To Repair or not to Repair?

Attached housing has long been the target of construction defect lawsuits. But detached housing communities nationwide have become increasingly embattled by construction litigation. According to data collected by NERA, an economic consulting firm, in Colorado alone the annual number of lawsuits increased by approximately 10 percent for the three-year period starting in 2000.

This string of lawsuits has led to rising, limited or, in some cases, unobtainable liability insurance for builders. As a result, builders face higher costs and consequentially a higher price tag for home buyers. According to the NAHB, in 2004, home builder liability was calculated to costs between $2,700 – $15,000 per housing unit. NAHB estimates that for for every $1,000 price increase, 260,000 households are being priced out of the market.

To stop the litigious wildfire, the NAHB is spearheading a national campaign to pass and or enhance existing Notice of Opportunity to Repair (NOR) laws in every state. NOR laws are aimed at giving builders the opportunity to repair or resolve legitimate home owner construction issues without going to court.

The NAHB, in collaboration with NAHB's High-Production Home Builders Council and state and local home builders associations, has created The Civil Justice Reform Initiative (the Initiative). The Initiative supports the lobbying activities and judicial educational programs that provide the impetus for the acceptance of NOR legislation.

Additionally, in 2002 the NAHB collaborated with the American Legislative Exchange Council (ALEC) to devise a model for NOR legislation. This model legislation has been successful in paving the way for adoption of NOR laws.

So far, the NAHB has succeeded in advancing the adoption of new NOR legislation in 21 states and the acceptance of enhanced NOR legislation in six other states.

It is too early to measure the national impact of NOR laws' on the home building industry, but preliminary findings back the premise that NOR laws can decrease the number of cases going to court.