to pay Sally back in $1,000 monthly installments starting January 1, 2021. When that date passes and Bob fails to make a payment,one could argue that the breach of oral contract accrued January 1, 2021.
More Complicated Statute of Limitation Examples
But what if the situation is more complex? What if Bob, on January 2, 2021, sends Sally an email saying, “I’m so sorry I missed that first payment. I had a big bill come through, but I promise that I’ll pay $2,000 for the February 1 payment and will be on time with payments after that.” Sally says that is fine and waits. February 1, 2021, comes and goes, and Bob again misses the payment.
Sally will argue that her claim against Bob for breach of oral agreement did not accrue until February 1, 2021. Though Bob had missed a payment previously, he acknowledged it and promised to make up the payment. A reasonable person would give him that chance, so she did not reasonably discover that Bob was going to breach the oral agreement until he missed the February payment.
If you’re Sally, it is better to file your lawsuit against Bob well before the statute of limitations runs. Sally does not want to argue with Bob in front of the judge about whether the breach claim accrued on January 1, 2021, or February 1, 2021. If Sally simply files her lawsuit well before the earliest possible date the statute of limitations could run, she will avoid the risk of a judge saying she waived her claim.
Creating a New Contract to Toll a Statute of Limitations
There is another way to toll a statute of limitations, and that is by written agreement. Let’s say Sally called her attorney on December 1, 2022. Based on our above analysis, we know that the statute of limitations is going to run on her claim soon – either January 1, 2023 or February 1, 2023, depending on whether the judge agrees Bob’s late payment promise tolled the statute of limitations.
So, Sally’s attorney quickly sends Bob a demand letter saying he owes the money and will be sued if he does not pay it. Let’s assume Bob responds that he is willing to work out a payment plan, but it will take some time – he’s out of the country or sick, or he needs to pull bank records to work out how much interest he owes, etc.
If Sally trusts that Bob will resolve the dispute and lets months go by, she will have waived her statute of limitations and be barred from filing her lawsuit against Bob. However, initiating a lawsuit is expensive, so if Sally believes she and Bob will work out the dispute pre-litigation (meaning, without filing a lawsuit) that will be better for everyone. In that case, she and Bob can agree to toll the statute of limitations.
The attorney can draft up a simple agreement that both parties sign stating that the statute of limitations on this dispute is about to run, but the parties are trying in good faith to resolve it, so they agree that the statute of limitations is tolled until a certain date (say, July 1, 2023). If Sally files a lawsuit before that date, it will be deemed timely.
Statute of Limitations Real Estate
In California, the statute of limitations for real estate parties to file suit is typically two years; however, there are exceptions. For example, if the dispute is complex or it has been somehow interrupted or delayed, it could be extended. Additionally, if the contract itself sets a shorter statute of limitations, that shorter period will apply.
In Texas, the statute of limitations for real estate contract claims is generally four years but that’s only a general guideline too; specific circumstances may alter the timeframe.
For example, if you discover years after the sale that your home had damage the previous owner knowingly hid, the statute of limitations begins when you discover the damage.
Don’t assume that you know the statute of limitations when it comes to a real estate-related contract. This area is extremely complicated. Always consult with a contract litigation attorney as soon as possible to determine when your time may be up to sue the other party.
Do You Need a Contract Litigation Attorney?
At LloydWinter, P.C., we can help you manage contract disputes. From construction to real estate disputes, our attorneys are dedicated to helping our clients when they need it the most.
We are a full-service law firm with offices in Texas and California. We have a solid foundation of compassionate values and professional ethics, but that doesn’t mean we won’t aggressively pursue justice for our clients. We represent landlords and tenants, business owners and employees. Our goal is to fight for justice.
We are who you need when you don’t want to settle. Our team has a proven track record of successful civil litigation experience. If you need a contract litigation attorney because you need to sue someone who didn’t fulfil their end of a contract or because you’re being wrongfully sued — contact us today. And don’t delay, the statute of limitations clock is ticking.
