A. Homeowners Associations
1. Board of Directors Statutory Authority
(a) The HOA has the authority to institute litigation in its own name on behalf of
itself or two or more units' owners on matters affecting the common-interest community.
NRS § 116.3102
(b) The Board of Directors may act in all instances on behalf of the association. NRS
§ 116.3103(1)
2. Board Of Directors Responsibilities
There are several reasons why the Board of Directors of an Association must seriously
investigate and pursue construction defect claims:
(a) Duty To Repair And Maintain Common Areas: NRS § 116.3107
(i) The HOA is responsible for maintenance, repair and replacement of the common
elements.
1. The CC&R's will determine which elements are common.
2. A construction defect to common areas requires the Board of Directors to exercise
its fiduciary duty and to recover funds to repair and maintain those areas, even by way of
a construction defect claim.
(ii) The owner of each separate unit is responsible for maintenance, repair and
replacement of that unit.
(b) Duty To Exercise Good Business Judgment: Nrs § 116.3103 (a); NRS 78.751
(i) The Board of Directors are required to exercise ordinary and reasonable care,
subject to the business-judgment rule.
(ii) A decision not to pursue a claim in the face of serious construction defects may
result in a breach of the business judgment rule and possible liability to the Board of
Directors.
(iii) A proper decision to initiate the SB 395 process and/or litigation will insulate
the Board of Directors from liability under applicable Nevada business laws. NRS §
116.3101(1)
B. Single Family Homes:
1. Authority To Initiate Suit:
(a) An owner of a residence may be a claimant against a contractor for construction
defects. NRS § 40.610
2. Class Action Suit:
(a) Who may sue as a class?
(i) Homeowners may choose to sue as a class if there are many homes within the same
development experiencing construction defects. NRCP 23
(ii) These claims arise where there is either no HOA or where there is an HOA and
defects arise in exclusive use areas, not common areas, according to the CC&R's
(b) The definition of a "class".
(i) Suing as a "class" means that one person represents all of the
homeowners' interests in the suit, rather than each individual homeowner being named as a
claimant
(c) What are the benefits of suing as a class?
(i) When there is a large group of claimants suing the same defendant(s), a
class-action suit is usually the most efficient manner to manage the claim.
1. Filing fees with the court are significantly reduced because each Plaintiff need not
file their own Complaint.
2. Costs are shared, i.e., experts fees.
C. Time Limits:
1. Substantial Completion:
The time limit in which a cause of action for construction defects may be filed begins
at the time of "substantial completion" of the project.
(a) Substantial Completion is usually determined to be the time the contractor files a
certificate of completion.
(b) Title companies may have "notices of completion" on record to help the
owners determine these dates.
2. Ten Year Statute:
(a) Actions based on known deficiencies by the contractor must be brought within ten
(10) years. NRS § 11.203
3. Eight Year Statute:
(a) Actions based on latent deficiencies, meaning a deficiency not apparent by
reasonable inspection, must be brought within eight (8) years. NRS § 11.204
4. Six Year Statute:
(a) Actions based on patent deficiencies, meaning a deficiency which is apparent by
reasonable inspection, must be brought within six (6) years. NRS § 11.205
5. Additional Two Years:
(a) If discovery of the defect occurs within the last year of each of the above
statutes, an additional two (2) years is given in which to commence suit.
6. Other Statutes To Consider:
(a) Actions Not Subject To The Statutes Of Repose:
(1) Actions based on willful misconduct of a contractor may be brought any time. NRS §
11.202
(b) Actions Based On Written Contracts:
(1) Actions based on written contracts must be brought within six (6) years; while
contract actions not founded upon a written instrument must be brought within four (4)
years. NRS § 11.190
(c) Actions Based On Tortious Injury To Real Property:
(1) Actions based upon tortious injury to real property must be commenced within four
(4) years after the cause of action accrues. NRS § 11.220
(2) Nevada courts are undecided whether this statute is still applicable subsequent to
the enactment of the Statutes of Repose.
(3) The Statute incorporates a rule of diligent discovery, meaning the action accrues
when a plaintiff knew, or in the exercise of proper diligence should have known, of
damage. Oak Grove Investors v. Bell & Gossett Co., 99 Nev. 616, 668 P.2d 1075 (1983).
For more legislation information, see the California Legislation Web Site at http://www.leginfo.ca.gov.
© Copyright 2008 The Miller Law Firm. All rights Reserved.
If you experience problems or have questions, contact us at Info@ConstructionDefects.com.
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