This article was published in the August 12, 2025 issue of The Legal Intelligencer.
By Jennifer M. Horn and Ryan M. Lockman
The current Pennsylvania Statute of Repose, 42 Pa. Cons. Stat. Section 5536, bars construction-related defect claims filed more than 12 years after the substantial completion of construction of or improvement to real property. Statutes of repose emerged in the 1960s in response to construction professionals’ concerns over liability for latent defects.
Unlike other states, Pennsylvania’s statute conditions repose on a defendant’s lawful performance of the construction at issue. The inclusion of the word “lawfully” reflects the legislature’s intent to withhold repose protection from defendants who failed to comply with applicable building codes, regulations or ordinances. In this regard, the statute of repose does not grant blanket immunity, but rather holds contractors accountable and protects only those whose work satisfies established legal construction standards. Furthermore, this framework incentivizes property owners and insurers to proactively inspect buildings, identify defects before closing and properly fix issues when they arise.
Unlike a statute of limitations, which initiates when a harm is discovered, a statute of repose begins at a determined point in time; in the construction context, this is the issuance of a certificate of occupancy. This certificate is presumed to mark the completion of construction. However, it is not a guarantee that no defects exist. Final inspections occur after construction is visually complete and do not typically assess the integrity of internal systems or components concealed beneath the building’s finished surface, or latent defects. Inspectors rely heavily on observable conditions and cannot ascertain compliance, one way or another, concerning what lies beneath. To this point, building codes and subsequent case law state that a certificate of occupancy does not guarantee a home is built to code.
Aloia v. Diament Case Currently Pending in Pa. Supreme Court
That brings us to Aloia v. Diament Building, which is currently pending in the Pennsylvania Supreme Court. Homeowners sued Diament Building Corp. for alleged negligent construction of their stucco-clad home, including failure to comply with the 2003 International Residential Code (IRC). The Supreme Court is deciding whether failing to comply with the 2003 IRC—adopted into law by the applicable municipality as the “minimum standards” required under law—renders the construction unlawful for purposes of the statute of repose. In other words, the argument is that the statute only protects “lawfully” performed construction, which does not occur when the construction violates the building code.
The statute of repose is meant to offer finality, but only to those who comply with the law. When contractors fail to construct a building lawfully, they undermine the very assumptions on which the statute of repose is based—that the building is complete, actually code-compliant and safe for occupancy. Importantly, the building code is a floor, not a ceiling, of construction standards—it is quite literally the least a builder can and must do for construction to be treated as legal.
Pennsylvania’s inclusion of the qualifier “lawfully” in the statute reflects a deliberate policy decision to withhold protection from those who violate building standards. In cases like Aloia, where unlawful construction concealed latent defects and caused substantial harm, courts should be empowered to determine that the repose period never validly commenced. A rigid application of repose in such instances would not promote fairness or legal certainty—it would instead reward noncompliance and erode the integrity of Pennsylvania’s construction industry.
Intersection of Latent Defects and Time-Barred Claims
Given the very nature of construction, this issue arises more than one would think. Latent defects—such as foundation settlement, inadequate grading, improper waterproofing and cladding, or structural miscalculations—may not surface until several years after construction is complete. The timing of a defect’s discovery can depend on numerous factors, including its location, nature, environmental exposure and building use. Such deficiencies, which are often undetectable during final inspections, are frequently more expensive to repair than if they had been avoided entirely during initial construction. Consequently, they impose substantial, sometimes catastrophic, financial burdens on property owners who often have little recourse.
Statutes of repose, like Pennsylvania’s 12-year bar, limit an owner’s timeframe to bring a claim, regardless of when the defect is discovered. This produces a harsh result in cases involving latent defects, which, by their nature, may not present until well after the repose period has passed. Contractors can then insulate themselves from liability with certificates of occupancy or sign-offs, even where those approvals were based on incomplete or inadequate inspections.
Impact on Contractors, Insurers and Design Professionals
Interpreting the statute of repose to limit protections for contractors who violate building codes would not only protect homeowners from harm caused by latent defects but also strengthen the construction industry as a whole. By removing legal shields from noncompliant contractors, the market would naturally exclude those who cut corners or reduce costs by ignoring code requirements. This would directly benefit reputable contractors who already adhere to professional and legal standards, leveling the playing field and preventing unfair competition from substandard contractors.
Likewise, insurers would also benefit from a market that rewards code-compliant construction while discouraging unqualified or negligent actors. While there may be an initial uptick in claims that would have previously been barred, in the long term it would incentivize higher standards in the construction sector and promote prolonged stability.
Design professionals would also markedly benefit from this interpretation. A stronger emphasis on code compliance over speed or cost mitigation could rebalance industry incentives, encouraging more deliberate and code-conscious design practices. This could reduce liability exposure for architects and engineers while improving long-term building performance and safety.
Therefore, interpreting the statute of repose in this manner would elevate expectations across the construction industry, gradually encouraging the growth of a professional class of experienced and code-compliant contractors and designers. In doing so, these reforms would promote long-term stability and public confidence in the construction profession. They would also rebalance the free market of residential construction by weeding out those contractors who fail even to surpass the “minimum standards” of the building code.
Conclusion
This case exemplifies a deeper understanding of what safe and enduring construction entails. Buildings are assembled through the deliberate sequencing of materials, each relying on the others to form a whole. This complexity demands the commitment of experienced professionals who can ensure structures are not only legally compliant but also functionally sound, durable and safe. By guaranteeing that only those who meet these standards receive the protection of repose, Pennsylvania can promote quality, fairness and trust in its built environment, offering long-term satisfaction and safety to its residents. We deserve nothing less.
—This article was prepared with the contributions of Brendan Lavelle, a 2025 summer associate at Horn Williamson, LLC.