(1) An action for default under a lease contract, including breach of warranty or indemnity, must be commenced within four (4) years after the cause of action accrued. By the original lease contract the parties may reduce the period of limitation to not less than one (1) year.

(2) A cause of action for default accrues when the act or omission on which the default or breach of warranty is based is or should have been discovered by the aggrieved party, or when the default occurs, whichever is later. A cause of action for indemnity accrues when the act or omission on which the claim for indemnity is based is or should have been discovered by the indemnified party, whichever is later.

(3) When an action is commenced within the time limited by subsection (1), but the judgment or decree is rendered against the plaintiff upon any ground not concluding his right of action, or when the judgment or decree is rendered in favor of plaintiff, and is arrested or reversed on appeal, the plaintiff or his representatives or privies as the case may be, may, from time to time, commence a new action within one (1) year after judgment, reversal or arrest.

(4) This section does not alter the law on tolling of the statute of limitations nor does it apply to causes of action that have accrued before this chapter becomes effective.

(5) A counterclaim or third-party complaint is not barred by the statute of limitations provided by this section if it was not barred at the time the claims asserted in the complaint were interposed. If a nonsuit is taken as to the original civil action, any counterclaim, cross-claim or third-party complaint arising from such action shall not be terminated but may proceed as an original civil action. However, if a counterclaim, cross-claim or third-party complaint is filed as a civil action as permitted by this subsection and such action does not proceed to an adjudication on the merits of such claim, the defendant shall have the right to file a counterclaim, cross-claim or third-party complaint within the time allowed for filing of a responsive pleading only if the original action is reinstituted pursuant to § 28-1-105. Any counterclaim, cross-claim or third-party complaint arising from an action or suit originally commenced in general sessions court and subsequently recommenced as an original action or as a counterclaim, cross-claim or third-party complaint pursuant to this section in circuit or chancery court according to the provisions of § 28-1-105, shall not be subject to the monetary jurisdictional limit originally imposed in general sessions court.