Construction defect legislation gets its day in Senate hearing

By Andrew Doughman

Saturday, April 6, 2013 | 2 a.m.

Legislators might change how homeowners can seek relief for their homes’ construction defects under a bill heard Friday.

Senate Bill 161 is a top legislative priority for Senate Minority Leader Michael Roberson, R-Henderson, and it changes the definition of a construction defect and removes the ability of a homeowner to recover legal fees involved in construction defect litigation.

Although the bill may affect homeowners, its primary champions are builders and contractors, and its primary detractors are trial lawyers. Substantial money from each group flowed into campaign coffers of Democrats and Republicans this past year, and Roberson has fought hard to get the bill its hearing.

“A lot of people give a damn about this bill throughout this state,” he said during a legislative hearing. “This affects people’s lives.”

The bill could play an important role in the latter days of the legislative session as Republicans and Democrats try to bargain their way to a budget.

Roberson said at a hearing that the state’s construction defect laws have gotten away from their original intent to protect homeowners from defects that builders cause.

“The intent of this law is hardly recognizable, and its unintended consequences have been severely detrimental to homeowners and builders alike,” he said.

He said the current laws make litigation lucrative and increase insurance premium costs for builders to the extent that some have left the homebuilding market.

Citing a recent UNLV study, he said litigation has been increasing when it should be decreasing, and the resulting costs are slowing the state’s economic recovery.

He brought to the legislative hearing a delegation of homebuilders and developers under the umbrella of a group called the “Coalition for Fairness in Construction.”

He also brought two former state senators, implicitly demonstrating the perennial nature of the construction defect issue at the Legislature.

“It sure seemed to me that if you build a house in Nevada or are involved in the construction of a house in Nevada, more than likely you’re going to be sued,” said former Sen. Terry Care, D-Las Vegas, who noted that his bill passed nearly unanimously in the Senate in 2009.

It never got a hearing in the state Assembly, where it eventually languished and died because legislators in that chamber did not deem it worthy of consideration.

Following Care’s testimony, Sen. Tick Segerblom, D-Las Vegas, told Care, “I admire your persistence” in getting the bill passed.

Another former legislator also testified in support of Roberson’s bill.

“I was very surprised to find that the issue of construction defects was partisan in nature,” said former state Sen. Allison Copening, D-Las Vegas, who worked for a developer’s customer relations department and fielded construction defect calls. “It should not be a trial lawyers versus construction industry issue, which it has become.”

On the other side, lawyers brought forward various homeowners who had construction defects and could not get the builders to fix the problems they should have fixed under warranty agreements.

At that point, homeowners can call for investigation from the Nevada State Contractors Board or sue the unresponsive builder.

Many of those testifying had problems with Kitec plumbing, a company facing a class-action lawsuit.

Legislators who heard the bill in the Senate Judiciary Committee asked builders and lawyers a bevy of questions about how they could encourage builders to correct their mistakes, how the state could clarify its law so that homeowners would know the consequences of entering into litigation, and what would be an appropriate way to address attorneys' fees.

Charles Litt, an attorney in Las Vegas, testified that homeowners should be allowed to recoup attorneys' fees in successful claims for damages because otherwise they would not have enough money to both repair their homes and pay their attorneys.

“You ultimately have a math problem,” he said.

The hearing ended inconclusively with no action taken on the bill but with a hint that something may be done regarding this issue.

“This system is rife with abuse,” said Sen. Greg Brower, R-Reno. “Clearly something has to be done.”