FAILURE TO PAY FOR MATERIALS OR SERVICES
In Nevada there are statutes setting forth specific requirements for owners, architects, contractors and subcontractors with respect to the submission of payment applications, review and approval, withholding, and the payment of amounts due. These statutes are commonly referred to as “prompt payment” statutes and provide a legal remedy for the aggrieved parties. However, there are additional statutes in Chapter 624 of NRS under which licensed contractors may find themselves in trouble with the Nevada State Contractors Board.
Pursuant to NRS 624.3102, it is grounds for disciplinary action by the Contractors Board for a contractor to divert money received for the completion of a specific construction project or operation to any other construction project or operation, obligation or purpose.
It is also grounds for disciplinary action for a licensee to willfully or deliberately fail to pay any money when due for any materials or services rendered in connection with the licensee’s operations, when the licensee has the capacity to pay or has received sufficient money for which the services or materials were rendered or purchased. Under NRS 624.3102 there is no definition of the meaning of “when due.” However, under the above-referenced prompt payment statutes, the general contractor must pay its subcontractors pursuant to contract and if there are no payment terms in the contract, suppliers must be paid within 30 days of the date of the subcontractor’s payment application or within 10 days of the date the contractor receives payment from the owner, whichever is sooner. Thus, it is reasonable to conclude that a willful failure to comply with the prompt payment statute could also result in disciplinary action by the Contractors Board under NRS 624.3102, in addition to any other damages or penalties available under the prompt payment statutes.
FAILURE TO PAY AMOUNT DUE
The statute also provides for disciplinary action against a licensee for the false denial of payment of any amount due, with intent to secure a discount upon such indebtedness or with intent to injure, delay or defraud the person to whom such indebtedness is due. However, this does not mean that a contractor should be afraid to withhold payment when appropriate. Under the prompt payment statutes, a contractor may withhold payment of an amount equal to the sum of the value of any work or labor that has not been performed or any materials or equipment that have not been furnished for which the subcontractor is seeking payment. This should be done by providing a timely written explanation of why the sums are being withheld. Simply stated, the subcontractor must perform the work or provide the materials and equipment for which he is requesting payment. A contractor is also permitted to withhold any costs and expenses reasonably necessary to correct or repair any work which is not materially in compliance with the agreement
FAILURE TO OBTAIN RELEASE OF LIEN
Similarly, the Contractors Board has authority to discipline the contractor if a subcontractor or material supplier has recorded a lien against the property and the contractor has received sufficient money as payment for the project, and has failed to obtain a discharge or release of any lien recorded against the property within 75 days after the recording of the lien
The Nevada State Contractors Board has authority to discipline licensees for actions that may very well be appropriate under the circumstances. Therefore, it is imperative that the licensee obtain the services of an experienced attorney if any claims are brought against them. The Wright Law Group, P.C. has decades of experience defending claims before the Contractors Board and is well equipped to assist you in handling your case. Please call us at 702-405-0001 to schedule a consultation or email us.