Revises provisions relating to constructional defects. (BDR 3-1144)
AB 505 revises Nevada’s constructional defect laws, which govern claims by homeowners and certain other parties against contractors, subcontractors, suppliers, and design professionals for defective residential construction. The bill changes the definition of “constructional defect” and updates the definition of “residence” to clarify the types of dwellings covered. It also modifies the pre-suit notice process by requiring the written response to a defect notice to state whether the responding party will mediate or waive mediation, and it adds more detailed requirements when the party elects to repair the defect.
The bill further requires contractors, subcontractors, suppliers, and design professionals to maintain insurance covering liability for constructional defects and to present defect claims to the insurer that issued the policy. It revises the settlement-offer procedure for these claims to align more closely with Rule 68 of the Nevada Rules of Civil Procedure, including extending the acceptance period from 10 to 14 days and removing certain penalty language tied to rejected settlement offers. AB 505 also clarifies recoverable damages, including that interest is recoverable only if provided by statute for otherwise recoverable damages, and it updates the mediation statute by requiring mediation to be waived in writing by the response deadline and eliminating the prior daily fee cap. The bill applies to claims arising on or after October 1, 2025.
AB 505 would amend multiple provisions in NRS Chapter 40 governing constructional defect litigation, affecting the rights and obligations of homeowners, homeowners’ associations, contractors, subcontractors, suppliers, design professionals, insurers, mediators, and courts. It imposes a new insurance-maintenance requirement on covered construction professionals, makes insurer presentation mandatory, changes the content and timing of defect responses, revises mediation procedures, and repeals NRS 40.650, which previously imposed consequences for rejecting settlement offers or failing to comply with certain pre-litigation steps. The bill also narrows and clarifies damages and settlement-related rules in defect actions, with prospective application to claims arising on or after October 1, 2025.
No committee transcript or vote record was provided, so there is no direct evidence of debate, support, or opposition in the available materials. Based on the bill text alone, the measure appears to be a technical and procedural overhaul of construction-defect litigation rather than a broad policy shift, suggesting its primary purpose is to clarify process, align statutes, and standardize obligations for parties involved in these disputes.
The most likely points of contention are the new mandatory insurance and claim-presentment requirements for contractors and related professionals, which could increase compliance burdens and potentially affect insurance costs. Another likely issue is the repeal of NRS 40.650’s existing settlement sanctions and the restructuring of offer-of-judgment rules, which may be viewed differently by homeowner advocates and construction-industry stakeholders depending on whether they see the changes as improving fairness or reducing leverage in defect claims. The mediation changes, including the waiver timing and removal of the mediation fee cap, may also draw attention from parties concerned about litigation costs and access to dispute resolution.