S.B. 274
Senate Bill No. 274–Committee on Commerce and Labor
March 5, 2001
____________
Referred to Committee on Commerce and Labor
SUMMARY—Revises provisions governing rights and duties of contractors and subcontractors under contracts or subcontracts. (BDR 54‑593)
FISCAL NOTE: Effect on Local Government: No.
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EXPLANATION
– Matter in bolded italics is new; matter
between brackets [omitted material] is material to be omitted.
Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).
AN ACT relating to contractors; revising the provisions governing the rights and duties of contractors and subcontractors under contracts and subcontracts; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN
SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
1-1 Section 1. Chapter 624 of NRS is hereby amended by adding thereto a
1-2 new section to read as follows:
1-3 1. If a contractor or a higher-tiered subcontractor enters into a
1-4 written subcontract with a subcontractor that includes a schedule for
1-5 payments, the contractor or higher-tiered subcontractor shall pay the
1-6 subcontractor on or before the date payment is due pursuant to the
1-7 schedule for payments. If a written subcontract does not contain a
1-8 schedule for payments or if a subcontract is oral, and if the
1-9 subcontractor has performed under the subcontract, the contractor or
1-10 higher-tiered subcontractor shall pay the subcontractor:
1-11 (a) Within 30 days after the date the subcontractor submits a request
1-12 for payment; or
1-13 (b) Within 10 days after the date the contractor or higher-tiered
1-14 subcontractor receives payment for all or a portion of the work, labor,
1-15 materials, equipment or services described in a request for payment
1-16 submitted by the subcontractor,
1-17 whichever is earlier.
1-18 2. If a contractor or a higher-tiered subcontractor fails to pay a
1-19 subcontractor within the time provided in subsection 1, the subcontractor
1-20 may stop work under the subcontract until payment is received if the
1-21 subcontractor gives written notice to the contractor or higher-tiered
1-22 subcontractor at least 5 working days before stopping work.
2-1 3. If a subcontractor stops work pursuant to subsection 2, the
2-2 subcontractor may terminate the subcontract by giving written notice of
2-3 the termination to the contractor or higher-tiered subcontractor.
2-4 4. If a contractor or a higher-tiered subcontractor through his own
2-5 act or neglect, or through the act or neglect of his agent, excluding acts
2-6 of God, floods, fires or strikes, causes the work to be stopped for a period
2-7 of 5 working days or more, the subcontractor may terminate the
2-8 subcontract if:
2-9 (a) The subcontractor gives written notice of his intent to terminate to
2-10 the contractor or higher-tiered subcontractor at least 5 working days
2-11 before terminating the subcontract; and
2-12 (b) The contractor or higher-tiered subcontractor fails to resume work
2-13 within 5 working days after receiving notice pursuant to paragraph (a).
2-14 5. If a subcontractor terminates a subcontract pursuant to subsection
2-15 3 or 4, the subcontractor may recover from the contractor or higher-
2-16 tiered subcontractor with whom he has contracted the amount found by a
2-17 trier of fact to be due the subcontractor, plus 2 percent of that amount,
2-18 including, without limitation:
2-19 (a) The cost of all work, labor, materials, equipment and services
2-20 furnished by the subcontractor;
2-21 (b) The profit and overhead the subcontractor would have received if
2-22 the subcontract had been performed in full;
2-23 (c) Interest at the rate agreed upon in the subcontract, or if no interest
2-24 rate is so provided, then interest at a rate equal to the prime rate at the
2-25 largest bank in this state, as determined by the commissioner of financial
2-26 institutions on January 1 or July 1, as the case may be, immediately
2-27 preceding:
2-28 (1) The time the subcontract was signed; or
2-29 (2) If the subcontract was oral, the time the terms of the
2-30 subcontract were agreed to by the parties; and
2-31 (d) The attorneys’ fees and costs incurred by the subcontractor in
2-32 collecting the amount due.
2-33 6. A subcontractor shall provide a copy of any notice given to a
2-34 contractor or higher-tiered subcontractor pursuant to this section to each
2-35 lower-tiered subcontractor with whom the subcontractor has contracted
2-36 who has not fully performed under that contract. Upon receipt of
2-37 payment pursuant to this section, the subcontractor shall notify all such
2-38 lower-tiered subcontractors in writing of his receipt of payment.
2-39 7. If a subcontractor stops work pursuant to this section, each such
2-40 lower-tiered subcontractor may also stop work on the project. If a
2-41 subcontractor terminates a subcontract pursuant to this section, all such
2-42 lower-tiered subcontractors may terminate their contracts with the
2-43 subcontractor.
2-44 8. The right of a subcontractor to stop work or terminate a
2-45 subcontract pursuant to this section is in addition to all other rights that
2-46 the subcontractor may have at law or in equity.
2-47 9. No subcontractor or his lower-tiered subcontractors, or their
2-48 respective sureties, may be held liable for any delays or damages that an
2-49 owner, contractor or higher-tiered subcontractor may suffer as a result
3-1 of the subcontractor stopping his work or terminating a subcontract in
3-2 accordance with this section.
3-3 10. A condition, stipulation or provision in a subcontract or other
3-4 agreement which requires a subcontractor to waive any rights provided
3-5 in this section or which limits those rights is void.
3-6 11. All notices required pursuant to this section must be:
3-7 (a) Delivered personally;
3-8 (b) Sent by facsimile and delivered by regular mail; or
3-9 (c) Delivered by certified mail.
3-10 12. As used in this section:
3-11 (a) “Higher-tiered subcontractor” means a subcontractor under a
3-12 contract who has entered into a subcontract with another subcontractor
3-13 pursuant to which the other subcontractor has agreed to perform any of
3-14 the duties of the subcontractor under the contract.
3-15 (b) “Lower-tiered subcontractor” means a subcontractor who has
3-16 agreed in a contract to perform any of the duties of another
3-17 subcontractor under another contract.
3-18 Sec. 2. NRS 624.020 is hereby amended to read as follows:
3-19 624.020 [1. For the purpose of this chapter, “contractor”] For the
3-20 purposes of this chapter, unless the context otherwise requires:
3-21 1. “Contractor” is synonymous with “builder.”
3-22 2. [Within the meaning of this chapter, a] A contractor is any person,
3-23 except a registered architect or a licensed professional engineer, acting
3-24 solely in his professional capacity, who in any capacity other than as the
3-25 employee of another with wages as the sole compensation, undertakes to,
3-26 [or] offers to undertake to, [or] purports to have the capacity to undertake
3-27 to, or submits a bid to, or does himself or by or through others, construct,
3-28 alter, repair, add to, subtract from, improve, move, wreck or demolish any
3-29 building, highway, road, railroad, excavation or other structure, project,
3-30 development or improvement, or to do any part thereof, including the
3-31 erection of scaffolding or other structures or works in connection
3-32 therewith. Evidence of the securing of any permit from a governmental
3-33 agency or the employment of any person on a construction project must be
3-34 accepted by the board or any court of this state as prima facie evidence that
3-35 the person securing that permit or employing any person on a construction
3-36 project is acting in the capacity of a contractor pursuant to the provisions of
3-37 this chapter.
3-38 3. A contractor [within the meaning of this chapter] includes a
3-39 subcontractor or specialty contractor, but does not include anyone who
3-40 merely furnishes materials or supplies without fabricating them into, or
3-41 consuming them in the performance of, the work of a contractor.
3-42 4. A contractor [within the meaning of this chapter] includes a
3-43 construction manager who performs management and counseling services
3-44 on a construction project for a professional fee.
3-45 Sec. 3. NRS 624.610 is hereby amended to read as follows:
3-46 624.610 1. [If, through no fault or act of a prime contractor or
3-47 anyone employed by him,] Except as otherwise provided in subsection 9,
3-48 if an owner of real property enters into a written or oral contract with a
4-1 contractor for the performance of work by the contractor and the owner
4-2 [fails] :
4-3 (a) Fails to pay that contractor[:
4-4 (a) Pursuant to their] on or before the date a payment is due pursuant
4-5 to a schedule for payments [under the contract, or within a reasonable time
4-6 after maturity and presentation of charges if] established in a written
4-7 contract; or
4-8 (b) If no such schedule is established[;
4-9 (b) Any sum certified by the architect, engineer or other supervisory
4-10 agent of the owner; or
4-11 (c) Such sum as is otherwise properly due,
4-12 or if the] or if the contract is oral, and if the contractor has performed
4-13 under the contract, fails to pay the contractor within 15 days after the
4-14 date the contractor submits a request for payment,
4-15 the contractor may stop work after giving written notice to the owner at
4-16 least 5 working days before stopping work. If a contractor stops work
4-17 pursuant to this subsection, the contractor may terminate the contract by
4-18 giving written notice of termination to the owner.
4-19 2. If the owner throughhis own act or neglect, or through the act or
4-20 neglect of his agent, excluding acts of God, floods, fires or strikes, causes
4-21 the work to be stopped for a period of 5 working days or more, the
4-22 contractor may[, after 5 working days’] terminate the contract if:
4-23 (a) The contractor gives written notice of his intent to terminate to the
4-24 owner[, stop work or terminate the contract and] at least 5 working days
4-25 before terminating the contract; and
4-26 (b) The owner fails to allow work to resume within 5 working days
4-27 after receiving notice pursuant to paragraph (a).
4-28 3. If a contractor terminates a contract pursuant to subsection 1 or 2,
4-29 the contractor may recover from the owner payment [for] in an amount
4-30 found by a trier of fact to be due the contractor, plus 2 percent of that
4-31 amount, including, without limitation:
4-32 (a) The cost of all work [executed.
4-33 2. If, through no fault of a subcontractor or anyone employed by him,
4-34 the contractor fails to pay that subcontractor:
4-35 (a) Pursuant to the schedule for payments under the subcontract, or
4-36 within a reasonable time after maturity and presentation of charges if no
4-37 schedule is established;
4-38 (b) Any sum certified by the architect, engineer or other supervisory
4-39 agent of the owner or contractor; or
4-40 (c) Such sum as is otherwise properly due,
4-41 or if the contractor through his own acts or neglect, excluding acts of God,
4-42 floods, fires or strikes, causes the work to be stopped for a period of 5
4-43 working days or more, the subcontractor may, after 5 working days’
4-44 written notice to the owner and the contractor, stop work or terminate the
4-45 subcontract and recover from the contractor payment for all work executed.
4-46 The subcontractor may not be held liable for nonperformance of that
4-47 subcontract and for the cost incurred by the contractor to complete the
4-48 work.
5-1 3. The provisions of subsection 2 do not apply if the contractor’s
5-2 failure to pay is caused by his need to withhold money pursuant to an
5-3 official notice from a state agency that he is liable to make payments or
5-4 contributions for the subcontractor pursuant to chapter 608 or 612 or
5-5 chapters 616A to 616D, inclusive, or chapter 617 of NRS.] , labor,
5-6 materials, equipment and services furnished by the contractor;
5-7 (b) The profit and overhead that the contractor would have received if
5-8 the contract had been performed in full;
5-9 (c) Interest at the rate agreed upon in the contract, or if no interest
5-10 rate is so provided, then interest at a rate equal to the prime rate at the
5-11 largest bank in this state, as determined by the commissioner of financial
5-12 institutions on January 1 or July 1, as the case may be, immediately
5-13 preceding:
5-14 (1) The time the contract was signed; or
5-15 (2) If the contract was oral, the time the terms of the contract were
5-16 agreed to by the parties; and
5-17 (d) The attorneys’ fees and costs incurred by the contractor in
5-18 collecting the amount due.
5-19 4. A contractor shall provide a copy of any notice given to an owner
5-20 pursuant to subsection 1 or 2 to each subcontractor with whom the
5-21 contractor has contracted who has not fully performed under that
5-22 contract. Upon receipt of payment pursuant to this section, the contractor
5-23 shall notify all such subcontractors in writing of his receipt of payment.
5-24 5. If a contractor stops work pursuant to subsection 1, each such
5-25 subcontractor may also stop work on the project. If a contractor
5-26 terminates a contract pursuant to this section, all such subcontractors
5-27 may terminate their contracts with the contractor.
5-28 6. The right of a contractor to stop work or terminate a contract
5-29 pursuant to this section is in addition to all other rights that the
5-30 contractor may have at law or in equity.
5-31 7. No contractor or his subcontractors, or their respective sureties,
5-32 may be held liable for any delays or damages that an owner may suffer
5-33 as a result of the contractor stopping his work or terminating a contract
5-34 in accordance with this section.
5-35 8. A condition, stipulation or provision in a contract or other
5-36 agreement which requires a contractor to waive any rights provided in
5-37 this section or which limits those rights is void.
5-38 9. All notices required pursuant to this section must be:
5-39 (a) Delivered personally;
5-40 (b) Sent by facsimile and delivered by regular mail; or
5-41 (c) Delivered by certified mail.
5-42 10. This section does not apply to a contract between a residential
5-43 contractor and a natural person who owns a single family residence for
5-44 the performance of qualified services with respect to the residence.
5-45 Sec. 4. This act becomes effective on July 1, 2001.
5-46 H