Contractors Seek To Defeat Construction Defect Lawsuits
Association members have found their insurance renewals dramatically higher, with some companies excluding coverage for any claims, “arising out of a construction defect.” And this is not for those contractors who take part in new construction; it applies to service and repair work as well.
Cindy Nevin, executive director for the Nevada Subcontractors Association (NSA), was the guest speaker at the March 19 SNARSCA membership luncheon in Las Vegas. Nevin spoke about the NSA’s history, the effects of defect legislation on the value of homes, and the goals of the organization for the upcoming legislative session.
“The history of the NSA closely follows the construction boom,” she said. “We have to ensure that contractors and subcontractors aren’t forced out of business.”
She cited statistics from California of what happened to the housing market in the wake of construction defect suits.
“Multi-family building plunged some 84% in California,” she said, “while the price rose 7% to cover costs.”
At the same time, real estate values in California went south, leaving many homeowners with higher mortgages than they could recoup from the resale value of the property.
In Las Vegas, the median price of a home has climbed to $178,920. According to Nevin, “That’s out of reach for many young families. For every $1,000 rise in price, another 1,400 people are priced out of the market.”
LAWSUITS ARE HURTING INDUSTRYDarren Wilson, Sierra Air Conditioning, is a long-time member of SNARSCA, and was voted the association’s Contractor of the Year in 2000. Wilson founded the Nevada Subcontractors Association with fellow contractors Dick Peck and Henry Sharp after California-based attorneys began moving to Nevada to file construction defects suits. He was a key player in the NSA’s lobbying and legislative efforts during the 1999 and 2001 sessions.
His goal is to educate lawmakers and homeowners about the real cost of these lawsuits.
“The homeowner doesn’t want litigation. They deserve to get their problem fixed. We build them a house, we need to do a good job,” said Wilson. “We need to give them what they paid for, and that is a quality home at a quality price — something that can be proud to own.”
Wilson said that contractors are willing to correct any building problems, if they are allowed to do so.
“We need the right to repair. We’re human beings working in the construction industry and if something goes wrong, we need to be able to fix it,” he said.
He, too, is concerned about the rising cost of a home.
“It’s very important to homeowners. If we’re not able to get it figured out, they’re not going to be able to buy a home or even sell a home,” said Wilson. “The price is going up and, until this comes to a halt, it’s not going to come down. We’re paying more for insurance premiums and so is the home builder.”
SEEK LEGISLATIONNSA Executive Director Cindy Nevin said that service contractors are being affected by construction defect lawsuits, even if they are never personally sued.
“As service contractors, they need to know that all the construction defect problems will trickle down,” she said. “Even if they don’t do the original building, if they do a repair later they can become involved.”
The association wants two major pieces of legislation to come out of the next session. The first is a definition of a construction defect.
“Right now, it’s too general, it can be anything,” said Nevin. “It can be fading paint, it can be over-driven nails, bad grout; it can be anything. We want to make sure it affects the safety and inhabitability of the house. It has to be major structural damage.”
The other goal is the right to repair, as that will force contractors to correct defects quickly and without the expense of litigation, said Nevin. She was careful to point out that the NSA will not protect bad builders and subs who do shoddy work.
“No one is trying to keep bad contractors in business. That’s not what this is about. This is to weed out the bad contractors and support the reputable contractors who support this community and who employ tens of thousands of people and provide satisfactory work,” she said. “This is a consumer protection issue.”
Publication date: 04/22/2002