Nevada enacted a pre-litigation process in 1995
and amended it in 1999 to parallel rather than precede a lawsuit.
The following information will mostly pertain to complex matters,
i.e. claims that have five or more homes.
A. Notice to Builder
When a construction defect action is commenced, then claimant
is to submit a formal written notice to the contractor that
specifies in reasonable detail each defect sued upon. The
notice must also include:
- The location of the defect and the nature and extent of
injuries or damages caused by the defect. If an expert opinion
was obtained regarding the defects, then a written copy
must be included in the notice.
- Any expert opinion on the defects or injuries and damages
must be based on samples from the residences or appurtenances.
The Chapter 40 Process now insulates master developers against
complex suits for construction defects in planned unit developments
where appurtenances were constructed on behalf of any master
developer, unless:
- The master developer fails to disclose the identity, address,
and telephone number of each contractor used to construct
the appurtenance. There must be a request for such information,
and 30 days to fulfill the request.
- After the claimant has made a good faith attempt to obtain
full recovery the responsible contractors, full compensation
is not made.
- If a court determines that a claimant cannot obtain full
recovery from the contractors, or if the contractors are
bankrupt, insolvent, or dissolved, the statutes of limitation
are tolled against the master developer. The claimant then
has one year to file an action against any master developer.
B. Duties and Options of the builder
After the suit is filed, the builder must then file a timely
answer. In addition, written responses to the defect allegations
must be made no less than 60 days prior to the initial date
of mediation, unless the parties agree otherwise.
The claimant must reply to the builder's response no later
than 45 days after it was mailed or constructively received.
Also, no later than 30 days following the date of service
of the answer, the builder and claimant must meet and confer
to establish a schedule for:
- All reports, photos, correspondence, plans, work orders
for repair and other documents or materials relating to
the claims that are not privileged.
- Inspections of residences or appurtenances that are part
of the claim to evaluate the allegations enumerated in the
defect list.
- The time frame to perform tests to determine the nature
and cause of the defects, the scope of the damages, and
extent of necessary repairs. The party conducting the testing
must give notice to all other parties involved.
- A mandated meet and confer session, which also sets forth
a schedule to file claims against parties not already involved.
The claimant and builder must then settle on a mediator and
proceed to mediation.
C. Offer by Builder
As part of the initial response to the suit, a builder must
submit a written offer of settlement. The claimant may reasonably
reject such an offer.
Within 60 days following the service of a summons and complaint,
any settlement offer must:
- Be served by certified mail, return receipt requested,
at claimant's last known address;
- Respond to each defect set forth in claimant's notice,
and
- Describe in reasonable detail the cause of the defect,
the nature and extent of damages, and method of repair.
The offers may also include:
- A proposal for monetary compensation;
- An agreement to make repairs;
- An agreement to have another contractor make the repairs.
The mediation process allows the builder another 60 days
prior to mediation, despite the original 60 days, to submit
a settlement offer. The parties may extend the time periods.
If the claimant is a part of a homeowners' association, the
association shall submit any settlement offers to each member
of the association within 30 days of receipt. The statute
is silent as to the powers the general membership has as a
result of receiving the offer.
D. Effect of Unreasonable Conduct
If a claimant unreasonably rejects a settlement offer made
by the builder, or does not permit the builder a reasonable
opportunity to make repairs pursuant to an accepted offer,
and then commences a lawsuit governed by the Chapter 40 Process,
the court may:
- Deny the claimant attorneys' fees and costs; and
- Award attorneys' fees and costs to the builder.
Unless the builder takes the following steps, the claimant
may commence a lawsuit without further compliance with the
Chapter 40 Process:
- Make a good faith response to claims if it asserts no
liability;
- Make an offer of settlement;
- Complete the repairs specified in an accepted offer in
a good and workmanlike manner;
- Agree to mediate or accept the appointment of a mediator;
or
- Participate in mediation.
E. Response to Settlement Offer
If a builder's offer has not been accepted within 45 days
of receipt, it is deemed rejected. Also, if the offer clearly
notifies the claimant of the consequences for failing to respond
to a settlement offer, an affidavit certifying rejection of
the offer may be filed with the court.
F. Option to Repurchase Property
A builder may settle a claim by a written agreement to repurchase
the claimant's residence. The repurchase agreement may include
reimbursement for:
- The market value of the residence without construction
defects. If the house is less than two years old, and the
builder who is being sued sold the house to the claimant,
then market value is the price paid by the claimant.
- The value for any improvements made to the property by
a person other than the builder.
- Reasonable attorneys' fees and fees for experts; and
- Any costs, including costs and expenses for moving and
costs, points, and fees for loans.
G. Curing Health or Safety Threats
A builder who receives written notice of defects that create
an imminent threat to the health or safety of residential
inhabitants must take reasonable steps to cure such defects
as soon as is practicable. If the builder fails to take reasonable
steps to cure the defect, the residence owner may fix the
defect and recover any reasonable costs of repair.
If a builder reasonable believes after a good faith inspection
that no health threat exists, there may be no liability for
costs. However, if a building inspector employed by the governmental
body with jurisdiction certifies that an imminent threat exists,
the builder will be subject to damages.
H. Inspection of Repairs
A builder making repairs under the Chapter 40 Process is
allowed to take reasonable steps to prove the repairs were
made by having them inspected.
I. Mediation
The parties are required to select a mediator by agreement.
If they cannot agree within 45 days after the claimant first
selects a mediator, either party may petition for appointment.
The mediator may look only at those documents or records that
are necessary to conduct the mediation.
The mediation must be completed within 60 days after the
matter has been submitted to the mediator, unless the parties
agree to an extension. Also, both parties share the costs
equally.
If the parties do not reach an agreement during mediation,
or if the builder fails to pay the required fees and appear,
the claimant may commence a lawsuit.
