What Is a Statute of Limitations?

By Kristi Waterworth – Updated Sep 8, 2025 at 12:30 PM EST

Key Points

Statutes limit how long you can sue for debts; varies by state and crime severity.
Missed deadlines mean you cannot pursue overdue payments legally anymore.
Investors must understand these limits, especially in sectors like biotech or debt collection.

When you own a business or have an interest in one, it's important to understand legal concepts like a statute of limitations. Knowing better how a statute of limitations works can help you better navigate your company's financials.

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Two people talking and reading paperwork at desk with legal books and gavel. — Image source: Getty Images.

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Inventory

Inventory includes items, goods, merchandise, and materials that a company either sells or uses to produce products that it sells.

However, it's important that statutes of limitations be a fair length because it can take time to discover problems like medical malpractice. In many states, these are limited to two years, but it may take a while to discover a new hip implant isn't just aching because you're getting used to it but that it was actually installed improperly and the hardware has worked loose.

Because of situations like this, one of the most important ongoing struggles with statutes of limitations is whether they will favor the consumer (generally allowing a longer statute of limitations, except in the case of debt collection) or the business.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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