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The Statute of Limitations Starts To Run At the First Sign of Trouble

The Iowa court of appeals decided a case, P&C Sierra v. John M. Carroll, 18-0826, which illustrates a common problem in the legal malpractice jurisprudence. Here, the plaintiff sold real estate to a third party, Richard Brown. According to the plaintiffs, their lawyer Mr. Carroll allegedly forgot to record the real estate contract and the mortgage. The owner of the property then borrowed money from a bank which did record a mortgage. This meant that the interests of the plaintiffs were junior to the interest of the bank. The transaction occurred in 2008.

Plaintiff argued that they were injured in 2012, when Brown stopped paying on their installment note. The court disagreed and found that the plaintiffs were aware, as early as 2009, that there was problem with their security interest in the property. Therefore, the lawsuit, filed in 2017, was untimely. Iowa has a five-year statute of limitations for legal malpractice claims.

This is a classic case where a plaintiff waited too long to file suit. Once the plaintiff realized that the lawyer may have made an error, the plaintiff discovered the injury and the statute of limitations began to run.

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