Construction Defects

The real estate profession has become increasingly based in legalities. While a handshake can signify an agreement, the contract is the foundation of the real estate transaction today.

With the increased focus on legal issues, NVAR provides members services in the legal arena. Various articles on current and hot legal topics are provided through the weekly NVAR Online News. In addition, the Legal Information Line is available to members.

There are many real estate related questions that arise often. These FAQs (Frequently Asked Questions) by topic are provided to assist you in finding quick answers.

Construction Defects

Many agents and brokers have had questions about construction defects.  What are they and what can a buyer do about a construction defect. 

 

QUESTION 1:  How is construction defect defined?

RESPONSE 1: NRS 40.615 defines a construction defect as a defect in the design, construction, manufacture, repair or landscaping of a new residence or an alteration of or addition, or appurtenance to an existing residence which is done in violation of law, which causes physical damage to the residence or appurtenance, which is not completed in a good and workmanlike manner or which presents an unreasonable risk of injury to person or property.  See NRS 40:615 below: 

 

NRS 40.615 “Constructional defect” defined. “Constructional defect” means a defect in the design, construction, manufacture, repair or landscaping of a new residence, of an alteration of or addition to an existing residence, or of an appurtenance and includes, without limitation, the design, construction, manufacture, repair or landscaping of a new residence, of an alteration of or addition to an existing residence, or of an appurtenance:

1. Which is done in violation of law, including, without limitation, in violation of local codes or ordinances;

2. Which proximately causes physical damage to the residence, an appurtenance or the real property to which the residence or appurtenance is affixed;

3. Which is not completed in a good and workmanlike manner in accordance with the generally accepted standard of care in the industry for that type of design, construction, manufacture, repair or landscaping; or

                4. Which presents an unreasonable risk of injury to a person or property.

                (Added to NRS by 1995, 2539; A 2003, 2041)

QUESTION 2:  What must an owner/buyer do if they discover a construction defect?

RESPONSE 2:  Before a claimant commences an action against a contractor, subcontractor, supplier or design professional, the claimant must give written notice by certified mail to the contractor and may give written notice by certified mail to any subcontractor, supplier or design professional known to the claimant.  Here is the law:

 

NRS 40.645 Notice of defect: Required before commencement of or addition to certain actions; content; reliance on expert opinion based on representative sample; notice regarding similarly situated owners; persons authorized to provide notice; exceptions.

1. Except as otherwise provided in this section and NRS 40.670, before a claimant commences an action or amends a complaint to add a cause of action for a constructional defect against a contractor, subcontractor, supplier or design professional, the claimant:

(a) Must give written notice by certified mail, return receipt requested, to the contractor, at the contractor’s address listed in the records of the State Contractors’ Board or in the records of the office of the county or city clerk or at the contractor’s last known address if the contractor’s address is not listed in those records; and

(b) May give written notice by certified mail, return receipt requested, to any subcontractor, supplier or design professional known to the claimant who may be responsible for the constructional defect, if the claimant knows that the contractor is no longer licensed in this State or that the contractor no longer acts as a contractor in this State.

 

 

QUESTION 3:  What must the notice say?

RESPONSE 3:  The notice must state that it is being given pursuant to NRS Chapter 40, specify the reasonable details of the defect and any damages, and describe the cause of the defects if known.  Here is the law:

 

NRS 40.645      

***

2. The notice given pursuant to subsection 1  of NRS 40.645 must:

                   (a) Include a statement that the notice is being given to satisfy the requirements of this section;

                   (b) Specify in reasonable detail the defects or any damages or injuries to each residence or appurtenance   that is the subject of the claim; and

(c) Describe in reasonable detail the cause of the defects if the cause is known, the nature and extent that is known of the damage or injury resulting from the defects and the location of each defect within each residence or appurtenance to the extent known.

 

QUESTION 4:  Does the contractor have an opportunity to respond to the notice of defect?

RESPONSE 4:  Yes, the contractor has 90 days to respond from the day the contractor receives a notice.  Here is the law:

 

NRS 40.6472 Response to notice of defect: Time for sending; content; effect of election to repair or not to repair.

1. Except as otherwise provided in NRS 40.6452, 40.670 and 40.672, a written response must be sent by certified mail, return receipt requested, to a claimant who gives notice of a constructional defect pursuant to NRS 40.645:

                (a) By the contractor not later than 90 days after the contractor receives the notice; and

(b) If notice was sent to a subcontractor, supplier or design professional, by the subcontractor, supplier or design professional not later than 90 days after the date that the subcontractor, supplier or design professional receives the notice.

 

QUESTION 5:  Does the contractor have an opportunity to repair the defect?

RESPONSE 5:  Yes, in his response indicated in RESPONSE 4 above, the contractor may include an election to repair the construction defect.  See NRS 40.648 below:

 

NRS 40.648 Election to repair defect: Who may repair; manner for performing repairs; deadline for repair; extension of deadline; written statement of repairs performed.

1. If the response provided pursuant to NRS 40.6472 includes an election to repair the constructional defect:

(a) The repairs may be performed by the contractor, subcontractor, supplier or design professional, if such person is properly licensed, bonded and insured to perform the repairs and, if such person is not, the repairs may be performed by another person who meets those qualifications.

                (b) The repairs must be performed:

                                (1) On reasonable dates and at reasonable times agreed to in advance with the claimant;

(2) In compliance with any applicable building code and in a good and workmanlike manner in accordance with the generally accepted standard of care in the industry for that type of repair; and

(3) In a manner which will not increase the cost of maintaining the residence or appurtenance than otherwise would have been required if the residence or appurtenance had been constructed without the constructional defect, unless the contractor and the claimant agree in writing that the contractor will compensate the claimant for the increased cost incurred as a result of the repair.

(c) Any part of the residence or appurtenance that is not defective but which must be removed to correct the constructional defect must be replaced.

(d) The contractor, subcontractor, supplier or design professional shall prevent, remove and indemnify the claimant against any mechanics’ liens and materialmen’s liens.

February 2013