Editorial: New fund not needed for builders

Friday, July 5, 2002 | 8:41 a.m.

The home-building market here has been and continues to be about the best in the country -- thousands of homes are in some stage of construction every day. The shadow cast by construction defects, however, has been getting longer and darker. Thousands of people in the Las Vegas Valley are currently pressing individual or class-action lawsuits, a situation that builders say couldn't get much worse.

It's so bad, builders say, that the state should step in and solve their biggest problem, which is getting insurance to cover construction-defect claims. Availability of such coverage has been dwindling over the past several years as insurance companies have withdrawn from that market, calculating that they would be paying out more in claims than they would be earning in premiums. The builders contend the state, reacting to the medical malpractice crisis, set up an insurance fund for doctors and should do likewise for builders, who employ one out of every 10 workers in Nevada. Without such assistance, the builders say, the day will soon come when insurance is no longer available and the home-building industry will collapse, plunging the state into unemployment and housing crises.

We agree there is a major problem but see no need for a bailout. The medical malpractice issue requires immediate and special treatment because it is a matter of life and death. The construction-defect issue requires legislative attention, certainly, but it does not merit a risky venture by the state, which is already facing a $245 million deficit. Since 1995 construction-defect bills have occupied a lot of legislative time, resulting in laws that require mediation before lawsuits can be filed, a greater role for the state Contractor's Board, and more expediency in District Court.

Problems associated with construction-defect lawsuits are best left to this normal legislative process. The 2003 Legislature might want to devise a sure-fire way of weeding out frivolous suits. For its part, the home-building industry should redouble its efforts to reduce the amount of defects and improve customer service. Under a new state bureaucracy guaranteeing access to insurance, the core problems creating the crisis might never get solved.