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Maryland Federal Court Approves Residential Sales Contract Provision Creating a One-Year Period of Limitations

In Daniels v. NVR, Inc., t/a Ryan Homes, the United States District Court for the District of Maryland upheld the validity of a contractual provision in a residential home purchase agreement that reduced the normal period of limitations for filing suit to one-year, despite the fact that the parties had entered into a tolling agreement.  In Maryland, the general period of limitations applicable to most civil claims is the three-year period established in Md. Cts. & Jud. Proc. Code Ann. Sec. 5-101.  This case involved construction defect claims concerning a newly constructed home.  The NVR purchase agreement contained a provision that made claims and disputes subject to a one-year period of limitations. The Court, which had jurisdiction on diversity found that this was not inherently unreasonable, and, therefore, was fully enforceable.

Interestingly, the parties had entered into a tolling agreement, which suspended the running of limitations during attempts to come to a resolution of the issues.   However, NVR successfully argued that the tolling agreement only suspended “statutes of limitations,” and did not toll a “contractual limitations period.”