Spotlight Focuses on Construction Defects Statute

Spotlight Focuses on Construction Defects Statute

December 28, 2011

When a construction defect complaint was settled for $19 million in favor of the Vistana homeowners association in southwest Las Vegas in 2007, the settlement amount stood out even in the big-money arena of construction defect litigation.

According to federal authorities, the large settlement came about as a result o fraud. A former board member of the Vistana homeowners association entered a guilty plea to charges of fraud last month.

The fraud alleged in this case and dozens of other cases was flourished in the vague law that covers construction defect cases.

The law, which is known as Chapter 40 for its position in the Nevada Revised Statute, was enacted during the 1990s to allow homeowners and builders to take disputes out of the courts.

According to developers, construction companies and subcontractors, while it is true that the law took a huge burden off the judicial system, it also became a cash cow for trial attorneys. It also burdened the construction industry and caused inefficiency for homeowners who are seeking to have their homes repaired.

Critics say that the most high-profile example of the faults in the law is the massive federal investigation of construction company owner Leon Benzer and famous construction defect attorney Nancy Quon.

A Nevada Subcontractors Association lobbyist, Josh Griffin, said, “Chapter 40 is the honey that attracts the flies. It is the legal mechanism that is easy to abuse.”

Federal and local law enforcement authorities have discovered what they believe as a huge conspiracy that involved proxies for Quon and Benzer’s firms taking control of various homeowners associations located in Las Vegas and steering work to Benzer and Quon.