Nevada is known for its games of chance. But as a homeowner buying a newly constructed home from a builder, you shouldn’t have to rely on luck. Developers will often sell homes to consumers before they are even built. You pay a price based on their representations about the size and quality of the house.
But what if you find major defects as soon as you move into the home – a hole in the kitchen floor, a broken skylight, or a defective heating system? Buying a home should not be like playing a card game at Vegas! How can you recover against a Nevada builder or developer for such defects?
Buying a house is a process that generates lots of contractual documents, particularly if it's within a new planned community. Your builder or developer surely gave you extensive materials describing your new property. You would have needed to sign a contract outlining your payment and the builder's promise to construct the home.
If you have to file a lawsuit against the builder, part of your claim will be that it breached this agreement – did not give you the structure and landscaping that it promised it would. Here, all of the materials the builder gave you, including photos, descriptions of the home and surroundings, plans and drawings, and emails describing the work, will be useful to establishing your expectations at the time you entered into the contract.
For example, if the various documents clearly show that you thought you were getting a home with tile floors, and the floors are a plastic imitation of tiles, this demonstrates the builder’s breach.
Nevada law provides a six-year statute of limitations for breach of contract, under Nev. Rev. Stat. § 11.190(1)(b). This means that claims based on a contract with the builder must be brought within this period, or they are barred.
However, discovery of the defect can toll the limitation period in some situations. When a homeowner could not have reasonably discovered the existence of the breach until after the six-year period – for example, if the concrete slab in the basement cracks after seven years because the builder didn't grade the property properly and the homeowner couldn’t have reasonably known – a court might allow the action to proceed.
Breach of contract isn’t the only basis upon which to sue a Nevada home builder. Another relevant legal theory is ordinary negligence; in this context, the builder’s failure to exercise the correct standard of care in building your home.
In Nevada, in order to establish a claim for negligence, the person filing suit must show that 1) a particular duty was imposed on the builder or developer by law; 2) the builder failed to conform to that legally imposed standard; 3) there was a causal link between the failure to meet the standard of care and the resulting construction defect; and 4) you suffered actual economic damages as a result of the injury to your home.
Note that Nevada has a three-year statute of limitations (a deadline on when you can file suit) for property damage caused by negligence under Nev. Rev. Stat. § 11.190(3)(c).
An important, and somewhat confusing, aspect of construction defect litigation in Nevada is the Statute of Repose for improvements to real property, found at Nev. Rev. Stat. Ann. § § 11.203-11.204.
Under this legislation, homeowners have ten years from substantial completion of the project for knowndeficiencies, with an additional two years to bring action if injury occurs in the tenth year.
The statute also provides that homeowners have eight years from substantial completion of the project for latent and patent deficiencies, with an additional two years if the damage occurs in the eigth year. Latent or patent defects are construction defects not immediately apparently when you first move into your home.
For example, if you walk into your new home for the first time and see a huge hole in the living room floor, this defect is obvious. You would have ten years to sue for this known defect, at most. But if the defect were the quality of the wood in a remote part of the house, which did not become known to you until a major storm, you would have only eight years, at most, in which to sue.
This is different from many states, where the limitation period can be further tolled (or delayed) based on when the homeowner discovers the existence of the defect. This statute is meant to give certainty to builders, so that they need not worry about claims after ten years have gone by. As a homeowner, this means that you essentially have an “ultimate deadline” to file your lawsuit: seven years after the completion of construction of your home.
There are a few clauses to watch out for in your contract before filing your lawsuit. First, it is common in construction contracts, in Nevada and elsewhere, to find a dispute resolution clause.
That clause may say that you were required to go to mediation with your builder or developer before filing your lawsuit. In this context, mediation is a facilitated negotiation for settlement, led by a third-party neutral individual. Often, that individual will have some experience with construction law, engineering, or building development.
Your contract may also contain an arbitration clause. This clause would require that you resolve your dispute through arbitration against the builder or developer, instead of litigation in a court of law. In arbitration, either one or three individuals – again, typically with experience in construction – will render a final determination on your dispute. The advantage of arbitration is that it is typically quicker than litigation, saving you money on legal fees. A potential disadvantage, however, is that the arbitrator's decisions are normally final.
Finally, take note of any aspects of the contract that shorten your statute of limitations or ability to make claims. It is not uncommon for construction contracts to shorten the amount of time that you have in which to file a legal claim against a home builder.
An attorney with experience in construction defect litigation in Nevada will be able to carefully review the document for these sorts of limitations and help you decide how to best seek compensation from your builder or developer.