Building defect bills introduced

David Strow and Erin Neff

Friday, Feb. 9, 2001 | 11:15 a.m.

Sponsors introduced the first of several expected bills related to construction defects Thursday as Nevada lawmakers try again to address the long-running issue.

At issue are construction defect claims for residential developments throughout the Las Vegas Valley -- and chronic delays in getting these defects fixed.

Developer and contractor groups blame the situation on lawsuit-happy attorneys more eager to sue than fix the problems, while construction defect attorneys blame it on construction companies and developers unwilling to fix recurring problems in homes throughout the area.

Both sides are now seeking amendments to state law. A bill backing the position of construction defect attorneys was introduced Thursday; construction companies promise to follow with their own bill within a week.

State Sen. Maggie Carlton, D-Las Vegas, sponsored the bill that revises provisions governing arbitration agreements and repairs related to construction defect matters.

"I had some complaints from some constituents who were having a hard time getting their homes fixed," Carlton said.

Senate Bill 89 states that contractors should not include a provision requiring binding or non-binding arbitration in contracts for the purchase or sale of property. The bill would not prohibit parties in a defect claim from participating in arbitration, but it does not require arbitration.

"I want people to be able to get their homes fixed without all of the red tape," Carlton said. "But I don't want to take away their right to go to arbitration."

The bill would also allow homeowners to recover costs from a contractor who refused to correct defects in a timely manner and was not "acting in good faith."

Also included in the legislation is a requirement that contractors who attempt to repair a claimed defect must post a performance bond of one-and-one-half times the market value of repairing the defect. The contractor must also pay for a third-party inspection of the repair.

Nancy Quon, a Las Vegas attorney who specializes in construction defect litigation, said she does not think Carlton's bill will pass in its entirety.

"There's going to be quite a few bills presented," Quon said. "And I'm sure we'll see that they're conflicting."

Quon was most concerned about the section of Carlton's bill requiring an independent inspector, who is bonded, to examine the repairs.

Scott Canepa, another Las Vegas construction defect attorney, says the legislation is in response to "saber-rattling" by construction and development companies over the state's construction defect laws.

In almost all cases involving a residential complex of condominiums or homes, Canepa said, construction companies typically do not offer to repair the problem or they offer a superficial repair that doesn't fix the source of the problem. He says consumers turn to him usually after exhausting all other options.

"They (builders) routinely turn it over to their insurance carriers and wash their hands of it," Canepa said. "From my standpoint, I haven't had a single (multi-family residential construction defect) case where the builder made an offer to repair."

But the contractors and developers don't see it that way. Attorneys representing these companies say their clients are routinely denied permission to fix defects by attorneys eager to file a lawsuit -- and eager to collect a big chunk of settlement fees when the case is resolved.

"It's quite clear they're not interested in having these houses fixed by the original builder ... they want to continue the procession of lawsuits filed," said Scott Rasmussen, attorney representing the Nevada Subcontractors Association. "Let's bypass this maze of horrendous lawsuits and let us fix houses."

To rectify this issue, the Nevada Subcontractors Association and the Southern Nevada Homebuilders Association are working with state Sen. Mike Schneider, D-Las Vegas, to introduce their own construction defect legislation. A bill could be introduced within a week, Rasmussen said.

The main thrust of this bill, Rasmussen said, will be a provision that requires a homeowner to allow the contractor on site to fix a claimed defect before a lawsuit can proceed.

"We do not want to deny in any way the homeowner's right to sue," Rasmussen said. "(But) these trial lawyers have put themselves as an impediment to getting the homes fixed. They have no interest in allowing anyone to fix the problem."

Canepa called this argument "subterfuge," saying homebuilders are already required to make an offer to resolve a construction defect claim when a lawsuit is filed -- and usually opt for a cash settlement.

The real issue behind the bill, Canepa said, is that homebuilders and contractors want to introduce language that says a homeowner can't seek redress for a defect until it causes personal injury or damage to the home.

"That position is as morally repugnant now as it was before," Canepa said. "Homeowners should not wait until they are injured or their house is injured to take redress."