Editorial: Good faith a factor in defect bill

Wednesday, May 28, 2003 | 8:54 a.m.

Once again the Legislature has passed a construction-defect bill with the intention of putting an end to the debilitating friction between builders and homeowners in the Las Vegas Valley. This friction has resulted in so many lawsuits over the past several years that District Court is hopelessly behind -- about 100 are currently filed and each one can take years to resolve. Also, home-building companies here are now having trouble getting construction-defect insurance. When they can buy it, the annual premium is apt to be well above $1 million, compared to under $200,000 just six or seven years ago. For consumers, the friction means the stress of living with defects while waiting for the courts to decide.

The 1995 Legislature attempted to solve the issue by requiring mediation between builder and homeowner before a suit could be filed. In 1999, however, the Legislature changed the law. "Chapter 40," as the 1995 law was known, was amended to allow consumers swifter access to the court system. The major change was in allowing a complaint involving five or more homes in a development to go directly to court, bypassing mediation altogether.

Predictably, District Court became clogged with class-action lawsuits. Builders accused trial attorneys of hustling homebuyers and attorneys accused the builders of slipshod work for the sake of higher profits. Meanwhile, insurance companies raised their rates to builders and frustrated homeowners refused to allow builders to fix any problems, fearing the loss of their case.

Senate Bill 241, which needs only the governor's signature to become law, may succeed where other bills failed. A compromise among lawyers and builders, the bill requires homeowners to give builders a chance to fix the defects. It sets specific timetables for inspecting the defects and repairing them. If the builder fails to meet the deadlines, the homeowner can file suit. The bill has incentives for everyone involved in a defect case to earnestly seek a solution short of going to court. Good faith on the part of all involved would go a long way toward making this bill a success.