Court Defines New Residence and Addresses Buyer Waivers of Constructional Defect Claims
In Westpark Owners’ Association v. Eighth Judicial District Court, ___ Nev. ___, 167 P.3d 421 (2007), the Court addressed three (3) issues concerning NRS Chapter 40 (constructional defects): i) the definition of “residence”; ii) the definition of “new”, in the context of a residence; and iii) the effect of a general waiver of constructional defects in a sales contract. Westpark Associates, LLC (“Westpark”) purchased a partially completed condominium project out of bankruptcy, and completed an additional 108 units, but due to market conditions decided to lease the 108 units as apartments, and did so from 1997 through 2003. Westpark started selling the units to the general public, and each contract required the buyer to waive “any” possible construction defect claims. The converted condo owners began experiencing problems with their units, and the Westpark Owners’ Association (the “Association”) served Westpark with a formal Chapter 40 notice.
The district court entered partial summary judgment in favor of Westpark, declaring generally that Westpark had “no liability” in connection with the development or sale, relying on several conclusions of law which were revisited by the Nevada Supreme Court. First, contrary to the district court’s reasoning, the Court found that the mere fact the units were originally built as apartments does not prevent them from meeting the definition of a residence. The Court found the event conferring “residence” status is the transfer of title to a home purchaser. Second, the Court interpreted “new” as a product of original construction that has been unoccupied as a dwelling from the completion its construction until its sale. Although the units in this matter did not meet the definition of “new”, the Court found that if Westpark altered or repaired the units before their sale, they would fall under NRS 40.615. Finally, while NRS 40.640(5) allows a contractor and homebuyer to stipulate to a waiver of any potential claims under NRS Chapter 40, the “waived” constructional defect must be disclosed to the buyer in clear language before the purchase of the residence. Here, the waivers did not disclose any constructional defects; they stated only that certain defects “may” exist and listed a number of potential defects. This general disclaimer language was not sufficient to waive any claims pursuant to NRS Chapter 40.
Posted by Jeffrey Steffen at 1:38 PM |
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Categories: Constructional Defects | NRS Chapter 40 | Nevada