While patent defects are obvious and are typically discovered during an inspection of the property, latent defects are hidden. The difference between a patent and latent construction defect is important for a homeowner to understand when recovering damages for construction defects. When a homeowner has a home that contains a latent defect, years may go by before it is discovered. Latent defects can cause substantial damage to a home since they can exist for a long time without being noticed and repaired.
Patent defects are construction defects that are open and obvious, meaning that they should be reasonably discovered during a routine inspection. These types of defects can be seen with the naked eye. For example, severe stucco cracking or flaking may be reasonably observed by a homeowner just by walking around the house. A patent defect is one where a lay person, without construction experience, can observe and reasonably understand that there is likely a problem or defect.
Latent defects are those that are hidden and not easily discovered. They cannot be seen with the naked eye and may not be uncovered through a regular inspection. These types of defects can continue causing damage for years before they are found or may exist without causing damage for years after completion of construction. For instance, defectively installed plumbing may not be discovered until years after installation when a leak finally occurs and causes damage. Or, defective soil conditions may exist and not show evidence of damage to the home for years after completion, depending on seasonal precipitation and exposure of water to the soil. These types of defects are likely only discoverable once damage occurs or an expert can identify them.
Patent and latent construction defects are handled differently by courts. In Nevada, homebuyers are expected to conduct inspections to discover obvious defects before they decide to purchase a home. If they fail to conduct an inspection and to discover obvious (patent) defects, they may not be able to recover damages for said patent defects depending on the circumstances of the home sale. Latent defects, or those concealed by a seller, may be recoverable. For new home construciton defect actions, both patent and latent defect damages may be recoverable depending on the facts and evidence presented.
Sellers of residential real estate must complete disclosure forms to inform potential buyers regarding defects in their properties. If they fail to disclose defects that they know about or reasonably should know about, they may be liable to pay trebled damages to an innocent buyer.
When homeowners discover latent defects that have caused damage, they will normally be able to recover damages against the responsible parties. The parties that caused the defects and damage may have to repair the defects and/or compensate the homebuyer for the resulting losses.
The difference between a patent and latent defect might not always be clear to homeowners who have no expertise in the construction industry. It might also not be clear which parties are liable – a prior seller and/or a builder/contractor. A construction defect attorney can help a homeowner determine whether a valid construction defect claim exists and who the responsible party might be.
It is a common misconception that there are no remedies available for construction defects when contractors file for bankruptcy. In fact, a claimant may still pursue compensation through the contractor’s liability insurance or the subcontracting companies after seeking leave from the bankruptcy court. When the contractor has liability insurance, a claimant can ask for the bankruptcy to be set aside to allow for the collection of a settlement or judgment from the contractor’s insurance carrier. Similarly, subcontractors that worked on the project and contributed to the alleged defects may also have liability insurance to pay for a portion of the damages. A final option is for the homeowners to pursue creditor claims through the bankruptcy case.
When a company files for bankruptcy protection, the court generally issues an automatic stay ordering the creditors to cease enforcement actions to collect the judgments and settlements secured against the business. The effect of the automatic stay on construction defect claims and judgments is that they will immediately be halted while the bankruptcy case is pending. While creditors can file claims with the bankruptcy court to be included in a Chapter 11 reorganization plan or a Chapter 7 liquidation plan to receive a portion of the proceeds of the bankruptcy estate, this will likely leave a homeowner with construction defects and only a very small percentage for recovery of damages. This is because of the business’s other creditors, including those with secured loans that will likely be in front of the homeowner for purposes of recovery in the bankruptcy action. Homeowners who hear that negligent contractors are considering filing for bankruptcy protection might want to weigh whether or not to seek a quick settlement before the petition is filed. Homeowners may also consider whether or not the claim is worth pursuing through the bankruptcy case and if insurance proceeds are available.
When a contractor has liability insurance and files for bankruptcy protection, a claimant may have more options. The claimant can file a request to have the bankruptcy case set aside so that he or she can pursue a claim against the contractor’s liability insurance carrier. The insurance company should pay any judgment or settlement that is obtained by the claimant. Subcontractors that worked on the project may also have contributed to the alleged construction defects and might have liability insurance to go after. By identifying all of the potentially liable parties, a construction attorney may help the claimant to find more sources of recovery to recoup losses that were caused by the defective construction.
If you are a homeowner dealing with a contractor who is out of business, contact a construction attorney to find out your rights. There may be hope for recovery even if the contractor filed for bankruptcy.
Before homeowners in Nevada can file lawsuits for construction defects, they must first complete a mandatory prelitigation process. This process requires giving proper notice and allowing the contractors and subcontractors time and the right to make repairs. The mandatory prelitigation process is designed to provide a way for construction defects to be resolved without the need for litigation. This helps reduce the number of cases that are filed while providing relief to affected homeowners.
When homeowners discover construction defects, they are required to send a notice of the defects to the contractor prior to commencing litigation. Under the statutory definition of a defect, the defective condition must either create unreasonable risks of injury to the property or person; or they must not have been completed in a good, workmanlike manner and are causing damage. The notice under NRS Chapter 40 must include reasonable details about the defects, including the injury to the property, and the damage it has caused. The notice must also include information about the defect’s location. Finally, the notice must include a signed statement by the homeowner verifying the existence of each claimed deficiency.
Once the notice is completed, the homeowner must send the notice by certified, return-receipt mail to the contractor at the address listed with the State Contractor’s Board. Once the contractor receives the notice of defect, it must forward a copy to each subcontractor, designer, or supplier whose scope of work may be implicated by the defects detailed in the notice.
Within 90 days of receiving the notice, the contractor may request an inspection of the property. The homeowner must provide the subcontractor, supplier, contractor, or designer with reasonable access so that the inspection can be completed. In the contractor’s written response to the notice, he or she must include either an election to repair or declination of repair. If the contractor elects to repair the defect, an estimate of the time it will take to complete the repair and the available dates should be included. Any repair cannot be conditioned upon a homeowner’s settlement or release. If a repair is made, the contractor must provide a statement of repairs to the homeowner for disclosure purposes. If the repair is declined, a prelitigation mediation must be conducted unless it is waived in writing.
An attorney can assist homeowners with the NRS Chapter 40 prelitigation process to adequately preserve the construction defect claims.
When construction defects lead to litigation in Nevada, several types of damages may be recoverable. General contractors may pursue litigation against subcontractors for defects after the subcontractors have been given an opportunity to repair the defects. Similarly, homeowners must first give contractors an opportunity to repair discovered defects before claims may be filed in Court. If the repairs are insufficient, the contractors or homeowners may then pursue claims to recover damages.
When a construction defect is discovered, the contractor or homeowner must first notify the responsible party about the problem and give the party the right to make repairs to correct it by way of an NRS Chapter 40 notice. While the subcontractor or contractor has a right to repair the defect, doing so might not release him or her from liability.
Under Nevada law, there is a very clear preliltigation process that must be completed before a construction defect lawsuit can be filed, which includes not only the right to repair, but also a prelitigation mediation to help promote settlement without the need for a lawsuit. Construction defect claims are often complex because of the number of parties that may be involved and the intertwined nature of the work of various subcontractors and insurance companies.
Depending on the individual circumstance, the damages that may be available in a construction defect claim include:
To recover damages, the party that files the claim must first prove that the defect exists and that it was caused by the contractor or subcontractor against whom the claim was filed. The claimant must also prove the losses that were suffered because of the defect. At trial, either a judge or jury will determine whether there was in fact the existence of a construction defect and the amount of damages caused by the same.
In Nevada and California, construction defects that cause toxic mold to build up in homes and buildings can cause substantial losses for property owners, and the parties that are responsible may have to repair the problems and pay for the victims’ injuries. Toxic mold can build up in a home or business when the building envelope is not properly sealed or when there are defects in the plumbing or HVAC systems. Toxic mold can cause people to suffer serious illnesses caused by indoor air pollutants. Structures that have been infected by the mold may need to be repaired or replaced because of weakening structural integrity. Because of the serious illnesses and structural damage that can be caused by toxic mold, it can be very expensive to correct the related problems.
Mold spores can be present in the air. Since modern buildings are designed to be airtight, this can prevent them from breathing and airing out. Buildings that have moisture introduced to the interior can cause both water damage and significant mold growth. Some of the common causes of toxic mold include:
When the cause of toxic mold is a construction defect, the company or companies responsible for the problem may have to pay for the property owner’s medical expenses and property damages, including mold mitigation and the replacement or repair of the affected structures. Some of the parties that have potential liability exposure for toxic mold might include former homeowners who failed to disclose the problems, contractors, architects, subcontractors, and materials suppliers, depending on the type of defect that caused toxic mold to develop.
A property owner’s losses because of toxic mold from construction defects can be substantial. Some people may develop illnesses caused by exposure to toxic mold and may have significant related medical expenses and potential long-term effects. Toxic mold can also cause serious structural damage to a commercial building or home. The cleanup, remdiation and mold-testing costs can be substantial. Structures can be weakened by mold and moisture, meaning that windows, roofs, walls, and other structural elements might need to be replaced. When the defect is located in the ventilation system, the costs can also be significant. If you believe that you might have a toxic mold claim caused by a construction defect or you believe that a prior owner failed to disclose a mold condition, contact an attorney to find out your legal rights and remedies.
Thermal imaging technology may be used to spot several types of construction defects, which can allow developers to fix issues before they become bigger problems and may help prospective buyers to understand problems that a particular property has before they complete a purchase. When construction defects are not identified early, they can cause substantial damage and huge losses to a property owners, likely leading to litigation. Using thermal imaging technology might help people to find problems before they cause further issues.
Thermal imaging relies on infrared technology to translate information about heat into visible light rays. Thermal imaging cameras are relatively inexpensive and can be connected to smartphones and other mobile devices to display infrared pictures of heat sources in a color display. Using a thermal imaging camera may allow people to see what is located behind walls and under floors so that they can try to identify problems in the construction.
While thermal imaging cameras have many applications, one important use is the identification of certain construction defects. Builders can use thermal imaging cameras to identify problems with radiant floor systems before the flooring is installed. Builders and construction defect experts can also use thermal imaging cameras to identify areas where insulation is missing or inadequate. In some instances, thermal imaging technology can help identify water leaks, some types of electrical problems and structural issues that need to be corrected. Identifying and correcting construction defects before they cause significant damage can help both builders and property owners alike.
Prospective buyers can also use thermal imaging cameras during their inspections of homes and other properties that they are considering for purchase. Potential buyers may want to ask inspectors whether they plan to use the technology in conducting their inspections. Identifying construction defects with thermal imaging can help buyers to renegotiate purchase contracts or decide to avoid the transactions all together. Purchasing a property, only to later discover a construction defect, can be costly and lead to thousands of dollars of expensive repairs and litigation. Depending on the types of defects, some properties may not be reasonably salvageable.
Thermal imaging cameras can identify several types of construction defects and prevent substantial damage and losses. Some of the types of defects that may be identified with thermal imaging include the following:
Identifying defects early can allow builders to correct them before damage occurs. Thermal imaging technology can help to prevent construction litigation that might otherwise ensue if the builder leaves defective conditions in place. Should litigation be necessary, thermal imaging may also be utilized by construction defect experts in formulating their opinions. Thermal imaging is just one example of technology used by those in the construction industry.
People in Nevada who plan to build homes or complete extensive remodeling projects need to be careful when they hire contractors so that they can help prevent future disputes. There are several things that people can do to find honest and reliable contractors for their building projects. Taking the time to find the best possible contractor can help to prevent costly mistakes. When people choose contractors who perform shoddy work, they might face thousands of dollars of losses to fix the construction problems.
The first step in finding a good contractor is to plan. People need to figure out exactly what they want before they begin interviewing contractors. If they plan to add an addition, they might need to secure architectural drawings. The plan should include the types of materials that will be used and the budget for the project, including permitting costs.
People should ask their friends and family members for referrals for good contractors. They should also make sure that the contractor is licensed in Nevada and does not have a history of complaints against them. The contractor should have substantial experience and have a good reputation. While Nevada does not legally require a contractor to carry liability insurance, it is crucial to ensure that the contractor you hire is willing to carry necessary licensing, permitting, insurance and bonding, if needed, and is willing to provide you with written proof of the same. Contractors being interviewed should be willing to provide references from prior customers and should be willing to provide potential customers with a detailed written bid/proposal.
Before a construction project begins, people should make sure that they have their agreements in writing. The written contract should include all of the agreed work and be detailed about the responsibilities of both the contractor and the homeowner. The contract should also include information about the time frame for the job and the materials that will be used. While signing the “bid/proposal” does create a binding legal contract, we highly recommend that a more detailed contract be executed so that there are not legal ambiguities should a dispute later arise. There should also be a clause that discusses how disputes will be handled, including a prevailing party provision to allow for the recovery of attorney’s fees and costs should litigation ensue. Also, homeowners should look out for arbitration clauses and limited warranty provisions that might strip the homeowner of rights under Nevada law.
Taking time to plan and thoroughly investigate contractors before they are hired can help homeowners to avoid costly mistakes. Before signing any contract of substantial value, it is our recommendation to have an attorney review it so that a homeowner fully understands their rights and obligations.
Arbitration clauses and non-disclosure agreements in Nevada construction disputes can potentially harm the rights of homeowners when they are seeking remedies for construction defects. While proponents of arbitration clauses claim that they help to make the claims process faster and protect both builders and homeowners, consumers are at a disadvantage when they arbitrate their claims instead of pursuing legal remedies in court. Arbitration agreements and NDAs are commonly used in the construction industry, and they have the effect of keeping disputes and outcomes out of the public’s eye. This means other consumers may not have good information about the workmanship and quality of a builder.
Arbitration clauses mandate that the parties to the contract settle their disputes in arbitration instead of through a court of law. These types of provisions force consumers to waive their right to a jury trial. While court proceedings are a matter of public record, arbitration is held outside of the court process. Arbitrators are third parties that are supposed to be neutral. When an arbitrator issues his or her decision, the matter is final, binding, and usually confidential. This means that a consumer who is unhappy with the outcome of arbitration will not have further legal redress available to him or her. Frequently, the construction company will get to choose the arbitrator and set the terms of the process through the sales contract, placing the homeowner at a greater disadvantage because the builder will often choose someone who they know and have probably had experience with in the past. An arbitrator who frequently works on arbitration matters after being hired by a construction company may also be more likely to issue rulings that favor the company over the homeowners during disputes. This frequently leads to consumers receiving arbitration verdicts worth far less than what they would otherwise be entitled to recover in Court. Unfortunately, consumers will sign arbitration clauses as part of their purchase agreement without even knowing the rights that they are waiving.
While the proceedings in arbitration are often held in secret, the parties can still talk about what occurred unless they are prohibited from doing so by non-disclosure agreements. Frequently, construction companies may offer unreasonably low settlements in exchange for the consumers’ agreement to sign non-disclosure agreements or will include unreasonable confidentiality provisions in proposed settlement agreements. When a consumer signs an NDA, he or she will be prohibited from discussing the settlement or what happened in his or her case. This prevents others from understanding the nature of the company’s work and its history, potentially leading to harm.
Before people enter into contracts to build or purchase homes, they should carefully review everything that is contained in the proposed contracts and strongly consider consulting a construction defect attorney prior to signing such a contract. If a company offers a warranty, it should be reviewed to see if there is any limiting language that might conflict with state law. Careful consideration should be given before signing any contract with arbitration or NDA provisions that limit one’s rights.
Construction defects can range from an improperly installed tile to more serious and costly problems, like an improperly installed exterior wall system that allows water intrusion or mold-growth. When such errors result in property damage or harm to a person, owners may pursue compensation for their losses.
Construction defects may include deficiencies in the design, manufacture, construction or repair of a new residential property or an addition to an existing residence, or of an appurtenance. Faults in the construction may rise to the level of defects when they are not completed in a “good and workmanlike manner” and “proximately causes physical damage” or “which presents an unreasonable risk of injury to a person or property”.
Design defects include errors to certain design elements that require a redesign or the replacement of some components to correct the mistake. For example, a roof designed with an incorrect pitch may cause poor drainage or allow water seepage, which may increase the risk of mold growth, destroy appliances or home interiors, or result in other costly damages.
Material defects involve the use of substandard, damaged, or otherwise inadequate building materials in the construction of a home. Inferior building materials may result in home features not functioning correctly, deteriorating quicker than expected, or providing inadequate structural support.
Errors involving the construction or repair of a property may occur as a result of contractors failing to follow applicable codes, industry quality standards, construction documents, or manufacturer’s installation instructions. For instance, workmanship defects may include improper soil compaction, which may allow a home’s foundation to sink, crack, or otherwise sustain damage.
Property owners who fall victim to negligent construction may take legal action and may be able to recover compensation for their losses. Homeowners may be able to file a lawsuit against their contractor or developer and, potentially, others involved with the design and building of their properties. Within 10 years of the substantial completion of a new construction or a property improvement, owners may be able to seek damages, including the costs of repairing the damage and some of the expenses associated with pursuing their claims, from those responsible for the defects to their properties.
The provisions included in Nevada’s recently amended construction defect law grants additional protections and benefits to homeowners and HOAs in the state. After sweeping reforms to the state’s construction defect law in 2015, Nevada lawmakers proposed and passed several notable amendments to the law governing homeowners’ rights to pursue legal action against the companies, contractors, and others responsible for the deficiencies in their homes.
The construction defect law amendments include extending the statute of repose. Homeowners previously had six years to file a lawsuit against negligent contractors and construction companies for home defects. Under the reformed law, homeowners now have 10 years to pursue defect claims from the date of substantial completion. An exemption included in the amendment permits homeowners to bring actions at any time for cases involving fraud.
The recent amendments also scale back the level of specificity needed for a Chapter 40 notice and the inspection attendance requirements. The law previously required claimants to provide specific detail of every defect, damage, and injury in their notices. However, the reformed law only necessitates reasonable detail. While the amendments did not eliminate the requirement for claimants to attend inspections of the property, they do allow a representative of the claimant to attend on his or her behalf.
Under the new construction defect law, homeowners now only have to reasonably exhaust applicable warranties, instead of having to pursue warranties known not to apply. Specifically, they need only diligently pursue builder’s warranty claims before they may serve a Chapter 40 notice.
The new construction defect law also lifts some previously imposed restrictions on the recoverable damages. The amendment opens the possible damages people may recover in Chapter 40 claims to include any reasonable costs incurred in pursuing their cases. This helps to allow homeowners to recover expert fees and litigation costs incurred in pursuing their claims.
In addition to benefiting homeowners, the amended construction defect law expands the rights of HOAs to bring Chapter 40 claims for common elements and areas that the HOA owns, insures or has a responsibility to maintain. This amendment helped to bring the Chapter 40 statute in line with other applicable Nevada HOA laws.
