Assembly votes to change Nevada construction defect law

CARSON CITY — A bill sought by Republican lawmakers to make changes to Nevada’s construction defect law passed the Assembly on a 25-17 party-line vote Tuesday.

Assembly Bill 125 was first amended to take out a provision requiring homeowners to make claims of damages to their homes under the threat of perjury. It now requires a signed statement instead, and was changed to reflect the concerns of some Democratic lawmakers.

The bill is moving quickly by legislative standards, having only been introduced Feb. 6. It was heard by the Assembly and Senate Judiciary committees in a joint hearing on Feb. 11 and voted out by the Assembly Judiciary Committee on a party-line vote Friday.

Called by supporters the Homeowner Protections Act of 2015, the bill would restrict the definition of what constitutes a home defect, repeal a provision allowing attorneys fees and costs in a home defect judgment, and require specific descriptions of defects.

It would make many other changes as well, including reducing the statute of limitations to six years from as many as 10 years in current law.

The bill also proposes to address an issue raised in a series of Review-Journal reports about a federal investigation into a scheme to take over local homeowners association boards. One objective of the takeovers was to trump up construction defects, then steer the HOA to hire a conspiring attorney to sue the contractor.

Once the contractor paid, the work of “fixing” the alleged defects would go to a confederated construction company that would do little or no work to “fix” the trumped-up problems and pocket payment from HOAs, all made possible by the litigation.

AB125 would eliminate a provision allowing an HOA board to bring a defect case on behalf of homes in the HOA upon a vote. It proposes to allow HOA boards to bring defect claims for common elements and common areas only.

The bill is another priority of the new Republican majority in the Legislature.

It is supported by home builders but opposed by some trial attorneys.

Democrats have argued the bill goes too far in restricting the legal rights of homeowners to fix problems with their homes.

Sen. Aaron Ford, D-Las Vegas, called the measure the “homeowner rejection” act rather than a homeowner protection act at the joint hearing on the bill.

In the Assembly floor debate on the bill, Assemblyman James Ohrenschall, D-Las Vegas, argued against passage, saying it puts roadblocks in the path of homeowners who have been harmed due to construction defects.

Assembly Minority Leader Marilyn Kirkpatrick, D-North Las Vegas, also spoke in opposition, saying the measure contains many provisions that lawmakers have not had a chance to discuss in detail.

Assemblyman Jim Wheeler, R-Minden, argued for the bill, saying it will allow access to the courts by homeowners. But a defect will have to be specific and legitimate, he said.

Wheeler noted that between 2006 and 2012, construction defect lawsuits in Nevada increased by 355 percent while at the same time, new home construction declined 86 percent.

The bill will help stop frivolous lawsuits, he said.

Assembly Judiciary Chairman Ira Hansen, R-Sparks, said the bill is the result of legislation proposed by both Democrats and Republicans in past legislative sessions that did not pass.

“What this bill finally does, really, is provide equity for homeowners and contractors,” he said.

Republicans in control in both the Senate and Assembly are moving quickly on their policy agenda. The Senate on Monday passed a bill allowing the rollover of bonding authority for schools while exempting any of the construction projects from the prevailing wage. It passed on an 11-9 party-line vote and will now be considered by the Assembly.

Contact Sean Whaley at swhaley@reviewjournal.com or 775-687-3900. Find him on Twitter: @seanw801.