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Frequently Asked Questions in Nevada

Question One - WHAT IS A CONSTRUCTION DEFECT?

Answer: Construction Defect is defined in Nevada Revised Statutes 40.615 as a defect in the design, construction, manufacture, repair or landscaping of a residence:

  • Which is done in violation of local codes or ordinances;
  • Which proximity causes physical damage to the residence or an appurtenance;
  • Which is not completed in a good and workmanlike manner in accordance with the generally accepted standard of care in the industry; or
  • Which presents an unreasonable risk of injury to a person or property.

Question Two - IS THERE A REMEDY?

Answer: If faced with the high cost of repairing the defects and with a developer who is not willing to make repairs, you may feel that you are without a remedy. However, a legal remedy is available to you in the form of a construction defect claim against the developer and/or the contractors who built your home or development. Nevada law provides a means by which you can recover not only the cost of repairing the construction defects, but also reimbursement for past repairs, attorney fees and expert costs.


Question Three - WHAT IF OUR DEVELOPER HAS FILED BANKRUPTCY OR IS NO LONGER IN BUSINESS?

Answer: The developer is primarily responsible for any construction defects at your development. The developer's insurance company will usually provide coverage for most of the defects and resultant damages. The subcontractors will also typically be brought into the case and, likewise, their liability insurance will often provide coverage for many of the defects and the resultant damage. Many property owners are under the impression that if the builder has declared bankruptcy, or is no longer in business, they are without a remedy. This is not the case if the builder carried liability insurance. The claimant can have the bankruptcy set aside and can collect any judgment or settlement from the available insurance of the builder. In the same manner, the subcontractors are also a viable source of recovery regardless of whether they are still in business or have declared bankruptcy.


Question Four - WHAT IS INVOLVED IN A CONSTRUCTION DEFECT CLAIM?

Answer: Initially, a team of experts is assembled by the association's attorneys to inspect and determine the nature and extent of the construction defects. After completing on-site inspections and testing, a list of defects is prepared by the experts.

Once the testing and inspections are complete, a notice of defects is served, the developer and subcontractors then perform their own inspections and testing. Under Nevada law, the developer and the subcontractors then have the opportunity to make repairs. If the developer elects not to make repairs or settle the claim through mediation, the case will proceed to litigation.

Fenton Grant advances all costs during litigation, including investigation and expert costs. The costs are reimbursed from the recovery. In this manner, the client is not required to pay any out of pocket costs to fund the construction defect claim.


Question Five - IS THERE A TIME LIMIT ON FILING A CONSTRUCTION DEFECT CLAIM?

Answer: Statutes of limitations govern the amount of time one has to file a lawsuit for construction defects and vary depending upon the type of construction defect. In Nevada, there are three statutes of limitation relative to construction defect cases:

  • Six years from substantial completion: patent defects
  • Eight years from substantial completion: latent defects
  • Ten years from substantial completion: known defects

For patent defects, those that are obvious and readily discoverable, there is a six year statute of limitations from substantial completion of the home under NRS 11.205. For latent defects, those that are hidden or not readily apparent, there is an eight year statue of limitations under NRS 11.204. Finally, there is a ten year statute of limitations under NRS 11.203 for defects that the builder knew, or in the exercise of reasonable diligence, should have known about at the time of construction. This ten year statute of limitation runs from the date of substantial completion of the home. These time periods may be extended or tolled under certain circumstances where repairs have been made or promised by the developer.


Question Six - CAN HOMEOWNERS SELL OR RE-FINANCE THEIR HOME DURING CONSTRUCTION DEFECT LITIGATION?

Answer: Certain lenders and lending institutions have policies against financing properties involved in construction defect litigation. However, numerous other lenders and lending institutions regularly provide financing for sales and refinancing of properties while in construction defect litigation. In fact, certain companies specialize in providing loans for property owners whose property is involved in litigation.


Question Seven - WHAT MUST I DISCLOSE TO A POTENTIAL BUYER?

Answer: Irrespective of whether defect litigation is ongoing, individual homeowners have a legal duty to disclose any construction defects they know of, or should know of, to potential purchasers. Recent case law has exempted the association and real estate agents from making such disclosures. NRS 40.688 requires that owners of residences in construction defect litigation disclose in writing to prospective purchasers:

  • All notices regarding construction defects given to the developer;
  • All expert opinions regarding construction defects;
  • The terms of any settlement, order or judgment relating to the construction defect claim; and
  • A detailed report of all repairs made to the residence as a result of the claim and recovery.

Question Eight - WILL A CONSTRUCTION DEFECT LAWSUIT REDUCE THE VALUE OF YOUR HOME?

Answer: As set forth above, if you know about defects in your home and are trying to sell it, Nevada law requires that you inform the potential buyer of those defects. A construction defect claim enables you to recover funds to repair the defects. Recovering money to repair your defects serves to protect the value of your home.


Question Nine - WHY ARE EXPERTS NECESSARY AND WHAT DO THEY DO?

Answer: Experts are critical to proving your construction defect claim. A team of experts in various fields of construction will be necessary to determine the nature and extent of your construction defect problems, to design methods of repair and to estimate the cost of such repairs. While every case is different depending upon the type of conditions at issue, the core team of experts typically consists of an architect, a civil engineer, a plumbing / mechanical expert and an electrical expert. Additionally, depending upon the complexity of the issues, other experts such as a structural engineer, or soils engineer may be necessary.


Question Ten - SHOULD I CONTACT THE BUILDER BEFORE FILING A LAWSUIT?

Answer: In many cases, reputable builders will offer to make necessary repairs to your home. This should always be your first step. You may still want to consider retaining your own expert to oversee the repairs and ask your developer for additional warranties relative to the repair work.


Question Eleven - WHAT ARE ASSOCIATION RELATED ISSUES AND WHAT ARE INDIVIDUAL RELATED ISSUES?

Answer: Typically, in a condominium setting, the association should be the party to seek recourse for common areas, separate areas that they are required to maintain, and separate area damages that are integrally related to common area issues. Each association's governing documents specify the extent of maintenance and repair responsibility for that association.


Question Twelve - WHAT LIABILITY DO THE COUNTY OR CITY INSPECTORS HAVE?

Answer: Pursuant to Nevada law, county and city inspectors are immune from liability for negligent inspection or failure to inspect.

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