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February 1st, 2017
construction
NEVADA SUPREME COURT DETERMINES WHEN A NOTICE OF COMPLETION IS “ISSUED” FOR PURPOSES OF COMMENCEMENT OF ACTIONS UNDER NRS 11.2055

In Dykema v. Del Webb Communities, Inc., No. 69335, 2016 WL 7626184 (Nev. Dec. 29, 2016), the Nevada Supreme Court clarified when a notice of completion is “issued” under NRS 11.2055(1)(b), which establishes the date of substantial completion for statute of repose purposes.  The Court determined a notice is “issued” when it is recorded, not when it is signed and notarized.

Plaintiffs Robert Dykema and Ronald Turner were homeowners, who contracted with Defendant developer Del Webb Communities, Inc. to build homes in the Anthem Heights subdivision of Henderson, Nevada.  Del Webb signed and notarized notices of completion on November 30, 2004 and December 14, 2004 for Dykema and Turner, respectively.  Del Webb did not record the notices until over a week after they were signed and notarized. 

Dykema and Turner served notices of construction defect on Del Webb on December 2, 2014, and December 22, 2014.  On February 27, 2015, Plaintiffs filed a complaint against Del Webb.  Del Webb filed a Motion to Dismiss the claims based on the ten year statute of repose.  The Court dismissed Dykema’s and Turner’s claims, agreeing the statute of repose began to run when the notices of completion were signed and notarized.

The Supreme Court of Nevada recognized the term “issued” in NRS 11.2055 was ambiguous and turned to the legislative history to interpret its meaning.  The Court noted a comment in the legislative history stating the reason a builder generally files a notice of completion is because it triggers the lien rights.  The Court acknowledged that the statutes addressing mechanics’ and materialmen’s liens explicitly state that recording a notice of completion triggers the time period for when a claimant must perfect its lien.  NRS 108.228(1). 

The Court utilized the interpretations of the mechanics’ and materialmen’s lien statutes to construe the language in NRS 11.2055.  The Court found the purpose NRS 11.2055 was to give a clear date on which the statute of repose begins to run.  The Court determined the interpretation of “issued” in NRS 11.2055 means the statutes of repose began to run when the notice of completion was recorded.

The Court’s decision in this case allows for more clarity moving forward in determining when the running of the statute of repose commences in residential construction cases.  Builders should take special care in verifying when the notice of completion is recorded, not just signed, so that the statute of repose begins to run.

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