Builders, lawyers are at odds over defect legislation

Friday, March 7, 2003 | 9:57 a.m.

CARSON CITY -- Contractors and trial lawyers agreed Thursday that builders should have the opportunity to fix any construction defects in a home before a lawsuit is filed.

But the groups disagreed broadly over the bill introduced in the Senate Thursday that aims to cure the construction-defect problem and help contractors get insurance.

Rick Demar, executive director of the Builders Association of Western Nevada, said at a news conference that a contractor who builds a 300-home subdivision must pay $600,000 a year for construction-defect insurance.

Because of the lack of insurance, only four or five contractors remain in Las Vegas building condominiums and townhouses , said Irene Porter of the Southern Nevada Homebuilders Association.

But Bob Crowell, representing the Nevada Trial Lawyers Association, said contractors in Southern Nevada were never able to show evidence to an interim task force studying the problem that there is a connection between the rising prices of homes and insurance premiums.

Crowell also said there was no evidence that any of the hundreds of construction-defect lawsuits in Clark County were frivolous.

Of 120 complex construction suits in Clark County, Crowell said, contractors never offered to make repairs.

The reason, said Steve Hill, head of the Coalition for Fairness in Construction, is once a suit is filed, the lawyers take over and the builders and homeowners are not allowed to talk to each other.

The present law says in cases in which five or more homes have construction defects, a lawsuit must be filed first.

Senate Bill 241, introduced by the Senate Commerce and Labor Committee, would change that. The first step in such complex construction-defect disputes would be a notice from the homeowners to the contractor, who would have a chance to make repairs before a lawsuit is filed.

The bill also changes the definition of a construction defect, Hill said. In the current law the definition is only two sentences long and needs clarification, he said.

But Crowell said the builders want to define a construction defect as one that violates the building code, excluding mistakes that were not code violations that may have damaged the home.

James Wadhams, an attorney representing the contractors, said that with 217 suits pending in Clark County, the bill is "trying to bring common sense back" to allow the contractor to make a repair before a suit is filed.

But he conceded, "Many builders are not taking the calls (from dissatisfied homeowners) as seriously as they could."

Going to court immediately, however, "is a terrible option," Hill said. The law requiring a lawsuit first was sought by contractors several years ago. But they now say that was a mistake.

Nobody wins in these construction suits, Hill said. Homeowners have to wait years before the problems are solved, and insurance companies spend large sums to defend the suits.

Crowell said the trial lawyers have no objection to permitting the contractor to correct the defect before a suit is filed.

"Everybody is on the same page -- to get people's homes fixed," he said.