SB241_EN

Senate Bill No. 241–Committee on Commerce and Labor

CHAPTER..........

AN ACT relating to real property; requiring notice, a right to inspect and a right to repair to be provided to a contractor before an action for constructional defects may be commenced; establishing the State Contractors’ Board as a resource to answer questions and assist in resolving disputes concerning matters which may affect or relate to constructional defects; making various other changes concerning constructional defects; and providing other matters properly relating thereto.

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Section 1. Chapter 40 of NRS is hereby amended by adding

thereto the provisions set forth as sections 2 to 15, inclusive, of this

act.

Sec. 2. “Amend a complaint to add a cause of action for a

constructional defect” means any act by which a claimant seeks

to:

1. Add to the pleadings a defective component that is not

otherwise included in the pleadings and for which a notice was not

previously given; or

2. Amend the pleadings in such a manner that the practical

effect is the addition of a constructional defect that is not

otherwise included in the pleadings.

The term does not include amending a complaint to plead a

different cause for a constructional defect which is included in the

same action.

Sec. 3. “Design professional” means a person who holds a

professional license or certificate issued pursuant to chapter 623,

623A or 625 of NRS.

Sec. 4. “Subcontractor” means a contractor who performs

work on behalf of another contractor in the construction of a

residence or appurtenance.

Sec. 5. “Supplier” means a person who provides materials,

equipment or other supplies for the construction of a residence or

appurtenance.

Sec. 6. 1. Except as otherwise provided in subsection 2, not

later than 60 days after a contractor receives a notice pursuant to

subsection 4 of NRS 40.645 which alleges common constructional

defects to residences or appurtenances within a single

development and which complies with the requirements of

subsection 4 of NRS 40.645 for giving such notice, the contractor

may respond to the named owners of the residences or

appurtenances in the notice in the manner set forth in section 9 of

this act.

2. The contractor may provide a disclosure of the notice of

the alleged common constructional defects to each unnamed

owner of a residence or appurtenance within the development to

whom the notice may apply in the manner set forth in this section.

The disclosure must be sent by certified mail, return receipt

requested, to the home address of each such owner. The disclosure

must be mailed not later than 60 days after the contractor receives

the notice of the alleged common constructional defects, except

that if the common constructional defects may pose an imminent

threat to health and safety, the disclosure must be mailed as soon

as reasonably practicable, but not later than 20 days after the

contractor receives the notice.

3. The disclosure of a notice of alleged common

constructional defects provided by a contractor to the unnamed

owners to whom the notice may apply pursuant to subsection 2

must include, without limitation:

(a) A description of the alleged common constructional defects

identified in the notice that may exist in the residence or

appurtenance;

(b) A statement that notice alleging common constructional

defects has been given to the contractor which may apply to the

owner;

which to request the contractor to inspect the residence or

appurtenance to determine whether the residence or appurtenance

has the alleged common constructional defects;

(d) A form which the owner may use to request such an

inspection or a description of the manner in which the owner may

request such an inspection;

(e) A statement advising the owner that if he fails to request an

inspection pursuant to this section, no notice shall be deemed to

have been given by him for the alleged common constructional

defects; and

(f) A statement that if the owner chooses not to request an

inspection of his residence or appurtenance, he is not precluded

from sending a notice pursuant to NRS 40.645 individually or

commencing an action or amending a complaint to add a cause of

action for a constructional defect individually after complying

with the requirements set forth in NRS 40.600 to 40.695, inclusive,

and sections 2 to 15, inclusive, of this act.

4. If an unnamed owner requests an inspection of his

residence or appurtenance in accordance with subsection 3, the

contractor must provide the response required pursuant to section

9 of this act not later than 45 days after the date on which the

contractor receives the request.

5. If a contractor who receives a notice pursuant to

subsection 4 of NRS 40.645 does not provide a disclosure to

unnamed owners as authorized pursuant to this section, the

owners of the residences or appurtenances to whom the notice

may apply may commence an action for the constructional defect

without complying with any other provision set forth in NRS

40.600 to 40.695, inclusive, and sections 2 to 15, inclusive, of this

act. This subsection does not establish or prohibit the right to

maintain a class action.

6. If a contractor fails to provide a disclosure to an unnamed

owner to whom the notice of common constructional defects was

intended to apply:

(a) The contractor shall be deemed to have waived his right to

inspect and repair any common constructional defect that was

identified in the notice with respect to that owner; and

(b) The owner is not required to comply with the provisions set

forth in NRS 40.645 or section 11 of this act before commencing

an action or amending a complaint to add a cause of action based

on that common constructional defect.

Sec. 7. 1. Except as otherwise provided in subsection 2, not

later than 30 days after the date on which a contractor receives

notice of a constructional defect pursuant to NRS 40.645, the

contractor shall forward a copy of the notice by certified mail,

return receipt requested, to the last known address of each

subcontractor, supplier or design professional whom the

contractor reasonably believes is responsible for a defect specified

in the notice.

2. If a contractor does not provide notice as required

pursuant to subsection 1, the contractor may not commence an

action against the subcontractor, supplier or design professional

related to the constructional defect unless the contractor

demonstrates that, after making a good faith effort, he was unable

to identify the subcontractor, supplier or design professional who

he believes is responsible for the defect within the time provided

pursuant to subsection 1.

3. Except as otherwise provided in subsection 4, not later

than 30 days after receiving notice from the contractor pursuant to

this section, the subcontractor, supplier or design professional

shall inspect the alleged constructional defect in accordance with

subsection 1 of section 8 of this act and provide the contractor

with a written statement indicating:

(a) Whether the subcontractor, supplier or design professional

has elected to repair the defect for which the contractor believes

the subcontractor, supplier or design professional is responsible;

and

(b) If the subcontractor, supplier or design professional elects

to repair the defect, an estimate of the length of time required for

the repair, and at least two proposed dates on and times at which

the subcontractor, supplier or design professional is able to begin

making the repair.

4. If the notice of a constructional defect forwarded by the

contractor was given pursuant to subsection 4 of NRS 40.645 and

the contractor provides a disclosure of the notice of the alleged

common constructional defects to the unnamed owners to whom

the notice may apply pursuant to section 6 of this act:

(a) The contractor shall, in addition to the notice provided

pursuant to subsection 1, upon receipt of a request for an

inspection, forward a copy of the request to or notify each

subcontractor, supplier or design professional who may be

responsible for the alleged defect of the request not later than 5

working days after receiving such a request; and

(b) Not later than 20 days after receiving notice from the

contractor of such a request, the subcontractor, supplier or design

professional shall inspect the alleged constructional defect in

accordance with subsection 2 of section 8 of this act and provide

the contractor with a written statement indicating:

(1) Whether the subcontractor, supplier or design

professional has elected to repair the defect for which the

contractor believes the subcontractor, supplier or design

professional is responsible; and

(2) If the subcontractor, supplier or design professional

elects to repair the defect, an estimate of the length of time

required for the repair, and at least two proposed dates on and

times at which the subcontractor, supplier or design professional

is able to begin making the repair.

5. If a subcontractor, supplier or design professional elects to

repair the constructional defect, the contractor or claimant may

hold the subcontractor liable for any repair which does not

eliminate the defect.

Sec. 8. 1. Except as otherwise provided in subsection 2,

after notice of a constructional defect is given to a contractor

pursuant to NRS 40.645, the claimant shall, upon reasonable

notice, allow the contractor and each subcontractor, supplier or

design professional who may be responsible for the alleged defect

reasonable access to the residence or appurtenance that is the

subject of the notice to determine the nature and extent of a

constructional defect and the nature and extent of repairs that

may be necessary. To the extent possible, the persons entitled to

inspect shall coordinate and conduct the inspections in a manner

which minimizes the inconvenience to the claimant.

2. If notice is given to the contractor pursuant to subsection 4

of NRS 40.645, the contractor and each subcontractor, supplier or

design professional who may be responsible for the defect do not

have the right to inspect the residence or appurtenance of an

owner who is not named in the notice unless the owner requests

the inspection in the manner set forth in section 6 of this act. If

the owner does not request the inspection, the owner shall be

deemed not to have provided notice pursuant to NRS 40.645.

Sec. 9. 1. Except as otherwise provided in NRS 40.670 and

40.672 and section 6 of this act, 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.

2. The written response sent pursuant to subsection 1 must

respond to each constructional defect in the notice and:

(a) Must state whether the contractor, subcontractor, supplier

or design professional has elected to repair the defect or cause the

defect to be repaired. If an election to repair is included in the

response and the repair will cause the claimant to move from his

home during the repair, the election must also include monetary

compensation in an amount reasonably necessary for temporary

housing or for storage of household items, or for both, if

necessary.

(b) May include a proposal for monetary compensation, which

may include contribution from a subcontractor, supplier or design

professional.

state the reasons for such a disclaimer.

3. If the claimant is a homeowners’ association, the

association shall send a copy of the response to each member of

the association not later than 30 days after receiving the response.

4. If the contractor, subcontractor, supplier or design

professional has elected not to repair the constructional defect, the

claimant or contractor may bring a cause of action for the

constructional defect or amend a complaint to add a cause of

action for the constructional defect.

5. If the contractor, subcontractor, supplier or design

professional has elected to repair the constructional defect, the

claimant must provide the contractor, subcontractor, supplier or

design professional with a reasonable opportunity to repair the

constructional defect.

Sec. 10. 1. If the response provided pursuant to section 9 of

this act includes an election to repair the constructional defect:

(a) The repairs may be performed by the contractor,

subcontractor, supplier or design professional, if he is properly

licensed, bonded and insured to perform the repairs and, if he 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.

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.

2. Unless the claimant and the contractor, subcontractor,

supplier or design professional agree to extend the time for

repairs, the repairs must be completed:

(a) If the notice was sent pursuant to subsection 4 of NRS

40.645 and there are four or fewer owners named in the notice, for

the named owners, not later than 105 days after the date on which

the contractor received the notice.

(b) If the notice was sent pursuant to subsection 4 of NRS

40.645 and there are five or more owners named in the notice, for

the named owners, not later than 150 days after the date on which

the contractor received the notice.

40.645, not later than 105 days after the date on which the

contractor provides a disclosure of the notice to the unnamed

owners to whom the notice applies pursuant to section 6 of this

act.

(d) If the notice was not sent pursuant to subsection 4 of

NRS 40.645:

(1) Not later than 105 days after the date on which the

notice of the constructional defect was received by the contractor,

subcontractor, supplier or design professional if the notice of a

constructional defect was received from four or fewer owners; or

(2) Not later than 150 days after the date on which the

notice of the constructional defect was received by the contractor,

subcontractor, supplier or design professional if the notice was

received from five or more owners or from a representative of a

homeowners’ association.

3. If repairs reasonably cannot be completed within the time

set forth in subsection 2, the claimant and the contractor,

subcontractor, supplier or design professional shall agree to a

reasonable time within which to complete the repair. If the

claimant and contractor, subcontractor, supplier or design

professional cannot agree on such a time, any of them may

petition the court to establish a reasonable time for completing the

repair.

4. Any election to repair made pursuant to section 9 of this

act may not be made conditional upon a release of liability.

5. Not later than 30 days after the repairs are completed, the

contractor, subcontractor, supplier or design professional who

repaired or caused the repair of a constructional defect shall

provide the claimant with a written statement describing the

nature and extent of the repair, the method used to repair the

constructional defect and the extent of any materials or parts that

were replaced during the repair.

Sec. 11. 1. Except as otherwise provided in section 6 of this

act, after notice of a constructional defect is given pursuant to

NRS 40.645, before a claimant may commence an action or

amend a complaint to add a cause of action for a constructional

defect against a contractor, subcontractor, supplier or design

professional, the claimant must:

(a) Allow an inspection of the alleged constructional defect to

be conducted pursuant to section 8 of this act; and

(b) Allow the contractor, subcontractor, supplier or design

professional a reasonable opportunity to repair the constructional

defect or cause the defect to be repaired if an election to repair is

made pursuant to section 9 of this act.

2. If a claimant commences an action without complying with

subsection 1 or NRS 40.645, the court shall:

(a) Dismiss the action without prejudice and compel the

claimant to comply with those provisions before filing another

action; or

(b) If dismissal of the action would prevent the claimant from

filing another action because the action would be procedurally

barred by the statute of limitations or statute of repose, the court

shall stay the proceeding pending compliance with those

provisions by the claimant.

Sec. 12. 1. A claimant and any contractor, subcontractor,

supplier and design professional may submit a question or dispute

to the State Contractors’ Board concerning any matter which may

affect or relate to a constructional defect, including, without

limitation, questions concerning the need for repairs, the

appropriate method for repairs, the sufficiency of any repairs that

have been made and the respective rights and responsibilities of

homeowners, claimants, contractors, subcontractors, suppliers

and design professionals.

2. If a question or dispute is submitted to the State

Contractors’ Board pursuant to this section, the State Contractors’

Board shall, pursuant to its regulations, rules and procedures,

respond to the question or investigate the dispute and render a

decision. Nothing in this section authorizes the State Contractors’

Board to require the owner of a residence or appurtenance to

participate in any administrative hearing which is held pursuant

to this section.

3. Not later than 30 days after a question or dispute is

submitted to the State Contractors’ Board pursuant to subsection

1, the State Contractors’ Board shall respond to the question or

render its decision. The response or decision of the State

Contractors’ Board:

(a) Is not binding and is not subject to judicial review pursuant

to the provisions of chapters 233B and 624 of NRS; and

(b) Is not admissible in any judicial or administrative

proceeding brought pursuant to the provisions of this chapter.

4. The provisions of this chapter do not preclude a claimant

or a contractor, subcontractor, supplier or design professional

from pursuing any remedy otherwise available from the State

Contractors’ Board pursuant to the provisions of chapter 624 of

NRS concerning a constructional defect.

5. If an action for a constructional defect has been

commenced, the court shall not stay or delay any proceedings

before the court pending an answer to a question or decision

concerning a dispute submitted to the State Contractors’ Board.

6. The State Contractors’ Board shall adopt regulations

necessary to carry out the provisions of this section and may

charge and collect reasonable fees from licensees to cover the cost

of carrying out its duties pursuant to this section.

Sec. 13. 1. If a contractor, subcontractor, supplier or

design professional receives written notice of a constructional

defect, the contractor, subcontractor, supplier or design

professional may present the claim to an insurer which has issued

a policy of insurance that covers all or any portion of the business

of the contractor, subcontractor, supplier or design professional.

2. If the contractor, subcontractor, supplier or design

professional presents the claim to the insurer pursuant to this

section, the insurer:

(a) Must treat the claim as if a civil action has been brought

against the contractor, subcontractor, supplier or design

professional; and

(b) Must provide coverage to the extent available under the

policy of insurance as if a civil action has been brought against

the contractor, subcontractor, supplier or design professional.

3. A contractor, subcontractor, supplier or design

professional is not required to present a claim to the insurer

pursuant to this section, and the failure to present such a claim to

the insurer does not relieve the insurer of any duty under the

policy of insurance to the contractor, subcontractor, supplier or

design professional.

Sec. 14. 1. If a settlement conference is held concerning a

claim for a constructional defect, the special master, if any, or the

judge presiding over the claim may order a representative of an

insurer of a party to attend the settlement conference. If a

representative of an insurer is ordered to attend the settlement

conference, the insurer shall ensure that the representative is

authorized, on behalf of the insurer, to:

(a) Bind the insurer to any settlement agreement relating to

the claim;

(b) Enter into any agreement relating to coverage that may be

available under the party’s policy of insurance which is required

to carry out any settlement relating to the claim; and

under the party’s policy of insurance.

2. If a representative of an insurer who is ordered to attend a

settlement conference pursuant to subsection 1 fails to attend the

settlement conference or attends but is substantially unprepared to

participate, or fails to participate in good faith, the special master

or the judge may, on his own motion or that of a party, issue any

order with regard thereto that is just under the circumstances.

3. In lieu of or in addition to any other sanction, the special

master or the judge may require the insurer to pay any reasonable

expenses or attorney’s fees incurred by a party because of the

failure of the insurer or its representative to comply with the

provisions of this section or any order issued pursuant to this

section, unless the special master or the judge finds that the

failure to comply was substantially justified or that any other

circumstances make the award of such expenses or fees unjust.

4. Any insurer which conducts business in this state and

which insures a party against liability for the claim shall be

deemed to have consented to the jurisdiction of the special master

or the judge for the purposes of this section.

5. The authority conferred upon the special master or the

judge pursuant to this section is in addition to any other authority

conferred upon the special master or the judge pursuant to any

other statute or any court rule.

Sec. 15. Not later than 15 days before the commencement of

mediation required pursuant to NRS 40.680 and upon providing

15 days’ notice, each party shall provide to the other party, or shall

make a reasonable effort to assist the other party to obtain, all

relevant reports, photos, correspondence, plans, specifications,

warranties, contracts, subcontracts, work orders for repair,

videotapes, technical reports, soil and other engineering reports

and other documents or materials relating to the claim that are not

privileged.

Sec. 16. NRS 40.600 is hereby amended to read as follows:

40.600 As used in NRS 40.600 to 40.695, inclusive, and

sections 2 to 15, inclusive, of this act, unless the context otherwise

requires, the words and terms defined in NRS 40.605 to 40.630,

inclusive, and sections 2 to 5, inclusive, of this act have the

meanings ascribed to them in those sections.

Sec. 17. NRS 40.610 is hereby amended to read as follows:

40.610 “Claimant” means [an] :

1. An owner of a residence or appurtenance [or a] ;

2. A representative of a homeowner’s association that is

responsible for a residence or appurtenance and is acting within the

scope of his duties pursuant to chapter 116 or 117 of NRS [.] ; or

3. Each owner of a residence or appurtenance to whom a

notice applies pursuant to subsection 4 of NRS 40.645.

Sec. 18. NRS 40.615 is hereby amended to read as follows:

40.615 “Constructional defect” [includes] 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 [. The term includes] 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 [that is proximately caused by a

constructional defect.] ;

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.

Sec. 19. NRS 40.635 is hereby amended to read as follows:

40.635 NRS 40.600 to 40.695, inclusive [:] , and sections 2 to

15, inclusive, of this act:

1. Apply to any claim that arises before, on or after July 1,

1995, as the result of a constructional defect, except a claim for

personal injury or wrongful death, if the claim is the subject of an

action commenced on or after July 1, 1995.

2. Prevail over any conflicting law otherwise applicable to the

claim or cause of action.

3. Do not bar or limit any defense otherwise available , except

as otherwise provided in those sections.

4. Do not create a new theory upon which liability may be

based [.] , except as otherwise provided in those sections.

Sec. 20. NRS 40.645 is hereby amended to read as follows:

40.645 1. Except as otherwise provided in this section and

NRS 40.670 , [:

1. For a claim that is not a complex matter, at least 60 days]

before a claimant commences anaction or amends a complaint to

add a cause of action for a constructional defect against a

contractor [for damages arising from a constructional defect,] ,

subcontractor, supplier or design professional the claimant [must]

(a) Must give written notice by certified mail, return receipt

requested, to the contractor, at the contractor’s [last known address,

specifying] 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 his 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 he no longer acts as a

contractor in this state.

2. The notice given pursuant to subsection 1 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 [. The notice must describe] ; and

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.

3. Notice that includes an expert opinion concerning the

cause of the constructional defects and the nature and extent of

the damage or injury resulting from the defects which is based on

a valid and reliable representative sample of the components of the

residences or appurtenances may be used as notice of the common

constructional defects within the residences or appurtenances to

which the expert opinion applies.

4. Except as otherwise provided in subsection 5, one notice

may be sent relating to all similarly situated owners of residences

or appurtenances within a single development that allegedly have

common constructional defects if:

(a) An expert opinion is obtained concerning the cause of the

common constructional defects and the nature and extent of the

damage or injury resulting from the common constructional defects

;

(b) That expert opinion concludes that based on a valid and

reliable representative sample of the components of the residences

and appurtenances [involved] included in the [action satisfies the

requirements of this section. During the 45‑day period after the

contractor receives the notice, on his written request, the contractor

is entitled to inspect the property that is the subject of the claim to

determine the nature and cause of the defect, damage or injury and

the nature and extent of repairs necessary to remedy the defect. The

contractor shall, before making the inspection, provide reasonable

notice of the inspection and shall make the inspection at a

reasonable time. The contractor may take reasonable steps to

establish the existence of the defect.

2. If a residence or appurtenance that is the subject of the claim

is covered by a homeowner’s warranty that is purchased by or on

behalf of a claimant pursuant to NRS 690B.100 to 690B.180,

inclusive, a claimant shall diligently pursue a claim under the

contract.

3. Within 60 days after the contractor receives the notice, the

contractor shall make a written response to the claimant. The

response:

(a) Must be served to the claimant by certified mail, return

receipt requested, at the claimant’s last known address.

(b) Must respond to each constructional defect set forth in the

claimant’s notice, and describe in reasonable detail the cause of the

defect, if known, the nature and extent of the damage or injury

resulting from the defect, and, unless the response is limited to a

proposal for monetary compensation, the method, adequacy and

estimated cost of any proposed repair.

(1) A proposal for monetary compensation, which may

include a contribution from a subcontractor.

(2) If the contractor or his subcontractor is licensed to make

the repairs, an agreement by the contractor or subcontractor to make

the repairs.

(3) An agreement by the contractor to cause the repairs to be

made, at the contractor’s expense, by another contractor who is

licensed to make the repairs, bonded and insured.

The repairs must be made within 45 days after the contractor

receives written notice of acceptance of the response, unless

completion is delayed by the claimant or by other events beyond the

control of the contractor, or timely completion of the repairs is not

reasonably possible. The claimant and the contractor may agree in

writing to extend the periods prescribed by this section.

4. Not later than 15 days before the mediation required

pursuant to NRS 40.680 and upon providing 15 days’ notice, each

party shall provide the other party, or shall make a reasonable effort

to assist the other party to obtain, all relevant reports, photos,

correspondence, plans, specifications, warranties, contracts,

subcontracts, work orders for repair, videotapes, technical reports,

soil and other engineering reports and other documents or materials

relating to the claim that are not privileged.

5. If the claimant is a representative of a homeowner’s

association, the association shall submit any response made by the

contractor to each member of the association.

6. As used in this section, “subcontractor” means a contractor

who performs work on behalf of another contractor in the

construction of a residence or appurtenance.] notice, it is the

opinion of the expert that those similarly situated residences and

appurtenances may have such common constructional defects;

and

5. A representative of a homeowner’s association may send

notice pursuant to this section on behalf of an association that is

responsible for a residence or appurtenance if the representative is

acting within the scope of his duties pursuant to chapter 116 or

117 of NRS.

6. Notice is not required pursuant to this section before

commencing an action if:

(a) The contractor, subcontractor, supplier or design

professional has filed an action against the claimant; or

(b) The claimant has filed a formal complaint with a law

enforcement agency against the contractor, subcontractor,

supplier or design professional for threatening to commit or

committing an act of violence or a criminal offense against the

claimant or the property of the claimant.

Sec. 21. NRS 40.650 is hereby amended to read as follows:

40.650 1. If a claimant unreasonably rejects a reasonable

written offer of settlement made as part of a response [made]

pursuant to [NRS 40.645 or 40.682 or does not permit the contractor

or independent contractor a reasonable opportunity to repair the

defect pursuant to an accepted offer of settlement] paragraph (b) of

subsection 2 of section 9 of this act and thereafter commences an

action governed by NRS 40.600 to 40.695, inclusive, and sections 2

to 15, inclusive, of this act, the court in which the action is

commenced may:

(a) Deny the claimant’s attorney’s fees and costs; and

(b) Award attorney’s fees and costs to the contractor.

Any sums paid under a homeowner’s warranty, other than sums paid

in satisfaction of claims that are collateral to any coverage issued to

or by the contractor, must be deducted from any recovery.

2. If a contractor , subcontractor, supplier or design

professional fails to:

(a) Comply with the provisions of section 9 of this act;

(b) Make an offer of settlement;

[(b)] (c) Make a good faith response to the claim asserting no

liability;

[(c) Complete, in a good and workmanlike manner, the repairs

specified in an accepted offer;]

(d) Agree to a mediator or accept the appointment of a mediator

pursuant to NRS 40.680 ; [or subsection 4 of NRS 40.682;] or

(e) Participate in mediation,

the limitations on damages and defenses to liability provided in

NRS 40.600 to 40.695, inclusive, and sections 2 to 15, inclusive, of

this act do not apply and the claimant may commence an action or

amend a complaint to add a cause of action for a constructional

defect without satisfying any other requirement of NRS 40.600 to

40.695, inclusive [.] , and sections 2 to 15, inclusive, of this act.

3. If a residence or appurtenance that is the subject of the

claim is covered by a homeowner’s warranty that is purchased by

or on behalf of a claimant pursuant to NRS 690B.100 to

690B.180, inclusive, a claimant shall diligently pursue a claim

under the contract. If coverage under a homeowner’s warranty is

denied by an insurer in bad faith, the homeowner and the contractor

, subcontractor, supplier or design professional have a right of

action for the sums that would have been paid if coverage had been

provided, plus reasonable attorney’s fees and costs.

4. Nothing in this section prohibits an offer of judgment

pursuant to Rule 68 of the Nevada Rules of Civil Procedure or

NRS 17.115 if the offer of judgment includes all damages to which

the claimant is entitled pursuant to NRS 40.655.

Sec. 22. NRS 40.655 is hereby amended to read as follows:

40.655 1. Except as otherwise provided in NRS 40.650, in a

claim governed by NRS 40.600 to 40.695, inclusive, and sections 2

to 15, inclusive, of this act, the claimant may recover only the

following damages to the extent proximately caused by a

constructional defect:

(a) Any reasonable attorney’s fees;

(b) The reasonable cost of any repairs already made that were

necessary and of any repairs yet to be made that are necessary to

cure any constructional defect that the contractor failed to cure and

the reasonable expenses of temporary housing reasonably necessary

during the repair;

structure, if any, to the extent the reduction is because of structural

failure;

(d) The loss of the use of all or any part of the residence;

(e) The reasonable value of any other property damaged by the

constructional defect;

(f) Any additional costs reasonably incurred by the claimant,

including, but not limited to, any costs and fees incurred for the

retention of experts to:

(1) Ascertain the nature and extent of the constructional

defects;

(2) Evaluate appropriate corrective measures to estimate the

value of loss of use; and

(3) Estimate the value of loss of use, the cost of temporary

housing and the reduction of market value of the residence; and

(g) Any interest provided by statute.

2. The amount of any attorney’s fees awarded pursuant to this

section must be approved by the court.

3. If a contractor complies with the provisions of NRS 40.600

to 40.695, inclusive, and sections 2 to 15, inclusive, of this act, the

claimant may not recover from the contractor, as a result of the

constructional defect, anything other than that which is provided

pursuant to NRS 40.600 to 40.695, inclusive [.] , and sections 2 to

15, inclusive, of this act.

4. This section must not be construed as impairing any

contractual rights between a contractor and a subcontractor,

supplier or design professional.

5. As used in this section, “structural failure” means physical

damage to the load-bearing portion of a residence or appurtenance

caused by a failure of the load-bearing portion of the residence or

appurtenance.

Sec. 23. NRS 40.660 is hereby amended to read as follows:

40.660 An offer of settlement made pursuant to paragraph (b)

of subsection 2 of section 9 of this act that is not accepted within [:

1. In a complex matter, 45 days; or

2. In a matter that is not a complex matter, 25 days,]

35 days after the offer is received by the claimant is considered

rejected if the offer contains a clear and understandable statement

notifying the claimant of the consequences of his failure to respond

or otherwise accept or reject the offer of settlement. An affidavit

certifying rejection of an offer of settlement under this section may

be filed with the court.

Sec. 24. NRS 40.665 is hereby amended to read as follows:

40.665 In addition to any other method provided for settling a

claim pursuant to NRS 40.600 to 40.695, inclusive, and sections 2

to 15, inclusive, of this act, a contractor may, pursuant to a written

agreement entered into with a claimant, settle a claim by

repurchasing the claimant’s residence and the real property upon

which it is located. The agreement may include provisions which

reimburse the claimant for:

1. The market value of the residence as if no constructional

defect existed, except that if a residence is less than 2 years of age

and was purchased from the contractor against whom the claim is

brought, the market value is the price at which the residence was

sold to the claimant;

2. The value of any improvements made to the property by a

person other than the contractor;

3. Reasonable attorney’s fees and fees for experts; and

4. Any costs, including costs and expenses for moving and

costs, points and fees for loans.

Any offer of settlement made that includes the items listed in this

section shall be deemed reasonable for the purposes of subsection 1

of NRS 40.650.

Sec. 25. NRS 40.667 is hereby amended to read as follows:

40.667 1. Except as otherwise provided in subsection 2, a

written waiver or settlement agreement executed by a claimant after

a contractor has corrected or otherwise repaired a constructional

defect does not bar a claim for the constructional defect if it is

determined that the contractor failed to correct or repair the defect

properly.

2. The provisions of subsection 1 do not apply to any written

waiver or settlement agreement described in subsection 1, unless:

(a) The claimant has obtained the opinion of an expert

concerning the constructional defect;

(b) The claimant has provided the contractor with a written

notice of the defect pursuant to NRS 40.645 [or 40.682] and a copy

of the expert’s opinion; and

requirements for inspection and repair as provided in NRS 40.600 to

40.695, inclusive [.] , and sections 2 to 15, inclusive, of this act.

3. The provisions of this section do not apply to repairs which

are made pursuant to an election to repair pursuant to section 9 of

this act.

4. If a claimant does not prevail in any action which is not

barred pursuant to this section, the court may:

(a) Deny the claimant’s attorney’s fees, fees for an expert

witness or costs; and

(b) Award attorney’s fees and costs to the contractor.

Sec. 26. NRS 40.670 is hereby amended to read as follows:

40.670 1. A contractor , subcontractor, supplier or design

professional who receives written notice of a constructional defect

resulting from work performed by the contractor , [or his agent,

employee or] subcontractor , supplier or design professional which

creates animminent threat to the health or safety of the inhabitants

of the residence shall take reasonable steps to cure the defect as

soon as practicable. The contractor , subcontractor, supplier or

design professional shall not cure the defect by making any repairs

for which he is not licensed or by causing any repairs to be made by

a person who is not licensed to make those repairs. If the contractor ,

subcontractor, supplier or design professional fails to cure the

defect in a reasonable time, the owner of the residence may have the

defect cured and may recover from the contractor , subcontractor,

supplier or design professional the reasonable cost of the repairs

plus reasonable attorney’s fees and costs in addition to any other

damages recoverable under any other law.

2. A contractor , subcontractor, supplier or design

professional who does not cure a defect pursuant to this section

because he has determined, in good faith and after a reasonable

inspection, that there is not animminent threat to the health or safety

of the inhabitants is not liable for attorney’s fees and costs pursuant

to this section, except that if a building inspector, building official or

other similar authority employed by a governmental body with

jurisdiction certifies that there is animminent threat to the health

and safety of the inhabitants of the residence, the contractor ,

subcontractor, supplier or design professional is subject to the

provisions of subsection 1.

Sec. 27. NRS 40.672 is hereby amended to read as follows:

40.672 Except as otherwise provided in NRS 40.670, if a

contractor , subcontractor, supplier or design professional receives

written notice of a constructional defect [that is not part of a

complex matter] not more than 1 year after the close of escrow of

the initial purchase of the residence, the contractor , subcontractor,

supplier or design professional shall make the repairs within 45

days after [the contractor receives] receiving the written notice

unless completion is delayed by the claimant or by other events

beyond the control of the contractor, subcontractor, supplier or

design professional, or timely completion of repairs is not

reasonably possible. The contractor , subcontractor, supplier or

design professional and claimant may agree in writing to extend the

period prescribed by this section. If [the] a contractor or

subcontractor fails to comply with this section, he is immediately

subject to discipline pursuant to NRS 624.300.

Sec. 28. NRS 40.680 is hereby amended to read as follows:

40.680 1. Except as otherwise provided in this chapter,

before a claimant commences an action [based on a claim governed

by NRS 40.600 to 40.695, inclusive, may be commenced in court,]

or amends a complaint to add a cause of action for a

constructional defect against a contractor, subcontractor, supplier

or design professional, the matter must be submitted to mediation,

unless mediation is waived in writing by the contractor ,

subcontractor, supplier or design professional and the claimant.

2. The claimant and [contractor] each party alleged to have

caused the constructional defect must select a mediator by

agreement. If the claimant and [contractor] the other parties fail to

agree upon a mediator within [45] 20 days after a mediator is first

selected by the claimant, [either] any party may petition the

American Arbitration Association, the Nevada Arbitration

Association, Nevada Dispute Resolution Services or any other

mediation service acceptable to the parties for the appointment of a

mediator. A mediator so appointed may discover only those

documents or records which are necessary to conduct the mediation.

The mediator shall convene the mediation within [60] 30 days after

the matter is submitted to him and shall complete the mediation

within 45 days after the matter is submitted to him, unless the

parties agree to extend the time. [Except in a complex matter, the

claimant shall, before]

3. Before the mediation begins [,] :

(a) The claimant shall deposit $50 with the mediation service ;

and [the contractor]

(b) Each other party shall deposit with the mediation service ,

in equal shares, the remaining amount estimated by the mediation

service as necessary to pay the fees and expenses of the mediator for

the first session of mediation [, and the contractor] and shall deposit

additional amounts demanded by the mediation service as incurred

for that purpose. [In a complex matter, each party shall share equally

in the deposits estimated by the mediation service.]

4. Unless otherwise agreed, the total fees for each day of

mediation and the mediator must not exceed $750 per day.

[3.] 5. If the parties do not reach an agreement concerning the

matter during mediation or if [the contractor] any party who is

alleged to have caused the constructional defect fails to pay the

required fees and appear, the claimant may commence [his] an

action or amend a complaint to add a cause of action for the

constructional defect in court and:

(a) The reasonable costs and fees of the mediation are

recoverable by the prevailing party as costs of the action.

(b) [Either] Any party may petition the court in which the action

is commenced for the appointment of a special master.

[4.] 6. A special master appointed pursuant to subsection [3] 5

may:

(a) Review all pleadings, papers or documents filed with the

court concerning the action.

(b) Coordinate the discovery of any books, records, papers or

other documents by the parties, including the disclosure of witnesses

and the taking of the deposition of any party.

and any consultants or experts of a party.

(d) Order settlement conferences and attendance at those

conferences by any representative of the insurer of a party.

(e) Require any attorney representing a party to provide

statements of legal and factual issues concerning the action.

(f) Refer to the judge who appointed him or to the presiding

judge of the court in which the action is commenced any matter

requiring assistance from the court.

The special master shall not, unless otherwise agreed by the parties,

personally conduct any settlement conferences or engage in any ex

parte meetings regarding the action.

[5.] 7. Upon application by a party to the court in which the

action is commenced, any decision or other action taken by a special

master appointed pursuant to this section may be appealed to the

court for a decision.

[6.] 8. A report issued by a mediator or special master that

indicates that [either] a party has failed to appear before him or to

mediate in good faith is admissible in the action, but a statement or

admission made by [either] a party in the course of mediation is not

admissible.

Sec. 29. NRS 40.688 is hereby amended to read as follows:

40.688 1. If a claimant attempts to sell a residence that is or

has been the subject of a claim governed by NRS 40.600 to 40.695,

inclusive, and sections 2 to 15, inclusive, of this act, he shall

disclose, in writing, to any prospective purchaser of the residence,

not less than 30 days before the close of escrow for the sale of

the residence or, if escrow is to close less than 30 days after the

execution of the sales agreement, then immediately upon the

execution of the sales agreement or, if a claim is initiated less than

30 days before the close of escrow, within 24 hours after giving

written notice to the contractor pursuant to [subsection 1 of] NRS

40.645 : [or subsection 1 of NRS 40.682:]

(a) All notices given by the claimant to the contractor pursuant

to NRS 40.600 to 40.695, inclusive, and sections 2 to 15, inclusive,

of this act that are related to the residence;

(b) All opinions the claimant has obtained from experts

regarding a constructional defect that is or has been the subject of

the claim;

the claim; and

(d) A detailed report of all repairs made to the residence by or

on behalf of the claimant as a result of a constructional defect that is

or has been the subject of the claim.

2. Before taking any action on a claim pursuant to NRS 40.600

to 40.695, inclusive, and sections 2 to 15, inclusive, of this act, the

attorney for a claimant shall notify the claimant in writing of the

provisions of this section.

Sec. 30. NRS 40.6882 is hereby amended to read as follows:

40.6882 [“Complainant”] As used in NRS 40.6884 and

40.6885, unless the context otherwise requires, “complainant”

means a person who makes a claim or files an action against a

design professional pursuant to NRS 40.600 to 40.695, inclusive [.] ,

and sections 2 to 15, inclusive, of this act.

Sec. 31. NRS 40.692 is hereby amended to read as follows:

40.692 [If, after complying with the procedural requirements of

NRS 40.645 and 40.680, or NRS 40.682, a claimant proceeds with

an action for damages arising from a constructional defect:

1. The claimant and each contractor who is named in the

original complaint when the action is commenced are not required,

while the action is pending, to comply with the requirements of

NRS 40.645 or 40.680, or NRS 40.682, for any constructional

defect that the claimant includes in an amended complaint, if the

constructional defect:

(a) Is attributable, in whole or in part, to such a contractor;

(b) Is located on the same property described in the original

complaint; and

provided that a good faith effort had been undertaken by the

claimant.

2. The] A claimant who commences an action for a

constructional defect is not required to give written notice of a

defect pursuant to [subsection 1 of NRS 40.645 or subsection 1 of

NRS 40.682] NRS 40.645 to any person who [is joined to or]

intervenes in the action as a party after it is commenced. If such a

person becomes a party to the action:

[(a)] 1. For the purposes of [subsection 1 of NRS 40.645 or

subsection 1 of NRS 40.682,] NRS 40.645, the person shall be

deemed to have been given notice of the defect by the claimant on

the date on which the person becomes a party to the action; and

[(b)] 2. The provisions of NRS 40.600 to 40.695, inclusive,

and sections 2 to 15, inclusive, of this act apply to the person after

that date.

Sec. 32. NRS 40.695 is hereby amended to read as follows:

40.695 1. Except as otherwise provided in subsection 2,

statutes of limitation or repose applicable to a claim based on a

constructional defect governed by NRS 40.600 to 40.695, inclusive,

and sections 2 to 15, inclusive, of this act are tolledfrom the time

notice of the claim is given, until 30 days after mediation is

concluded or waived in writing pursuant to NRS 40.680 . [or

subsection 4 of NRS 40.682.]

2. Tolling under this sectionapplies [:

(a) Only to a claim that is not a complex matter.

(b) To] to a third party regardless of whether the party is

required to appear in the proceeding.

Sec. 33. NRS 40.613, 40.682, 40.6881 and 40.6883 are hereby

repealed.

Sec. 34. The amendatory provisions of this act apply only to

claim for a constructional defect that arises before, on or after

August 1, 2003, unless the claimant:

1. Has commenced an action concerning the claim in

accordance with NRS 40.600 to 40.695, inclusive, before August 1,

2003; or

2. Has given notice of the claim to the contractor,

subcontractor, supplier or design professional pursuant to NRS

40.600 to 40.695, inclusive, before August 1, 2003, including notice

on behalf of named and unnamed claimants.

Sec. 35. 1. This section and section 12 of this act become

effective upon passage and approval for the purpose of adopting

regulations and on August 1, 2003, for all other purposes.

2. Sections 1 to 11, inclusive, and 13 to 34, inclusive, of this

act become effective on August 1, 2003.

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