Nevada Legislature: Bill would curb construction defect suits

A hearing on Republican-led effort to curb frivolous construction defect lawsuits drew large crowds on Wednesday and included a spirited back-and-forth between lawmakers and a bill opponent.

The Assembly and Senate judiciary committees met together Wednesday for a lively discussion on AB125, a bill that would change a portion of Nevada law known as Chapter 40.

Republicans say the law was originally meant to protect homeowners when flaws surfaced in their houses, but has opened the floodgates for expensive litigation and created a financial incentive for attorneys to file suit. In one recent case, attorneys’ fees were 16 times the amount of money awarded to homeowners, according to building industry lobbyist Josh Hicks.

The measure would more narrowly define construction defects so it wouldn’t include issues that cropped up as a result of remodeling or later construction. It would require homeowners to exhaust other options, such as using the builder’s warranty and seeking resolution through the Nevada State Contractors Board, before pursuing a lawsuit.

Homeowners would have to give an explanation of their defect, and could be subject to criminal penalties if they lied about it.

The bill also would require parties to pay their own legal fees. Existing law allows attorneys’ fees to be awarded as damages.

While several people testified in favor of the bill, Terry Riedy of the Nevada Justice Association was the lone opponent who spoke against it.

He said the bill would discourage homeowners from seeking recourse when they encountered defects, and argued that it could open them up to penalties if they did not accurately describe the defect. He also objected to a provision that would lower the statute of limitations on a defect lawsuit to six years from the date a home was built, down from 10.

Removing the attorney fee provision, he said, would discourage homeowners from seeking professional legal help and put them at a disadvantage compared with large national building companies and their teams of lawyers.

Democratic Sen. Aaron Ford said he’s open to some law changes, including requiring homeowners to be specific about the defect they’re claiming and changing the attorney fee provision, but worries the bill helps contractors at the expense of homeowners.

Fellow Democratic Sen. Ruben Kihuen said he felt the bill was being rushed through the Legislature without allowing time for lawmakers to understand its complex provisions.

Assemblyman Ira Hansen, the Republican leading the hearing and a contractor who has long championed changes to construction defect laws, shot back, saying Democrats declined to seriously consider the issue when they controlled the Legislature in past sessions.

The bill has a much better chance now that Republicans control both the Senate and the Assembly.