Chapter 40 Revisions

Revisions to Nevada’s construction defect pre-litigation statutory scheme adds burden to claimants’ ability to bring and maintain construction defect lawsuits.

Effective February 24, 2015, major changes to NRS 40.600 et seq. (“Chapter 40”) were enacted, placing significant burdens on both homeowners and their counsel to litigate construction defect lawsuits in Nevada. Perhaps most notably, Chapter 40 “entitlements” to fees and costs has been abolished, thereby substantially impacting the the scope of damages recoverable through litigation. In addition, homeowners associations are prohibited from litigating claims outside of the statutorily defined common areas.

Below is an overview of the more notable highlights of the revisions to Chapter 40, effective immediately (and in some instances, retroactively):

  • Eliminates attorneys’ fees as recoverable damages under Chapter 40;
  • Reduces the statute of repose to six years, without exception;
  • Significantly limits the definition of a construction defect;
  • Increases the requirements homeowners must meet to bring a valid claim;
  • Eliminates the provision of “common defect claims” in their entirety;
  • Prevents homeowners associations from bringing any claims not strictly involving the common areas;
  • Provides for binding Offers of Judgment during the pre-litigation process;
  • Codifies and significantly limits subcontractors’ contractual duty to defend and indemnify; and,
  • Sets forth new requirements for owner controlled insurance (wrap) programs.

While it is too early to fully predict the practical implications that these new provisions will have upon existing and future construction defect litigation in Nevada, they will, without question, significantly impact litigation defense strategies for professionals in the construction industry. Equally important, they will create new obligations for builders and developers during construction. Armed with a thorough understanding of these changes, we are fully equipped to help you develop strong defense strategies and to achieve compliance with these new regulations. 

To speak with one of our many knowledgeable attorneys to determine how this new law will impact your business, or to schedule a comprehensive and complimentary presentation for your company, please contact us at your convenience.

For a comprehensive summary of Assembly Bill 125, click here.

For a complete text containing all revisions to Chapter 40, click here