Construction defect legislation remains contentious

Wednesday, April 29, 2009 | 6:15 p.m.

Archive of Sun politics stories

CARSON CITY -- No issue will have been fought over more intensely, or more expensively this legislative session, than construction defect law.

Builders and subcontractors came to the session in February well-armed, with a team of lobbyists dedicated to stopping what they view as a flood of construction defect litigation.

They say the litigation is crippling an already struggling industry.

Lawyers for homeowners with shoddy houses, though less numerous, are also well organized. They say they're here to protect homeowners.

The fight has grown so intense that it is spilling over into legislation that is ostensibly unrelated, as happened in a senate hearing Wednesday.

Assembly Bill 215, offered by Majority Leader John Oceguera, a Las Vegas Democrat, would force contractors to buy liability insurance to get their license renewed.

Developers and their lobbyists say it's retaliation for Senate Bill 349, which would effectively gut the statute regulating construction defect litigation, known as Chapter 40, for its place in Nevada statutes.

Builders had lobbied for the Senate measure because they say it's led to a torrent of fake claims and exorbinant legal costs. Chapter 40 guarantees reasonable legal fees for plaintiffs in defect cases.

Some homeowners appeared Wednesday to testify for the Oceguera measure, saying they were sold bad houses by contractors without enough insurance to fix the defects.

Builders complained they'd be unable to comply with the Oceguera measure because the insurance would be hard to find and would be too expensive.

Oceguera said he duplicated language used by other states, and said he would work with the parties on a compromise.

The committee took no action.

Discussion: 2 comments so far…

By mcmc_john

4/29/09 at 7:26 p.m.

Suggest removal

Here we go again, the stories by builders and their hired guns. Majority Leader John Oceguera is right and the builders are lying again.

Why shouldn't subcontractors be required to carry enough insurance to cover any potential liability that they might have? The state requires contractors to carry a bond according to their bid amounts. Why not the same for general liability insurance? Protecting the consumer in case the contractor performs poor quality work only makes sense.

Look how easy it is for a contractor to run out of insurance coverage liability with a problem like Kitec. If a home in the valley has the Kitec plumbing problem, it would cost approximately $6,000 per home to repair.

A million dollar insurance policy for the subcontractor would only cover about 168 homes. Most subcontractors in the residential community build more than 168 homes in one month. Once the first 168 homeowners file their claims the insurance carrier is not obligated to help anyone else. So the builder then sues all the other subcontractors insurance carriers for the money the plumber did not have.... that is right the builder sues the roofer, the framer, the concrete contractor even the vendor supplying the potable outhouses to pay the rest of the bill....

The builders statement that "the insurance would be hard to find" is humorous. Why would an insurance company not be willing to sell the contractors more insurance. It would increase their premiums and insurance companies love larger premiums. The cost would still be less than 6% of the cost of a home in today's market. Wow the builders would have to lower profit margins to 35% instead of 41%... and other trades insurance would go down in cost because they would not be drug into the fight...

IF you really want the truth... just ask the builders to put up the true cost of insurance in an article .. and the the true increase cost for more insurance ... they won't do it.... that is what is laughable..
By renobuilder

5/1/09 at 9:31 a.m.

Suggest removal

As a homebuilder struggling to survive this townturn we are spending thousands of dollars to defend ourselves. We realize with all that goes into building a house there are things that go wrong. We would rather fix the problem than pay an attorney to defend us. With the current law if a homeowner goes to an attorney first, we never get the opportunity to fix the problem. Their attorney's goal is to get a money settlement.

The attorneys on both sides have no desire to solve the case as one side get paid defending themselves and the other with the hope of a big settlement. They are charging $200-400 an hour work on these cases. Where is the incentive to come to closure. I'm sure we spend at least $300 for every letter written by an attorney.

You can spend hundreds of thousands of dollars and years to come up with a $20,000 fix. Of course the settlement always includes paying the homeowners attorney fees.

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