States Move to Limit Housing Defect Cases

February 27, 2015

Lawmakers in several states are moving to try to make construction-defect laws more stringent, which could make litigation more difficult for home owners who want to sue home builders over flaws, everything from leaky roofs to foundation cracks, The Wall Street Journal reports.

Nevada lawmakers are leading efforts. The state has seen a soaring number of court battles, pitting home owners and builders against each other in property flaw disputes. Recently, Nevada lawmakers tightened its construction-defect laws. Its new law, effective immediately, requires home owners to provide detailed descriptions of alleged defects and requires claims go through a warranty process first so that builders have a chance to fix the defects out of court.

“This is going to chill Nevada home owners’ efforts to make claims on builders,” says Terry Riedy, a partner in Las Vegas law firm Canepa, Riedy, Abele & Costello. Riedy’s law firm has won more than $700 million in settlements and judgments for plaintiffs in Nevada home defect cases since 1995.

Lawmakers in several other states – such as in Arizona, Colorado, Florida, and Washington – also are trying to make it more difficult for home owners to sue over alleged construction defaults too. A bill in Colorado, for example, proposes that home owners go through mediation and arbitration before they can file a lawsuit against a builder. In Florida, a proposed bill would require home owners to provide specific details of an alleged defect when filing a claim so that builders can more quickly investigate and address it. In Washington, a bill would require any alleged defect to be inspected by a professional before a home owner could reject a builder’s settlement offer or choose to sue.

Home builders argue that lawsuits over construction defaults are raising the cost of doing business. Also, they argue that many of these alleged problems can be resolved through mediation, instead of heading to court.

“In almost every instance, builders prefer to fix construction defects rather than litigate them,” says Ken Gear, executive director of the Leading Builders of America, a trade group.

But some home owner advocates say the law changes are unfair to home owners.

“All of this legislation seems to be geared toward making it harder for the consumer and easier for the developers and home builders,” says Jonathan Harris, head of the Build Our Homes Right coalition, a group formed to oppose a defect bill pending in Colorado.

Source: “Nevada, Other States Target Construction-Defect Lawsuits,” The Wall Street Journal (Feb. 25, 2015) [Log-in required.]