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Nevada Supreme Court Addresses Construction-Defect Statute of Repose

In Somersett Owners Ass’n v. Somersett Dev. Co., Ltd., 137 Nev. Adv. Op. 35 (2021), the Nevada Supreme Court addressed the statute of repose for construction-defect cases and, more specifically, when a residential property is “substantially completed” under the “rules of common law” for purposes of the running of the statute.

Under the Nevada statute, a home is usually deemed “substantially completed” when one of the following events occurs: (1) final building inspection, (2) issuance of a notice of completion, or (3) issuance of a certificate of occupancy. But there are times when there is no record of any of the foregoing having occurred. In such cases, the statute says that you are to look to the “rules of common law.”

In Somersett Owners Ass’n, the Court adopts the following “common law” definition of substantially completion: “the stage in the progress of the work when the work … is sufficiently complete in accordance with the contract documents so that the owner can occupy or utilize the work for its intended purpose.” This definition seems somewhat obvious and creates a fact-intensive inquiry for discovery. However, in adopting this definition, the Court specifically rejected the plaintiff HOA’s argument that the property must be defect free. In other words, the Court will not look to the quality of the property when determining whether it is substantially completed.