Navigating construction defect claims under NRS Chapter 40 in Nevada demands a strategic approach. A...
Homeowners who have a limited new house warranty from their builders can file a claim for qualifying defects that are damaging their newly constructed home. They should consult a construction defect attorney if they are unsure if the warranty covers the defect.
What Is a New House Warranty?
When homeowners hire a contractor to build their new home, they expect the house to be safe and free of defects. However, even if a house looks perfect, it may have latent defects that homeowners will not find for months or years.
Latent defects in construction are problems with the house that the homeowners or inspectors cannot detect through a visual inspection of the home. Homeowners may not become aware of such defects for months or years. At that point, the defect may have caused severe damage requiring extensive repairs.
Most builders give homeowners a builder warranty, also called a limited new house warranty, to protect them against potential construction defects. Nevada law does not require builders to issue a new house warranty. However, many contractors include them in the contract of sale.
New house warranties include one-, two-, and ten-year terms. A typical warranty provides:
- a one-year warranty for labor and materials
- two years’ protection for mechanical defects (plumbing, electrical, heating, air conditioning, and ventilation systems), and
- ten years’ warranty for structural defects in the home
What Is a Construction Defect Under a Limited New House Warranty?
Labor and Material Defects
The one-year labor and material portion of a limited new house warranty covers defective construction materials and poor workmanship, leading to defects in the house. Faulty products or defective building material might include windows that leak, concrete that cracks under pressure, or drywall that crumbles. Defective materials include anything the builder used in the house’s construction that fails to function adequately. This portion of the warranty also covers any problems with labor leading to the improper installation of products.
The labor and material warranty covers almost any problem arising from the home’s construction. However, it only lasts for one year. For many defects, homeowners will not see the resulting damage for years. Substandard roofing or improperly installed windows that allow leaks are examples of defects that may not be immediately obvious. Leaks can occur between walls or inside attics where homeowners cannot easily see them. By the time the water damage spreads to a visible area, the material and labor warranty will have likely expired.
The two-year mechanical defect portion of the warranty covers problems with things like the plumbing, electrical, or heating and air conditioning system. This portion of the warranty is much more limited than the labor and material warranty. However, it can be very valuable if one of the expensive systems in a house is defective and needs extensive repair.
In a limited new house warranty, the term structural defect refers to specific problems with construction leading to issues with a house’s structural integrity. A structural defect is actual physical damage to a load-bearing portion of the home that causes it to become unsafe, unsanitary, or otherwise unlivable. Load bearing portions of the house include the:
- Footing and foundation systems
- Load-bearing walls and partitions
- Roof framing systems; and
- Floor systems
While this is the legal definition of a structural defect, a limited new home warranty might specify that it covers additional defects beyond damage to the load-bearing structure. Construction defect attorneys in Nevada are familiar with limited new home warranties used by local builders. They can help homeowners determine what would be considered a construction defect under a limited new house warranty.
While limited new home warranties cover many defects stemming from the home’s construction, they typically exclude certain problems and expenses. Most warranties do not cover out-of-pocket expenses homeowners might incur if they move out of their homes while the builder or other contractors remedy the defects. They also do not cover:
- Household appliances
- Small cracks in brick, tile, cement, or drywall
- Damage that the homeowner caused through abuse, misuse, neglect, or poor maintenance
- Damage caused by “acts of God” such as storms or falling trees
How Can Homeowners Make a Claim Under a New House Warranty?
When homeowners realize a construction defect has led to home damage, they should determine whether their limited new house warranty covers the defect. They can skip trying to enforce the warranty if the problem clearly is not covered or the warranty period has expired. However, if there is a possibility the warranty covers the defect, the homeowner should quickly notify the builder. It is better for homeowners to file a claim and withdraw it if it is baseless, rather than risk the warranty expiring.
Each limited new house warranty will outline the procedures for filing a claim. Many warranties require homeowners to send the builder a written notification. Others may include a telephone number to a hotline somewhere in the warranty documentation. However, homeowners should always notify the builder in writing. It is a good practice for homeowners to keep a record of their interactions with the builder in the case of a dispute. They can send the initial letter by certified mail and use the certified mail receipt to prove the builder received notice of the claim.
Homeowners should act quickly once they discover a defect. Warranties cover most defects only through the first year. Homeowners want to make sure they do not fall outside the warranty’s time limit because they delayed making their claim. They should also pay close attention to the warranty’s wording. Some warranties only require homeowners to file a claim with the builder within the designated period to claim their rights. Others require homeowners and builders to reach an agreement before the warranty’s term expires. Homeowners can consult construction defect attorneys in Nevada for help filing a claim or interpreting their limited new house warranty.
What if the Builder Refuses to Remedy a Construction Defect?
Builders and homeowners may disagree about whether a warranty covers the defect and resulting damages. If they cannot come to terms, they have to look for another option to settle their dispute. Warranties often require homeowners to submit to mediation or arbitration to resolve disputes with the builder.
If a warranty calls for mediation, homeowners and builders must meet with a neutral third party, called a mediator, and attempt to resolve their dispute. The mediator guides discussion between the parties and tries to help them reach an agreement. Mediators do not have any decision-making power. They can only make suggestions and nudge the parties toward a reasonable settlement.
If mediation fails, homeowners must submit a claim to arbitration or file a case against the builder in the appropriate court. If the warranty requires arbitration, homeowners must file for arbitration rather than with the court.
In arbitration, both sides present their case to an arbitrator or a panel of arbitrators. The parties can have legal representation and present evidence, witnesses, and expert testimony. The arbitrator acts as judge and jury and makes a final decision regarding the homeowner’s claim. Most warranties and agreements providing for arbitration require both parties to accept the decision without appeal, meaning the arbitrator’s decision is final. If homeowners lose their arbitration case, they cannot seek relief through any other avenue.
Homeowners can file a civil case against the builder in civil court if the warranty does not require arbitration. They can request that the builder perform its duty under the warranty agreement. They can also seek monetary compensation from the builder for the costs they incurred repairing their home. In a court case, the parties present their case before and judge and jury, and the jury decides whether the homeowner deserves to prevail. Homeowners can appeal the decision if they lose.