Editorial: Erecting a faulty policy

Sunday, April 9, 2000 | 10:35 a.m.

The net effect is to eviscerate a homeowner's right to be fairly compensated for defects caused by a builder. And as the Sun's Diana Sahagun reported last Sunday, 40 North Las Vegas homeowners are suing to get their no-lawsuit contracts ruled illegal, arguing that state law ensures recourse through the courts if they are unable to resolve their disputes through mediation.

It is believed that as many as half the builders in the area require buyers to sign the no-lawsuit clause. These builders contend the clause is necessary because of increasing litigation costs. But this begs the question of whether the contracts are fair to the buyer. After all, every industry could claim that lawsuits drive up costs and they should be exempted as well.

To get an idea of how harmful a ban on lawsuits is to the consumer, just turn to the only business which, by federal law, is shielded from most lawsuits -- the health insurance industry. This exemption has turned upside down the practice of medicine, as HMOs create financial incentives for doctors to deny care so that they can make even more money. If you don't have to worry about being sued, there isn't much incentive to provide needed care or, in the case of builders, to sell homes free of defects.

To prevent homeowners from having their day in court doesn't make sense, especially in Las Vegas. Don't forget that our booming economy has produced an explosion in the need for new housing, which has created an environment where homes are built too fast and mistakes happen frequently -- sometimes with catastrophic results.

It is hard to believe a no-lawsuit contract would stand up in court anyway since the Legislature already has established a public policy that homeowners can sue their builders for defects as long as arbitration is pursued first. If, however, the courts haven't settled this issue before the year is out, the 2001 Legislature should pass legislation that affirms homeowners can go to court. Buying a home usually is the biggest financial decision a family will make. If the home they buy is defective, there is no reason why they shouldn't be compensated for someone else's mistake.