The Five Most Common Mistakes
That Get Contractors In Trouble with The Nevada State Contractors Board
You may think that doing good work alone will keep you out of trouble with the Nevada State Contractors Board, but surprisingly, bad workmanship is rarely the only issue the Board brings disciplinary proceedings over. Most of the time, good contractors will be able to rectify workmanship, warranty or punch list item themselves. But when a consumer or another contractor makes a complaint to the NSCB, the investigator will examine the entire project file from the first proposal to the end-product, looking for any deviations from its rules. When it finds one, what may have been a simple fix can turn into a serious headache with the contractor facing fines, out-of-pocket expenditures and even suspension or revocation of its license. Each of the following items are specifically prohibited by NRS /NAC 624 and can result in an Administrative Citation or formal Board Complaint. Although not an exhaustive list, avoid these common mistakes and you’ll avoid a lot of trouble and expense.
- Not Pulling a Permit.
Without question, the most common charges we see in NSCB complaints and citations are for failure to pull a permit when required. The Board will issue a charge of “Disregard of plans, specifications, laws or regulations” claiming a violation of NRS 624.3011. When in doubt, pull a permit. Your ‘honest mistake’ will rarely help you here because the law imposes “a rebuttable presumption that the contractor willfully and deliberately violated the building laws of this State or of its political subdivisions.” Meaning, the burden is on you to explain why no permit was pulled. There’s really no excuse for not doing it, and it could even lead to civil damages if the homeowner sues. Homeowners are required by law to disclose all unpermitted work to potential purchasers when they sell their home. Thus, you not pulling a permit can cause a cascade of legal issues for you and others years down the road. Just pull a permit. It’s a small price to pay to avoid lots of legal headaches.
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Not Having Your License Number and Monetary Limit on Your Contract.
When the Board opens an investigation, it will examine your contract to make sure it complies with NRS/NAC 624. Every residential contract is required to contain your monetary limit and license number, among other requirements. If you only use quotes or work authorizations and no formal contract, these documents will be construed as the contract and they need to have this information as well. This is not everything every contract is required by law to contain. If you do residential work, a Residential Recovery Fund admonishment is also required. Additional requirements apply to certain types of contracts, such as solar or pool work. This is generally met with a small fine and an order to correct the problem and provide proof to the Board, so, it’s best to have your contract examined by a lawyer familiar with the Board’s rules.
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Bidding In Excess of Your Monetary Limit
This one has ramifications beyond just potential disciplinary action; it can void your contract and leave you with fewer options to recover money if you don’t get paid. Nevada Administrative Code (NAC) 624.640(1) states: “If a licensee bids or contracts outside the scope of his or her license or exceeds the monetary limit placed on the license, the bid or contract is void.” Things to remember:
- The act of bidding in excess of your limit is a violation alone, even if the bid is not accepted and no contract was formed.
- Do not try to break the project into small bites or through change orders try to increase the contract price without violating the rule- it won’t work, many have tried, all have failed. The law specifically forbids this practice.
- Never forget you can always ask for a “one-time” increase. The common term is a misnomer as you are allowed to ask up to five times in a 12 year period. Pursuant to NAC 624.670 “A licensee may . . . submit to the Board a written application requesting an increase, for a single project, in the monetary limit on his or her license. Not more than five such applications may be submitted by a licensee during any 12-month period.” The important part is that you make this request BEFORE submitting your bid- see (a) above.
- Bidding Work Beyond Your Scope of License
Just like bidding more than your limit, this is not only a disciplinary issue, but affects the validity of your contract and thus, your ability to get paid. Sometimes, however, it isn’t clear what a particular classification covers, and even more complicated, what is “incidental” to your work. NRS 624.220(4) makes clear that a specialty contractor is allowed to enter into a contract involving the use of two or more crafts or trades, if the performance of the work in the crafts or trades, other than in which the specialty contractor is licensed, is incidental and supplemental to the performance of work in the craft for which the specialty contractor is licensed. However, whether you are taking on incidental work, working outside your scope or even acting as a general contractor can be difficult to determine at times. This is compounded by the fact that the word ‘incidental’ is not even defined by the code. Thus, having a good working knowledge of precedents and usage of trade is critical to defend these types of claims.
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Hiring Unlicensed Contractors
A contractor can be disciplined under NRS 624.3015(4) if it knowingly enters a contract with a contractor (sub or otherwise) while that contractor is not licensed. While the Board must prove this was done “knowingly” be aware that the Board considers its regulations to include a duty to verify a contractor’s status before submitting or accepting bids with that contractor. Since these contracts are considered illegal, they are also considered void as a matter of law and make enforcement difficult. This office has successfully defended this charge before the Board based on the “knowingly” standard- but it’s just better practice to avoid this problem altogether.
In summary, avoiding these commons mistake and pitfalls will save you in the long run. If, however, you find yourself being investigated or charged with any of these violations, call the Wright Law Group, P.C., immediately. We have successfully defended all these charges before the Board and in some cases, even before the District Court, overturning the Board’s erroneous decisions, clearing records and with fines ordered refunded to the contractor. John Henry Wright, Esq., is uniquely qualified to handle these types of cases, regularly handling Board licensing and disciplinary actions and being AV rated by Martindale – Hubbell in both Commercial Litigation and Criminal Defense, with 35 years of construction industry litigation experience. Call for a free consultation 702-405-0001.