Nevada’s residential construction industry is breathing a sigh of relief since the Nevada Legislature and Governor Brian Sandoval signed into law Assembly Bill 125, which makes significant and meaningful revisions to the state’s onerous construction defect litigation law.
AB 125 improves current law, NRS Chapter 40, so that Nevada’s homeowners – not attorneys – come first in the resolution process. Although the original law enacted in the mid-1990s was intended to protect homeowners, instead, it opened the flood gates for excessive and in many cases, unwarranted lawsuits.
The goal of AB 125 is to restore Chapter 40’s original intent to facilitate a quick and efficient resolution of homeowners’ construction defect claims, while still giving homeowners access to the judicial system.
AB 125, which went into effect immediately after the governor signed it, has the following important components:
- It requires that a construction defect either cause physical damage to a residence or create unreasonable risk of physical damage to persons or property;
- It treats attorney’s fees in a construction defect case the same way fees are treated in other lawsuits;
- It ensures that the inspection and repair process is conducted in an effective, timely and cost-efficient manner;
- It specifies that homeowners should be clearly informed of their rights and obligations in a construction defect case;
- It specifies that early resolution of construction defect cases should be encouraged. Parties should have the freedom to explore alternative methods of dispute resolution so that litigation becomes a last step rather than the first step.
The impacts of construction defect litigation have plagued our state for more than a decade. Abusive and excessive construction defect lawsuits have depressed the housing construction sector in Nevada, especially for multifamily housing, which bore most of the brunt of Chapter 40 litigation.
New home construction should and can mean more Nevada jobs and economic growth. The residential construction industry believes reform of Chapter 40 will make that happen, which is good news for everyone involved in our housing industry.