Cathleen Allison / Associated Press
Sen. Michael Roberson, himself a lawyer, told the Senate Judiciary Committee on Friday that flaws in Nevada’s construction-defects law are encouraging lawsuits that only benefit lawyers.
Roberson, R-Las Vegas, said the Chapter 40 legislation was passed with good intentions but has helped fuel a 355 percent increase in construction-defect lawsuits over the past six years at the same time that new-home sales fell 86 percent.
Roberson said the law essentially prevents builders from fixing construction problems and gives lawyers representing homeowners every incentive to delay cases as long as possible so they can run up huge fees for themselves. The result, he said, is that the rate of defects litigation in Nevada is 38 times the national average.
He was joined at the table by a variety of business representatives including Josh Hicks, who cited a case that, after more than a year, resulted in a jury verdict awarding the homeowner $15,000.
“Attorney’s fees and costs ended up at about $1.5 million,” he said.
Former Senator Terry Care, a Las Vegas Democrat who tried to get defects legislation through in 2009, said Roberson’s bill better defines a construction defect. He said it eliminates a practical guarantee the lawyers will get whatever fees they claim, which would go a long way toward fixing the problem.
“We came to the conclusion that, if you build a house in Nevada or are involved in constructing a house in Nevada, more than likely you’re going to get sued no matter who you are,” Care said.
Rocky Cochran, president of the Southern Nevada Home Builders Association, said he sees every construction-defects lawsuit that comes through his company.
“Ninety-eight percent of the time, it is the first time I’m being told there is a warranty problem with one of our homes,” he said.
Former Sen. Allison Copening, D-Las Vegas, said that when she worked for Del Webb, a major contractor in the homebuilding business, lawyers suing them over defects used every excuse available to avoid settling and getting the homeowner’s problems fixed.
Sen. Mark Hutchison, R-Las Vegas, said the heart of the issue seems to be the builder’s right to repair a problem before it ends up in litigation. Copening agreed, saying once a suit is filed, builders aren’t allowed to repair anything.
Chris Hallman of Pardee Homes said that is their issue as well and pointed out that under current law, exceeding the building code is considered a defect.
But defects lawyer Charles Litt of Las Vegas said changing the law could leave homeowners without the money to fix whatever problem they have — especially the removal of the attorney fees provisions. If that happens, he said, the homeowner will have to pay a lawyer out of the money he or she won to fix the problem.
“They only get what they can prove is the cost of repairing the home,” he said.
Litt also charged that the new definition of a defect would be so restrictive that too many problems wouldn’t qualify for repair and would be left to the homeowner to pay.
He denied the fees are mandatory, saying the fees are ultimately up to the court to decide.
Roberson, minority leader in the Senate, described the construction-defects bill as his top priority this session. He asked Judiciary Chairman Tick Segerblom, D-Las Vegas, to at least hold a vote on the measure.
The committee took no action on Senate Bill 161.