For example, assume the decedent prematurely broke a fixed-term lease because he wanted to follow the summer tour of the Grateful Dead (assume they are still touring). The landlord vowed to sue the decedent once he returned from his vacation. When the landlord returned from vacation he discovered that his former tenant had passed away in a tragic hot air balloon accident (the Grateful Dead were not playing that day). Normally the landlord would have 4 years to commence suit against his former tenant. CCP § 337.2. However, since his tenant passed away, the time limit changed.
CCP § 366.2(a) reads "If a person against whom an action may be brought on a liability of the person, whether arising in contract, tort, or otherwise, and whether accrued or not accrued, dies before the expiration of the applicable limitations period, and the cause of action survives, an action may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply."
So the landlord now has 1 year to file suit rather than 4 years. If the landlord does not timely file suit, his claim is time-barred and is subject to dismissal with prejudice. That is, the landlord could not re-file his suit at a later time.
This 1 year time limit is known as the statute of limitations.
Many people ask if they can sue for some hypothetical reason. The answer almost always depends on what type of action they seek to file suit. One cause of action, personal injury or wrongful death, has a 2 year statute of limitation. CCP § 335.1. Another cause of action, trespass or injury to real property, has a 3 year statute of limitation. CCP § 338. What makes CCP § 366.2 unique is that it overrides the statute of limitations of the other statute. As mentioned above, the landlord would have 1 year to sue instead of 4 years because the tenant passed away before he filed suit. In other words, CCP § 366.2 trumps CCP § 337.2.
For reference "CCP" stands for the California Code of Civil Procedure. It can be found here
http://leginfo.legislature.ca.gov/faces/codes.xhtml
