Although the expansion of the Sun City Summerlin case against Del Webb Communities from nine plaintiffs to more than 1,400 homes made a great deal of press in May (see “Waterlogged,” July, page 48), Wadhams says the real problem is that trial lawyers have kept fighting the NOR law by not releasing a contractor once a repair is finished.
According to Wadhams, the trial lawyers claim that they don't release the contractors because they need to see how each repair affects the rest of the case. Wadhams believes it's simply in the economic interest of the trial attorneys to keep the contractors in the case as long as possible. The longer the contractor is attached to the case, the longer the period of time that the lawyers can bill.
“We need to have language that clearly establishes not only the right to repair, but the right to be free from the lawsuit if you execute that repair,” says Wadhams, who adds that the HBA needs to add language that states clearly that only homeowners who have an actual problem can be added to a lawsuit.
Monica Caruso, director of public affairs for the Southern Nevada HBA, says the home builders will have to regroup and present the new language to the state legislature in the 2007 session. While disappointed by the recent spike in defect cases, Caruso is realistic.
“The uniformity of optimism with the passage of the NOR was terrific,” says Caruso. “We thought we had a great victory, we thought we'd get in touch with our customers and make the repairs that had to be made,” she says. “While in many ways I feel like it's ‘here we go again,' we'll need to develop another marketing campaign geared for the 2007 legislative session.”
ROCKY ROADThe NAHB's march to pass NOR laws nationwide could hardly have been expected to be executed without a glitch. Like any other attempt to pass legislation, passing these NOR laws—and tweaking them once a track record has been established—has been a very difficult fight often steeped in state politics.
In Missouri, then-Gov. Bob Holden vetoed an NOR bill last year when he was caught in a tough primary. Holden lost the primary, and the state's new governor, Matt Blunt, generally agrees with the NOR concept; at press time, he was set to sign the bill into law.
Another wrinkle for building industry lobbyists is that consumer rights groups such as Homeowners Against Deficient Dwellings (HADD) despise the NOR bills. According to HADD president Nancy Seats, the NOR laws tilt the balance in favor of the builder and put the burden of proof on the homeowner.
“The NOR bills put all the burden on the victim to prove anything,” Seats says. “None of these bills do anything to force the builder to do proper repairs,” she insists.
Suffice it to say, the NAHB and the state HBAs will keep fighting these cases in statehouses across America. For now, the NAHB's Traylor takes heart in an example such as Colorado, where, Traylor says, after the NOR law went into effect on April 27, 2003, the average monthly number of lawsuits filed by the three most active construction defect legal firms dropped 60 percent to about two and a half cases a month.
Traylor also insists that litigation is a very inefficient system, pointing out that the latest NAHB research found that the homeowner typically gets $1 for every $3 spent on a lawsuit.
“Unrealistic promises are made to homeowners, and in about half the cases, after the bills are paid the homeowner doesn't have enough money to make repairs,” Traylor says.
Few people would claim that the NOR laws are perfect. But most everyone in home building would agree that the climate now is preferable to the environment in 2003, when lawsuits were rampant, insurance carriers checked out of most states, and triple-digit premium increases were not uncommon.