Shinnick, Ryan & Ransavage P.C.

Chapter 40 Notice Requirements for Single Family Homeowners

Chapter 40 Flowchart (11" x 17" PDF Print)

      The Nevada Legislature enacted recent amendments to Chapter 40 in an effort to reduce the amount of construction defect actions being filed. The Chapter 40 pre-litigation process requires claimants to provide contractors notice of the construction defect claims and an opportunity to inspect the property and conduct repairs before suit is filed. The Chapter 40 process for single family homeowners consists of three main steps: 1) the notice of the claim; 2) the pre-filing opportunity to inspect; and 3) the pre-filing opportunity to conduct repairs. When all parties participate in this process in good faith, it can result in repairs and can reduce the number and expense of construction defect lawsuits in Nevada. (For a Chapter 40 Flowchart detailing all steps of the process, please visit www.clarkcountybar.org to print out an 11”x17”version, or for a hard copy, please contact Shinnick, Ryan & Ransavage P.C. at 4116 West Craig Road, Suite 102, North Las Vegas, NV 89032 (702) 631-8014).

      Substantial Compliance with Chapter 40 is Sufficient
      For a single family homeowner’s claim for construction defects, Nevada Revised Statute (NRS) 40.645 in pertinent part requires that the notice:

(b) Specify in reasonable detail the defects or any damages or injuries to each residence…that is the subject of the claim; and

(c) Describe in reasonable detail the cause of the defects if the cause is known, the nature and extent that is known of the damage or injury resulting from the defects and the location of each defect within each residence… to the extent known. [emphasis added]

      The Legislature used such language as “reasonable,” “damages or injuries,” “if the cause is known,” and “to the extent known” to provide a certain amount of leeway in what constitutes adequate notice under Chapter 40. Nevada case law recognizes that the issue of what is “reasonable” is ordinarily a question of fact. K-Mart Corporation v. Willie Washington 109 Nev. 1180, 1189, 866 P.2d 274, 280 (1993). In K-Mart, the plaintiff brought an action against the store regarding an incident in which he was accused of shoplifting and detained. K-Mart asserted it had a shopkeeper’s privilege pursuant to NRS 598.030, which allows a shopkeeper to detain a suspected shoplifter in a “reasonable manner and for a reasonable length of time.” The Supreme Court explained that because the statute imposed a standard of “reasonableness,” but did not define what was “reasonable,” it was a factual matter to be determined by the jury. Id. at 1189.
      Chapter 40 pre-filing notice statutes require substantial compliance to meet the standards and purpose of Chapter 40 by giving the contractor the opportunity to inspect defects and to offer to make repairs. For example, providing a description of the defective conditions accompanied by photos of the defects provides the contractor with notice of the defects alleged, and their location, to the extent known, and substantially complies with Chapter 40 requirements.

      The Language of Chapter 40 is Similar to Other Notice of Claim Statutes
      Substantial compliance with Chapter 40 notice is the standard, as evidenced by similar notice statutes involving claims against governmental entities, claims for tax refunds, claims for mechanic’s liens, and claims for refunds of bail bonds. In interpreting notice statutes, Nevada courts have held that substantial compliance with statutory notice requirements is sufficient. For example, in Hansen-Neiderhauser, Inc. v. The Nevada State Tax Commission, 81 Nev. 307, 310, 492 P.2d 480, 481 (1965) a corporation sought a refund of taxes it paid mistakenly. A statute required that every claim for a refund “shall be in writing and shall state the specific grounds upon which the claim is founded.” NRS 372.645 (emphasis added). The Tax Commission rejected the claim, and the corporation brought suit, alleging compliance with the statutory procedural requirements. Id. The Tax Commission alleged that the corporation did not comply with the statutory requirements because the written claim was not specific enough. The court disagreed, holding that “[w]here the facts constituting the claim encompass the same basic dispute, substantial compliance with the statute requiring the filing of a claim is sufficient.” Id. Emphasis added. The Supreme Court went on to explain that, “[t]he purpose of the statute requiring the filing a claim as a predicate to the commencement of suit…is to enable the agency to investigate the claim …while the occurrence is recent and the evidence available to the end that it may protect itself against spurious and unjust claims.” The Court held that because the Tax Commission did receive notice of the claim, and had an opportunity to investigate it, substantial compliance with the pre-filing requirements was sufficient.
      Also, in Rogers v. State of Nevada 85 Nev. 361, 363, 455 P.2d 172, 173 (1969) plaintiffs brought an action against the state of Nevada, and were required to comply with a statute that required any claim against the state to be “presented to the ex officio clerk of the state board of examiners within six months from the time the cause of action accrues.” NRS 41.036(2). (emphasis added). Plaintiffs presented the claim to the Secretary of State six months after the accident occurred. The claim was then transmitted to the ex officio clerk of the board four days later. Id. The Supreme Court held that to require that the claim must have been presented to the clerk rather than to an individual member of the board would “exalt form over substance,” and that “substantial compliance with statutory requirements is sufficient.” Id. at 363. The purpose of permitting substantial compliance with notice of claims statutes is to prevent such forfeiture of claimants’ rights.
      Substantial compliance makes sense in the construction defect arena because the contractor is alerted to the claim and the contractor can see with his/her own eyes the nature of the claim. Regardless of the level of detail of the notice description, or even whether the description is right or wrong, the contractor can make up his/ her own mind about whether something is defective, about how to fix defects, or about whether to deny liability. Moreover, at the initial stage of notice, hidden defects and their causes are not usually known. This is especially true if the single family homeowner is providing notice on his or her own behalf, without the assistance of an expert conducting an investigation.
      As with other notice statutes, requiring substantial compliance with Chapter 40 also avoids the potential “forfeiture” of homeowners’ rights to recover damages or to have the defective conditions repaired. To require a strict level of detail to comply with Chapter 40 would be considered exalting “form over substance.” Substantial compliance allows claims to be decided on their merits rather than a technical objection to a notice document. Such notice claims are not “proof” documents, and the notice requirements must be liberally construed because they are included at such an early stage, before a Complaint is even filed.

      Even “General” Chapter 40 Notices Have Resulted in Repairs
      Chapter 40 can be an effective way to resolve construction defect claims when all parties cooperate in the process. Even general notices of construction defect claims have resulted in repairs, ranging from windows being sealed to major soils and foundation leveling repairs being done as the investigation evolves. Even if providing notice of the claim does not result in repairs, the notice puts the parties and their insurance carriers on notice early so that cooperative and cost-effective investigations and mediations can be conducted.

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