For the period during which an installment-purchase contract or lease-purchase contract that was entered into to finance a performance contract is in effect, the property that is the subject of the installment-purchase contract or lease-purchase contract:

1. 1. Is exempt from ad valorem property taxation by this State and its political subdivisions if:

   1. (a) An improvement is being constructed on the property pursuant to the installment-purchase contract or lease-purchase contract; or
   2. (b) This State or a using agency is in possession of the property.

2. 2. Shall be deemed to be the property of this State or the using agency that is a party to the installment-purchase contract or lease-purchase contract for the purposes of statutory limits on damages that may be awarded against this State, including, without limitation, the limits in chapter 41 of NRS, with respect to any action or claim, including a claim for civil damages, that arises from or is related to the property and is brought by a person who is not a party to the installment-purchase contract or lease-purchase contract if:

   1. (a) An improvement is being constructed on the property pursuant to the installment-purchase contract or lease-purchase contract; or
   2. (b) This State or the using agency is in possession of the property.

(Added to NRS by 2005, 2898)