The Committee on Judiciary was called to order at 9:10 a.m., on Monday, May 10, 1999. Chairman Bernie Anderson presided in Room 3138 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All Exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mr. Bernie Anderson, Chairman

Mr. Mark Manendo, Vice Chairman

Ms. Sharron Angle

Mr. Greg Brower

Ms. Barbara Buckley

Mr. John Carpenter

Mr. Jerry Claborn

Mr. Tom Collins

Mr. Don Gustavson

Mrs. Ellen Koivisto

Ms. Sheila Leslie

Ms. Kathy McClain

Mr. Dennis Nolan

Ms. Genie Ohrenschall

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Note: Interested parties observed the meeting and provided testimony through a simultaneous videoconference in Room 4401 of the Grant Sawyer State Office Building, 555 East Washington Avenue, Las Vegas, NV.

Chairman Anderson stated S.B. 32 was originally scheduled for a committee hearing last week. He was disappointed with the delay in processing the bill, but the committee needed to hear the amendments to the bill. He understood amendments had been prepared and would be explained in addition to the bill. Chairman Anderson had received numerous e-mail messages concerning controversial sections of the bill. Members of the committee probably had received as many e-mail messages as he received. The committee had heard similar assembly bills that were allowed to die in the hope S.B. 32 would solve several big problems. Chairman Anderson asked for a bill to protect homeowners, subcontractors, contractors, and the developer.

Chairman Anderson opened the hearing on S.B. 32.

James L. Wadhams, representing Southern Nevada Homebuilders Association opened the testimony on S.B. 32. Mr. Wadhams presented a tome (Exhibit C) to the committee. He apologized to the committee for the time delay. Issues involved in the bill were important and "could not be resolved with the wave of a hand." A recent independent survey of homeowners revealed over 80 percent were satisfied with their home. There would always be problems with homes because homes were built by humans and would never be perfect. The system to address the defects in homes needed improvement. This committee had homeowners and homebuilders at the committee meeting because the system was not working. There had been dozens if not hundreds of homeowners who had informed the committee their problems were not being resolved.

Builders who were constructing substandard homes and multiple house units should have their contractors’ licenses revoked. Mr. Wadhams proposed eliminating the problem up front. He wanted to revoke the contractors’ licenses. Allow the quality builders the opportunity to take care of their customers. There was a need to preserve the right to sue contractors who did not stand behind their contracts.

The 1995 law was good for single-family homes but was a poor law concerning multiple housing units (five or more). Cases involving five or more residences were referred to as complex cases. In the complex cases the homeowner should give the builder an opportunity to repair the problem. Builders who did not respond should be sued or have their contracting license revoked.

The process did not work when the builder was not informed where the problem was located or was not allowed the opportunity to repair the problem. The process did not work when a homeowner who did not have a problem, discovered he or she was involved in a lawsuit because of the homeowner’s association. A lawsuit interfered with the homeowner’s ability to sell the home, to refinance their home, or their lender had become insecure regarding their property.

Mr. Wadhams gave an example of a homeowner’s lawsuit begun in 1989 and had not been resolved. Lawsuits were time consuming. It was time to adjust the law to allow a contractor to stand behind his contract.

Homebuilders had been working for many weeks with the Nevada Trial Lawyers representatives to resolve the differences. The bill was not perfect. Builders took pride in their work, and builders did not like to be sued. If a builder did not stand behind his work, the builder should be sued. The homeowner was entitled to have their home repaired.

The bill originated in the Senate, but contained substantial aspects from the Assembly’s bill. The consumer disclosure provisions and repairs within the first year were reflective of the assembly’s philosophy.

• The bill tightened the requirement for identifying the defect.
• Improved the information available to the consumer.
• Enhanced the opportunity to repair the problem.
• Improved the efficiency to sue when all else failed.

S.B. 32 applied to residential property only, not commercial property. The bill identified and defined the contractor as the person involved in the construction process, general contractors, subcontractors, developers, or one of the design professions. Five or more residences or a homeowners’ association became a complex matter. Complex matters involved more time to address and solve problems.

Mr. Wadhams gave an example of a homeowner informing the builder the toilet in his master bedroom overflowed every time the toilet was flushed. It was a specific problem with an exact location. That information was vital in assisting the builder in repairing the problem. Conversely, if a homeowner in a 200 unit complex housing unit informed the builder there were cracks in the roof tiles, the builder would not be able to find the cracks in a timely manner. If several people had a problem, controlled the homeowners’ association, and decided to file a lawsuit on behalf of the association, every homeowner in the association would be named as part of the lawsuit.

S.B. 32 was not perfect because the bill was put together by humans. The bill did require some additional amendments so the bill could be recommended to the committee for passage.

Section 1 of the bill was bill drafter language.

Section 2 identified complex matters, a homeowners association or five or more residences. Subsection 1 required the claimant file an action in court and at the same time give the contractor written notice specifying the defect and location of the defect. In subsection 3, the parties had 30 days to exchange information to resolve the problem. In subsection 4, the parties must establish a schedule of any additional persons to resolve the problem. Subsection 6 identified the parties to meet and exchange any additional information. Subsection 7 allowed the appointing of a special master to act as a referee to keep the process moving. Subsection 11 required the homeowners association to disclose all offers to fix the problem to each homeowner.

Section 3 dealt with quick repairs. If the defect was not part of a complex case and occurred in the first year of ownership of a new house and was reported in writing to the contractor, the contractor had 45 days to repair the problem. The section dealt with the handling of major problems. Contractors commonly referred to those as "punch list" problems.

In section 4, once the repair process had begun, if the homeowner discovered another defect, the repair process did not have to begin again. The additional defect would be added into the same time process as the original repair.

Assemblyman Carpenter referred to page 1, line 12, which stated, "any damages or injuries to each residence," and on page 2, line 5, "resulting from each defect, based on a representative sample." He wanted to know why the bill said each one and then a representative sample, how did he put those two together.

Robert C. Maddox, representing Nevada Trial Lawyers Association, responded the homeowner had to identify the defect in each residence. The method of identifying a defect in each residence was an expert using a representative sampling would render an opinion whether the defect existed in each residence. Representative sampling had been in the statutes since 1995.

Chairman Anderson stated the committee would hear testimony on sections 1 through 5 and then, ask questions or voice their concerns.

Scott M. Craigie, representing Del Webb Corporation, testified on section 5 of S.B. 32. Del Webb Corporation developed planned unit developments and built the homes in the development. Section 5 allowed a person to go into the business of purchasing a plot of land, designing a map of a planned residential community, having the plan approved by the city or county supervisors, and selling the plan to a builder. The master developer would be in the second tier of persons sued for construction defects.

Section 5, subsection 1, stated the master developer became secondary in the legal process to everyone who did construction work. If the homeowner could not obtain a full recovery from the licensed general contractor, the subcontractor(s) or those who worked on the building site; the homeowner could sue the master developer for the remainder of the recovery amount.

Subsection 2 dealt with the statute of limitations. There would be no statute of limitations. A court would determine if the homeowner could obtain a full recovery against the contractors. If the contractors were bankrupt, the master developer would be responsible to the homeowner.

Chairman Anderson interjected the committee had a handout from Friday, May 7, 1999 (Exhibit E), (Exhibit C), and "Amendments to Senate Bill 32 submitted by the Nevada Trial Lawyers Association, Nevada Homebuilders, and Nevada Land Developers" (Exhibit D). He asked if there were amendments to sections 1 through 4 of the bill and asked Mr. Maddox if there was another document the committee should have in its possession.

Mr. Maddox responded the Legislative Counsel Bureau (LCB) had issued its version of the amendments and assumed they had been distributed to the committee.

Chairman Anderson stated the committee did not have any amendments LCB had produced and asked for the name of the person who drafted the amendments for LCB. Before the chairman’s question could be answered, Chairman Anderson called for a recess of the committee.

Chairman Anderson reconvened the committee meeting stating the LCB had been working on proposed amendments to section 5. The committee had not approved any amendments. Any amendments to the bill would come from the committee and wanted a conclusion to the bill within the power of the committee.

Mr. Craigie stated one of the reasons for the continued amendments to the bill was the mistrust between the parties involved in the bill. In order for the bill to pass contractors, homeowners, and lawyers had to listen to each other and draft a bill agreeable to the three groups. A one-word change was vital to all three parties such as when the word "licensed" was inserted in front of contractor. An agreement on the language was vital to all parties concerned. The language in the bill was not perfect, but the concerned parties were close to an agreement.

Mr. Craigie referred to the new subsections for section 5 in (Exhibit D), "The provisions of this section did not apply unless the master developer or subdivider responds within 30 days to any claimant’s request for the name, address, and phone number(s) of the contractor, subcontractors or design professionals who participated in the improvements of the subject appurtenances." The other subsection read "The provisions of this section do not apply to a master developer or subdivider who, in the course of construction the subject appurtenances, acts as general contractor or uses his general contractor’s license for the construction of the subject appurtenances."

Mr. Craigie stated section 5, subsection 3, lines 10 through 13, referred to constructional defects and would include the design of the constructional defect. Subsection 4 was changed to "’Master developer’ means a person who buys, sells, develops for a planned unit development. Master developer also includes any person who enters into a development agreement pursuant to Nevada Revised Statutes (NRS) 278.001."

Assemblywoman Buckley asked when would a developer be brought into a construction defect lawsuit from the outset. Mr. Craigie responded when the developer had designed the construction defect, if the developer’s equipment touched the land, if the developer built on the land, and to the extent the developer sold the property to the homeowner.

Assemblywoman Buckley asked for the circumstances when a developer would not be brought into the lawsuit. Mr. Craigie responded when the developer drew the development map, moved the map through the approval process, and sold the plan to the builder. If the homeowner did not receive the total amount of their just compensation from the contractor, then the developer would become liable to complete the just compensation to the homeowner.

Assemblywoman Buckley stated the first paragraph of the bill contained confusing language. She suggested rewriting the first paragraph of the bill.

Chairman Anderson mentioned he was trained in the United States Army as an artillery surveyor. After he was discharged from the United States Army, he worked as a surveyor. He asked Mr. Craigie if he surveyed the lots would he be included in a lawsuit. Mr. Craigie answered he would not be included in the first tier of the lawsuit.

Chairman Anderson asked if he surveyed the property for streets and the lots, Del Webb purchased the property, put in the water, sewer, and streets, and built five or more houses to make the development a complex development, would he be liable. Mr. Craigie answered he would not be in the first tier of the lawsuit.

Mr. Wadhams responded to Chairman Anderson’s question. The original owner of the land should not be named on the original lawsuit. He was against "shot gunning" everyone on the lawsuit. He wanted to focus on the persons responsible for the construction.

Mr. Craigie referred to (Exhibit D), page 1, for section 5 a new subsection was written, "The provisions of this section do not apply unless the master developer or subdivider responds within 30 days to any claimant’s request for the name, address, and phone numbers(s) of the contractor, subcontractors or design professionals who participated in the improvements of the subject appurtenances." There was a special master process included in the bill. The requirements were clearly spelled out for the homeowner, the master developer, the contractor, and the designer. The contractor, subcontractors, and design professionals all had to be listed and contacted to determine who was to be named in the suit.

Assemblyman Collins was concerned if every contractor and subcontractor would be brought into the suit. His other concern was if the master developer was left out of the first tier of the lawsuit, what was going to stop the master developer from awarding the bid for every contract to the lowest bidder who did defective workmanship. Mr. Craigie replied if the developer hired a licensed general contractor, the responsibility was out of the developer’s hands. The developer would be in the second tier. If the developer sold a lot of land for someone to build his or her home on the lot, the developer would be on the first tier of the lawsuit.

Mr. Wadhams responded to Mr. Collins’ first concern. The special process for complex cases was spelled out on page 2, line 27. The meeting would focus the dispute at the core problem and the core contractors responsible. Subsection 4 was to eliminate the "shot gunning."

Mr. Maddox agreed with Assemblyman Collins’ concern about naming all the subcontractors in the lawsuit. Usually, general contractors brought the subcontractors into the lawsuit. There was an existing statute, which covered the penalties for a contractor bringing others into a lawsuit unnecessarily.

Assemblyman Brower asked if the master developer designed maps and sold the maps to a master developer like Del Webb why would the developer be liable under current law. His second question was why change current law. Mr. Craigie responded the people who worked on S.B. 32 wanted to eliminate "the shotgun" approach. Under current law, anyone who walked into a home to work could be named in a lawsuit. The same was true for master developers being named in a lawsuit. The objective of the bill was to find the person or persons responsible for the construction defects.

Assemblyman Brower stated the committee needed to know why under current law the master developer could be sued and found liable. His second question was why change the law. Mr. Maddox responded the master developer was involved in the common areas of a development, streets and sewers. If a sewer pipe in the street broke and caused sewage to backup in a person’s home, there was current liability on the master developer.

Assemblyman Brower stated he had been asked by several members of the committee why would a master developer be sued for the roofing on a house. Mr. Maddox responded as stated in section 5 of the bill, the master developer would not be liable for a defect if the master builder had nothing to do with the design, building, or selling of a home in the development.

Assemblywoman Ohrenschall asked Mr. Craigie if the master developer sold the plan to a builder and agreed to receive a percentage of the profits, would the master developer be liable. Mr. Craigie responded receiving a commission was participation in the selling of the houses and part of the first tier to be sued.

Assemblyman Carpenter commented he did not like to see ranches and farms subdivided. Mr. Carpenter asked Mr. Craigie to explain in (Exhibit D), page 1, section 5, and first new subsection. Mr. Craigie answered that was how the parties were put together in a lawsuit under the supervision of the special master. There were requirements demanded of all the parties in the lawsuit. Homeowners were required to give the contractor the exact location of each defect so the contractor could repair the defects. The objective of the bill was to have the defects repaired.

Assemblyman Carpenter thought the question he asked was concerning section 5. Mr. Craigie responded section 5 dealt with the rights and responsibilities of subdividers and master developers. Assemblyman Carpenter asked if a rancher was asked the name of the contractor would the rancher’s action make him liable. Mr. Craigie answered the reason the new subsection was in section 5 was because section 5 dealt with all the rights and responsibilities in an orderly manner for subdividers and master developers. The master developer was required to supply the list of names, addresses and phone numbers.

Mr. Maddox responded to Mr. Carpenter’s question. The rancher was not the subdivider so he would not have any responsibility in the development. If there was a problem with roads or sewers, Mr. Maddox would ask the master developer, who was the contractor. The homeowner needed to know who constructed the roads or sewers. The master developer was not liable, but the master developer was responsible for supplying the names, addresses, and phone numbers of the contractors and what they constructed.

Chairman Anderson asked how many people in the room wished to address section 5 of the bill. Three people in the committee room raised their hands. He invited Mr. Madole to testify and would allow him 10 minutes to testify.

John Madole, Executive Director, the Nevada Chapter of the Associated General Contractors of America, Inc., stated he built commercial buildings and normally did not pay attention to residential construction. He regretted not being involved with the amendments to the bill because of the word appurtenance. The membership of the association was made up of contractors, design consultants, and subcontractors involved with appurtenances in residential construction. He felt contractors were being sacrificed to help developers. He would like to have the necessary amendments in the bill. The amendments would have to address the concerns of his members.

Paul J. Georgeson, Attorney, represented Nevada Chapter of Associated General Contractors of America, Inc. He understood the proponents’ position on the bill. Even with the amendments, he did not agree with the language read to leave the developer out of the first tier of people to be sued. That was the same point Ms. Buckley questioned. In section 5, subsection 3 applied to residences only, as opposed to the overall bill, which applied to appurtenances. One of his concerns was if the master developer designed the residence, he could not be sued. If the master developer designed the appurtenance, he could be sued in the second tier. He saw that as a wording problem. He did not think the language accomplished what the participants were trying to achieve. The most important person involved with the bill was the homeowner. A lawsuit with the first tier would take 2 to 10 years to resolve. If the lawsuit went to the second tier, it would take another 2 to 10 years to resolve.

Norman L. Dianda, President, Q & D Construction, Inc. testified against section 5 of the bill. He informed the committee the normal procedure was the general contractor or the subcontractor had a contract with the developer of the project. Mr. Dianda could not understand why the homeowner did not go directly to the developer to have defects corrected because the homeowner had a contract with the developer. In the bill the homeowner went directly to the subcontractors or the general contractor to repair the defect.

Chairman Anderson asked Mr. Dianda the distinction between a builder and a subcontractor. Mr. Dianda used the example of constructing the legislative building. Q and D Construction Inc. was the general contractor. If there were something wrong with the legislative building, the state would not sue the various subcontractors who worked on the building. The state would sue Q and D Construction Inc. He wanted an amendment in the bill stating the developer was to be sued first before the homeowner could sue the contractor or the subcontractor. Mr. Dianda wanted the chain of command followed, builder-developer, general contractor, and subcontractors. Mr. Dianda stated when he built the legislative building, he had 50 subcontractors. He was ultimately responsible to see the subcontractors completed their work according to the specifications and plans for the building.

Chairman Anderson asked if the homeowner had a problem with the plumber would it be better for the homeowner to contact the plumber rather than go through the builder-developer. Mr. Dianda responded the homeowner did not have a contract with the plumber. The homeowner had a contract with the builder-developer.

Assemblywoman Ohrenschall asked if the bill would supercede the order of responsibility in contracts between the builder-developer, general contractor, and subcontractors.

Chairman Anderson stated in section 5 the committee was looking for new language. He asked how many people had seen the proposed conceptual language. Mr. Wadhams responded the information had been distributed to both houses since early in the session. The committee had to look at the whole bill. The homebuilder was the person with whom the homeowner had a contract to build a house. There was no direct action against a subcontractor. The homeowner would sue the homebuilder. The process allowed all responsible people involved to go to the table to resolve the problems.

Mr. Maddox responded to Ms. Ohrenschall’s question. The Nevada Trial Lawyers Association position would not abdicate contractual rights. If the court determined the homeowner did not have a contract with the subcontractor, there was a provision for the homeowner to receive full recovery from the master developer.

Mr. Craigie stated there were two persons in the committee room representing subcontractors. Chairman Anderson responded the two representatives were on his list of people to testify before the committee.

Mr. Wadhams stated section 6 was a disclosure section. Subsection one required the seller of a defective home to disclose the defect to the buyer. The repaired defect would be disclosed also. In subsection 2, the homeowner’s attorney advised their client and made sure the claimant understood the opportunities and the remedies provided. Section 7 was a bill drafting section. Section 8 clarified the definition of an appurtenance applied to common areas. Section 9 was a notice section.

Assemblyman Brower asked if once a claim had been resolved under section 6, once would disclosure have to be made to the buyer. Mr. Wadhams responded, "correct." The problem would be disclosed with the repairs. That eliminated the possibility of a secondary lawsuit.

Assemblyman Brower stated in the language of section 6 only the homeowner who made the claim would be responsible for the disclosure and not the subsequent sellers of the home. Mr. Wadhams agreed with Mr. Brower. He said section 6 was part of the real estate chain and currently in the statutes.

Assemblywoman Buckley gave an example of a person who bought a house and had some defects repaired. She suffered once because of the defects and had to suffer a second time because she had to disclose the repair of the defects. She asked by placing disclosure in the bill, how was public policy served. Mr. Wadhams responded public policy was being served in two ways. First, people were on notice of the property they were buying. Subsequent buyers would be aware if the defects were fully repaired. Second, at least the purchasers were aware of what they were buying.

Assemblywoman Buckley disagreed and commented current law stated known defects must be disclosed. S.B. 32 stated disclosure had to be made regarding repaired defects. She wanted to know how did disclosure of completed repairs help public policy. Mr. Wadhams gave the example of a car that was repainted and sold without disclosure. The new owner discovered the repainted area and successfully sued the seller. S.B. 32 attempted to minimize litigation and optimize the identification and correction of problems.

Chairman Anderson commented on the possibility of a "time window" for the reporting of repaired defects. He had no problem disclosing a repaired defect made 5 years ago. He questioned the reporting of a defect repaired 20 or 30 years ago.

Mr. Maddox stated Assemblywoman Buckley was correct. If the defects were repaired, under existing law there would not be a requirement to disclose the repaired defect(s). There was a battle over the language of the bill with a number of compromises. He stated overall disclosure was good. Ms. Buckley’s point was well taken.

Mr. Craigie stated he was responsible for the disclosure part in the bill. Personally, he wanted to know if there was a repaired defect. Maybe he would want to hire an expert to check out the repaired defect. He agreed with Ms. Buckley’s comment regarding the owner suffering a second time by having to report the repaired defect, and the sale price was affected. The buyer had a right to be an informed buyer.

Chairman Anderson asked if the bill changed the reporting of defects at the time of sale. Mr. Wadhams stated if a seller had a repaired defect, currently the seller did not have to report the repaired defect. Chairman Anderson asked, "Do I have the responsibility to report the problems to the buyer." Mr. Wadhams responded, "yes, you do." Chairman Anderson asked, "We’re not dropping that standard." Mr. Wadhams responded the standard was not being dropped. In fact the bill enhanced the standard requiring disclosure of the repair and allowed the buyer to decide if the repair was made.

Mr. Wadhams stated section 9 dealt with notice. The section covered the responsibility of the homeowner notifying the contractor naming each defect with the exact location. The section defined the number of days for the contractor’s response to the defect(s).

Mr. Wadhams reviewed section 10. Section 10 contained bill drafter language incorporating the complex case process, which existed in law. The section required the parties to fully participate in resolution of the dispute. That section was an attempt to eliminate full-scale litigation.

Mr. Wadhams stated section 11 extended the time for all parties involved to resolve the issues. Section 12 was bill drafter language incorporating the earlier complex case process into the existing law. Section 13 required all parties to be present at the decisionmaking process for a quicker resolution to the process. That precluded involving the building inspector until after the primary action was concluded. The view of the homebuilders was government was not responsible for the quality of construction, homebuilders were responsible.

Mr. Wadhams reviewed section 14. Section 14 dealt with the statute of limitation for simple cases. The statute of limitations preserved the right to go to court. Since complex cases would already be in court, the statute of limitations did not apply to complex cases. Section 15 defined the date of substantial completion of an improvement to real property.

Mr. Wadhams stated sections 16, 17, and 18 provided for claims against third parties responsible for a defect, a contribution, or indemnity. Those three sections allowed all the responsible parties to be pursued by the homeowner.

Mr. Wadhams walked the committee through section 19. Section 19 covered disclosure. The homebuilder was required to provide the original homebuyer a copy of chapter 40 of Nevada Revised Statute (NRS) and copies of sections 15 and sections 2 through 6 of the bill. The homebuilder must provide the original homebuyer with a soil report. As the committee had heard in previous testimony, the cause of defects in a number of homes was a soil problem.

Chairman Anderson inquired who was responsible for obtaining the soil report from a subcontractor. He gave the example of a homeowner who wanted to have an air conditioning unit installed in his home. He hired a person to pour a concrete pad for the air conditioner. After the air conditioner was installed there was a chemical reaction with the soil and the air conditioner. He asked who was responsible to take care of the homeowner.

Mr. Maddox answered the seller of the home must provide the soil report to the buyer. The buyer had 20 days to cancel the purchase of the home if the buyer felt a concern because of the soil report.

Chairman Anderson gave another example of a developer in his district. The developer built homes on a ridge. Sometime during the millenium there was volcanic activity on the ridge. The ridge had shifted. He gave another example of soil in an area in Clark County, which caused problems with the pipe laid in the soil. He asked who was responsible for not informing the developer of the soil. Mr. Maddox responded the homeowner who had the defect would bring a claim against the developer. If the soil report was prepared in a negligent manner, the claim would be against the person who prepared the soil report. If the grading subcontractor never received the report, he would not be liable. If the developer did not provide the soil report to the grading subcontractor, the developer would be responsible.

Assemblyman Manendo stated there was a great deal of concern in his district. He gave an example of homeowners who had to replace the carpeting in their homes because the water table was so high in the surrounding area. His constituents wanted to know who was responsible. Mr. Maddox responded under current Nevada law the county was liable for having knowledge of a defective condition and having failed to act reasonably to correct the problem either in the planning stage or the inspection stage. If the soil report identified there was a high water table and a system for removal of the groundwater was not installed, the county could be liable.

Mr. Wadhams referred to section 19. He stated disclosure would be made to the initial purchaser of the home. Currently, disclosure was not part of the law. The lack of disclosure had caused frustration with many of the Assembly’s constituents. The focus of the bill was to provide a process for the homeowner to notify the developer to begin the process of correcting the defects.

Mr. Wadhams stated section 20 was a bill drafting section incorporating the prior disclosure section into NRS 113. Section 21 dealt with the contractor’s board when the complex process was begun between the homeowner and the contractor. The contractor’s board allowed the situation to be resolved between the developer and the homeowner before attempting to take action. Section 22 dealt with common areas in possible homeowner associations to be included in homeowner warranty programs. Section 23 allowed the insurer providing home warranty protection to maintain more repair inventory parts. Section 24 clarified the obligation of the home insurer of home protection warrantees to respond to claims. Section 25 was a business section. The section modified the restriction to which a home warranty company could participate in other businesses. Sections 26 and 27 were bill draft sections.

Mr. Wadhams expressed a concern of real estate brokers. He had no problem supporting the removal of the phrase, "or acts as a broker." The master developers who were not involved with the construction or sale of homes would not be responsive to a claim. Master developers who were involved in the construction or sale of homes would have to be responsive to claims.

Chairman Anderson asked if anyone on the committee had concerns about a particular section of the bill.

Assemblyman Carpenter stated he would like section 5 written in cowboy language. Mr. Wadhams responded he would try to work with bill drafting to simplify the language.

Chairman Anderson stated Ms. Buckley had concern with the language in section 2 of the bill.

Assemblyman Claborn thought "the guts" had been removed from the bill. He could not find in the bill where it stated the repairs would not be charged to the homeowner. He asked who was going to pay for the repairs. Mr. Maddox responded existing law, NRS 40.655 protected the homeowner from having to pay for repairs. Exhibit C contained existing law. The reason Mr. Claborn did not see any mention of homeowners not having to pay for the defects in S.B. 32 was because nobody was trying to remove it from the Nevada statutes.

Assemblyman Claborn mentioned a bill the committee heard earlier in the session, i.e., A.B. 442, stated the homeowner would not have to pay for the repairs. Mr. Maddox responded proponents tried to expand the language to having repairs paid by the contractor. They did not get the repairs expanded, but home repair by the contractor was not taken away. The law remained the same; the homeowner did not have to pay for the repairs.

Chairman Anderson asked Mr. Canepa to sit at the witness table. He asked Mr. Canepa if anyone on the committee had seen the proposed amendments besides the brief glance he had. Scott Canepa, representing Nevada Trial Lawyers Association responded "nobody." Chairman Anderson asked who else had seen the proposed amendments. Mr. Canepa responded the team from the Nevada Trial Lawyers Association, homebuilders, and land developers. Chairman Anderson strongly suggested to Mr. Canepa to distribute a copy of the amendments to each member of the committee. Mr. Canepa said, "It will be distributed."

Chairman Anderson adjourned the committee meeting at 11:09 a.m.

RESPECTFULLY SUBMITTED:

Ken Beaton,

Committee Secretary

APPROVED BY:

Assemblyman Bernie Anderson, Chairman

DATE: