(REPRINTED WITH ADOPTED AMENDMENTS)
SECOND REPRINT 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
1-2 the provisions set forth as sections 2 to 9, inclusive, of this act.
1-3 Sec. 2. As used in NRS 624.610, 624.620 and 624.630 and sections 2
1-4 to 9, inclusive, of this act, the words and terms defined in sections 3 and
1-5 4 of this act have the meanings ascribed to them in those sections.
1-6 Sec. 3. “Higher-tiered subcontractor” means a subcontractor under
1-7 a contract who has entered into an oral or written subcontract with
1-8 another subcontractor pursuant to which the other subcontractor has
1-9 agreed to perform any of the duties of the subcontractor under the oral
1-10 or written subcontract.
1-11 Sec. 4. “Lower-tiered subcontractor” means a subcontractor who
1-12 has agreed in an oral or written contract to perform any of the duties of
1-13 another subcontractor under another oral or written subcontract.
1-14 Sec. 5. 1. Except as otherwise provided in this section, if a
1-15 contractor or higher-tiered subcontractor enters into:
1-16 (a) A written subcontract with a subcontractor that includes a
1-17 schedule for payments, the contractor or higher-tiered subcontractor
1-18 shall pay the subcontractor:
1-19 (1) On or before the date payment is due; or
2-1 (2) Within 10 days after the date the contractor or higher-tiered
2-2 subcontractor receives payment for all or a portion of the work, labor,
2-3 materials, equipment or services described in a request for payment
2-4 submitted by the subcontractor,
2-5 whichever is earlier.
2-6 (b) A written subcontract that does not contain a schedule for
2-7 payments, or a subcontract that is oral, the contractor or higher-tiered
2-8 subcontractor shall pay the subcontractor:
2-9 (1) Within 30 days after the date the subcontractor submits a
2-10 request for payment; or
2-11 (2) Within 10 days after the date the contractor or higher-tiered
2-12 subcontractor receives payment for all or a portion of the work, labor,
2-13 materials, equipment or services described in a request for payment
2-14 submitted by the subcontractor,
2-15 whichever is earlier.
2-16 2. If a contractor or higher-tiered subcontractor has complied with
2-17 subsection 3, the contractor or higher-tiered subcontractor may:
2-18 (a) Withhold from any payment owed to the subcontractor:
2-19 (1) A retention amount that the subcontractor is authorized to
2-20 withhold pursuant to the contract;
2-21 (2) An amount equal to the sum of the value of:
2-22 (I) Any work or labor that has not been performed or materials
2-23 or equipment that has not been furnished for which payment is being
2-24 sought; and
2-25 (II) Costs and expenses reasonably necessary to correct or repair
2-26 any work which is the subject of the request for payment and which is
2-27 not materially in compliance with the subcontract to the extent that such
2-28 costs and expenses exceed 50 percent of the amount withheld pursuant to
2-29 subparagraph (1); and
2-30 (3) The amount the owner, contractor or higher-tiered
2-31 subcontractor has paid or is required to pay pursuant to an official notice
2-32 from a state agency or employee benefit trust fund, for which the owner,
2-33 contractor or higher-tiered subcontractor is or may reasonably be liable
2-34 for the subcontractor or his subcontractors in accordance with chapter
2-35 608, 612, 616A to 616D, inclusive, or 617 of NRS; and
2-36 (b) Require as a condition precedent to the payment of any amount
2-37 due, lien releases furnished by the subcontractor and his lower-tiered
2-38 subcontractors and suppliers. For purposes of this paragraph:
2-39 (1) If the amount due is paid with a check or is not paid
2-40 concurrently with the contractor’s or higher-tiered subcontractor’s
2-41 receipt of the lien releases, the lien releases must be conditioned upon the
2-42 check clearing the bank upon which it is drawn and the receipt of
2-43 payment and shall be deemed to become unconditional upon the receipt
2-44 of payment; and
2-45 (2) The lien releases must be limited to the amount of the payment
2-46 received.
2-47 3. If, pursuant to subparagraph (2) or (3) of paragraph (a) of
2-48 subsection 2 or paragraph (b) of subsection 2, a contractor or higher-
2-49 tiered subcontractor intends to withhold any amount from a payment to
3-1 be made to a subcontractor, the contractor or higher-tiered subcontractor
3-2 must give, on or before the date the payment is due, a written notice to
3-3 the subcontractor of any amount that will be withheld and give a copy of
3-4 such notice to all reputed higher-tiered subcontractors, contractors and
3-5 the owner. The written notice must:
3-6 (a) Identify the amount of the request for payment that will be
3-7 withheld from the subcontractor;
3-8 (b) Give a reasonably detailed explanation of the reason the
3-9 contractor or higher-tiered subcontractor will withhold that amount,
3-10 including, without limitation, a specific reference to the provision or
3-11 section of the subcontract, and any documents relating thereto, and the
3-12 applicable building code, law or regulation with which the subcontractor
3-13 has failed to comply; and
3-14 (c) Be signed by an authorized agent of the contractor or higher-tiered
3-15 subcontractor.
3-16 4. A subcontractor who receives a notice pursuant to subsection 3
3-17 may provide written notice to the contractor or higher-tiered
3-18 subcontractor of the correction of a condition described in the notice
3-19 received pursuant to subsection 3. The notice of correction must be
3-20 sufficient to identify the scope and manner of the correction of the
3-21 condition and be signed by an authorized representative of the
3-22 subcontractor. If a contractor or higher-tiered subcontractor receives a
3-23 written notice from the subcontractor of the correction of a condition
3-24 pursuant to this subsection, the contractor or higher-tiered subcontractor
3-25 must:
3-26 (a) Pay the amount withheld by the contractor or higher-tiered
3-27 subcontractor for that condition on or before the date the next payment is
3-28 due the subcontractor; or
3-29 (b) Object to the scope and manner of the correction of the condition,
3-30 on or before the date the next payment is due to the subcontractor, in a
3-31 written statement which sets forth the reason for the objection and which
3-32 complies with subsection 3. If the contractor or higher-tiered
3-33 subcontractor objects to the scope and manner of the correction of a
3-34 condition, he shall nevertheless pay to the subcontractor, along with
3-35 payment made pursuant to the subcontractor’s next payment request, the
3-36 amount withheld for the correction of conditions to which the contractor
3-37 or higher-tiered subcontractor no longer objects.
3-38 Sec. 6. 1. If a contractor or higher-tiered subcontractor fails to:
3-39 (a) Pay the subcontractor within the time provided in subsection 1 or 4
3-40 of section 5 of this act;
3-41 (b) Pay the subcontractor within 45 days after the 25th day of the
3-42 month in which the subcontractor submits a request for payment, even if
3-43 the contractor or higher-tiered subcontractor has not been paid and the
3-44 subcontract contains a provision which requires the contractor or
3-45 higher-tiered subcontractor to pay the subcontractor only if or when the
3-46 contractor or higher-tiered subcontractor is paid; or
3-47 (c) Give the subcontractor written notice of any withholding in the
3-48 time and manner required by subsection 3 or 4 of section 5 of this
3-49 act,
4-1 the subcontractor may stop work under the subcontract until payment is
4-2 received if the subcontractor gives written notice to the contractor or
4-3 higher-tiered subcontractor at least 10 days before stopping work.
4-4 2. If a subcontractor stops work pursuant to paragraph (a) or (c) of
4-5 subsection 1, the subcontractor may terminate the subcontract by giving
4-6 written notice of the termination to the contractor or higher-tiered
4-7 subcontractor after stopping work but at least 15 days before the
4-8 termination of the subcontract. If the subcontractor is paid the amount
4-9 due before the date for termination set forth in the written notice, the
4-10 subcontractor shall not terminate the subcontract and shall resume work.
4-11 3. If an owner, contractor or a higher-tiered subcontractor through
4-12 his own act or neglect, or through an act or neglect of his agent,
4-13 excluding acts of God, floods, fires, labor disputes, strikes or reasonable
4-14 adjustments in work schedules, causes the work to be stopped for a
4-15 period of 15 days or more, the subcontractor may terminate the
4-16 subcontract if:
4-17 (a) The subcontractor gives written notice of his intent to terminate to
4-18 the contractor or higher-tiered subcontractor at least 10 days before
4-19 terminating the subcontract; and
4-20 (b) The contractor or higher-tiered subcontractor fails to allow the
4-21 subcontractor to resume the work within the time set forth in the written
4-22 notice given pursuant to paragraph (a).
4-23 4. If a subcontractor stops work pursuant to paragraph (a) or (c) of
4-24 subsection 1, the contractor or higher-tiered subcontractor may
4-25 terminate the subcontract by giving the subcontractor written notice of
4-26 his intent to terminate at least 15 days before terminating the
4-27 subcontract.
4-28 5. If the subcontract is terminated pursuant to subsection 3, or if the
4-29 subcontractor stops work in accordance with this section and the
4-30 subcontract is terminated pursuant to subsection 2 or 4, the
4-31 subcontractor is entitled to recover from the contractor or higher-tiered
4-32 subcontractor with whom he has contracted the amount found by a trier
4-33 of fact to be due the subcontractor, including, without limitation:
4-34 (a) The cost of all work, labor, materials, equipment and services
4-35 furnished by and through the subcontractor, including any profit and
4-36 overhead the subcontractor incurred or earned through the date of
4-37 termination;
4-38 (b) The profit that the subcontractor and his lower-tiered
4-39 subcontractors would have received if the subcontract had been
4-40 performed in full;
4-41 (c) Interest at a rate equal to the rate agreed upon in the subcontract,
4-42 or, if no interest rate is so provided, interest at a rate equal to the prime
4-43 rate at the largest bank in this state, as determined by the commissioner
4-44 of financial institutions on January 1 or July 1, as the case may be,
4-45 immediately preceding:
4-46 (1) The time the subcontract was signed; or
4-47 (2) If the subcontract was oral, the time the terms of the
4-48 subcontract were agreed upon by the parties,
4-49 plus 2 percent; and
5-1 (d) The reasonable costs, including court costs, incurred by the
5-2 subcontractor and his lower-tiered subcontractors in collecting the
5-3 amount due.
5-4 At any action brought to enforce the rights or obligations set forth in this
5-5 subsection, the trier of fact may award reasonable attorney’s fees to the
5-6 subcontractor or, if the trier of fact determines that the subcontractor
5-7 stopped work or terminated the contract without reasonable cause, the
5-8 trier of fact may award reasonable attorney’s fees to the contractor or
5-9 higher-tiered subcontractor.
5-10 6. If a subcontractor stops work pursuant to this section, each lower-
5-11 tiered subcontractor with whom the subcontractor has contracted who
5-12 has not fully performed under the contract may also stop work on the
5-13 project. If a subcontractor terminates a subcontract pursuant to this
5-14 section, all such lower-tiered subcontractors may terminate their
5-15 contracts with the subcontractor.
5-16 7. The right of a subcontractor to stop work or terminate a
5-17 subcontract pursuant to this section is in addition to all other rights that
5-18 the subcontractor may have at law or in equity and does not impair or
5-19 affect the right of a subcontractor to maintain a civil action or to submit
5-20 any controversy arising under the contract to arbitration.
5-21 8. No subcontractor or his lower-tiered subcontractors, or their
5-22 respective sureties, may be held liable for any delays or damages that an
5-23 owner, contractor or higher-tiered subcontractor may suffer as a result
5-24 of the subcontractor or lower-tiered subcontractor stopping his work or
5-25 terminating a subcontract for reasonable cause and in accordance with
5-26 this section.
5-27 Sec. 7. 1. A subcontractor shall provide a copy of any notice given
5-28 to a contractor or higher-tiered subcontractor pursuant to this section or
5-29 section 5 or 6 of this act to each lower-tiered subcontractor with whom
5-30 the subcontractor has contracted who has not fully performed under the
5-31 contract. Upon receipt of payment pursuant to section 5 of this act, the
5-32 subcontractor shall notify all such lower-tiered subcontractors in writing
5-33 of his receipt of payment.
5-34 2. A subcontractor shall provide a copy of any notice given to a
5-35 contractor or higher-tiered subcontractor pursuant to this section or
5-36 section 5 or 6 of this act to each reputed higher-tiered subcontractor,
5-37 contractor and the owner, if known. The failure of a subcontractor to
5-38 comply with this subsection does not invalidate any notice otherwise
5-39 properly given.
5-40 3. A condition, stipulation or provision in a subcontract or other
5-41 agreement which requires a subcontractor to waive any rights provided
5-42 in this section or section 5 or 6 of this act, or which limits those rights, is
5-43 void.
5-44 4. All notices required pursuant to this section or section 5 or 6 of
5-45 this act must be:
5-46 (a) Delivered personally, in which case the subcontractor shall obtain
5-47 a notarized statement from the person who delivered the notice as proof
5-48 of delivery;
6-1 (b) Sent by facsimile and delivered by regular mail, in which case the
6-2 subcontractor shall retain proof of a successful transmission of the
6-3 facsimile;
6-4 (c) Delivered by certified mail; or
6-5 (d) Delivered in the manner provided in the contract.
6-6 5. Within 5 days after a contractor receives a written request for the
6-7 information set forth in paragraphs (a), (b) and (c) from a subcontractor
6-8 with respect to a subcontract that has not been fully performed, the
6-9 contractor shall notify the subcontractor in writing of the following:
6-10 (a) The date the contractor made a specified payment to his
6-11 subcontractor;
6-12 (b) Whether the contractor has paid his subcontractor the entire
6-13 amount of a specified payment; and
6-14 (c) The amount withheld by the contractor of a specified payment to
6-15 his subcontractor and the reason for the withholding.
6-16 Sec. 8. 1. Except as otherwise provided in subsections 2 and 4 and
6-17 subsection 4 of section 9 of this act, if an owner of real property enters
6-18 into a written or oral contract with a contractor for the performance of
6-19 work by the contractor, the owner must:
6-20 (a) Pay that contractor on or before the date a payment is due
6-21 pursuant to a schedule for payments established in a written contract; or
6-22 (b) If no such schedule is established or if the contract is oral, pay the
6-23 contractor within 21 days after the date the contractor submits a request
6-24 for payment.
6-25 2. If an owner has complied with subsection 3, the owner may:
6-26 (a) Withhold from any payment to be made to the contractor:
6-27 (1) A retention amount that the owner is authorized to withhold
6-28 pursuant to the contract;
6-29 (2) An amount equal to the sum of the value of:
6-30 (I) Any work or labor that has not been performed or materials
6-31 or equipment that has not been furnished for which payment is being
6-32 sought; and
6-33 (II) Costs and expenses reasonably necessary to correct or repair
6-34 any work which is the subject of the request for payment and which is
6-35 not materially in compliance with the contract to the extent that such
6-36 costs and expenses exceed 50 percent of the amount withheld pursuant to
6-37 subparagraph (1); and
6-38 (3) The amount the owner has paid or is required to pay pursuant
6-39 to an official notice from a state agency or employee benefit trust fund,
6-40 for which the owner is or may reasonably be liable for the contractor or
6-41 his subcontractors in accordance with chapter 608, 612, 616A to 616D,
6-42 inclusive, or chapter 617 of NRS; and
6-43 (b) Require as a condition precedent to the payment of any amount
6-44 due, lien releases furnished by the contractor and his subcontractors and
6-45 suppliers. For purposes of this paragraph:
6-46 (1) If the amount due is paid with a check or is not paid
6-47 concurrently with the owner’s receipt of the lien releases, the lien
6-48 releases must be conditioned upon the check clearing the bank upon
7-1 which it is drawn and the receipt of payment and shall be deemed to
7-2 become unconditional upon the receipt of payment; and
7-3 (2) The lien releases must be limited to the amount of the payment
7-4 received.
7-5 3. If, pursuant to subparagraph (2) or (3) of paragraph (a) of
7-6 subsection 2 or paragraph (b) of subsection 2, an owner intends to
7-7 withhold any amount from a payment to be made to a contractor, the
7-8 owner must give, on or before the date the payment is due, a written
7-9 notice to the contractor of any amount that will be withheld. The written
7-10 notice must:
7-11 (a) Identify the amount of the request for payment that will be
7-12 withheld from the contractor;
7-13 (b) Give a reasonably detailed explanation of the reason the owner
7-14 will withhold that amount, including, without limitation, a specific
7-15 reference to the provision or section of the contract, and any documents
7-16 relating thereto, and the applicable building code, law or regulation with
7-17 which the contractor has failed to comply; and
7-18 (c) Be signed by an authorized agent of the owner.
7-19 4. A contractor who receives a notice pursuant to subsection 3 may
7-20 provide written notice to the owner of the correction of a condition
7-21 described in the notice received pursuant to subsection 3. The notice of
7-22 correction must be sufficient to identify the scope and manner of the
7-23 correction of the condition and be signed by an authorized representative
7-24 of the contractor. If an owner receives a written notice from the
7-25 contractor of the correction of a condition pursuant to this subsection,
7-26 the owner must:
7-27 (a) Pay the amount withheld by the owner for that condition on or
7-28 before the date the next payment is due the contractor; or
7-29 (b) Object to the scope and manner of the correction of the condition,
7-30 on or before the date the next payment is due to the contractor, in a
7-31 written statement which sets forth the reason for the objection and which
7-32 complies with subsection 3. If the owner objects to the scope and manner
7-33 of the correction of a condition, he shall nevertheless pay to the
7-34 contractor, along with payment made pursuant to the contractor’s next
7-35 payment request, the amount withheld for the correction of conditions to
7-36 which the owner no longer objects.
7-37 Sec. 9. 1. A contractor shall provide a copy of any notice given to
7-38 an owner pursuant to subsection 1 or 2 of NRS 624.610 to each
7-39 subcontractor with whom the contractor has contracted who has not fully
7-40 performed under that contract. Upon receipt of payment pursuant to
7-41 section 8 of this act, the contractor shall notify all such subcontractors in
7-42 writing of his receipt of payment.
7-43 2. A condition, stipulation or provision in a contract or other
7-44 agreement which requires a contractor to waive any rights provided in
7-45 this section, NRS 624.610 or section 8 of this act or which limits those
7-46 rights is void.
7-47 3. All notices required pursuant to this section, NRS 624.610 and
7-48 section 8 of this act must be:
8-1 (a) Delivered personally, in which case the contractor shall obtain a
8-2 notarized statement from the person who delivered the notice as proof of
8-3 delivery;
8-4 (b) Sent by facsimile and delivered by regular mail, in which case the
8-5 contractor shall retain proof of a successful transmission of the
8-6 facsimile;
8-7 (c) Delivered by certified mail; or
8-8 (d) Delivered in the manner provided for in the contract.
8-9 4. This section, NRS 624.610 and section 8 of this act do not apply to
8-10 a contract between:
8-11 (a) A residential contractor and a natural person who owns a single-
8-12 family residence for the performance of qualified services with respect to
8-13 the residence; and
8-14 (b) A public body and a contractor for the performance of work and
8-15 labor on a public work.
8-16 5. Within 5 days after an owner receives a written request for the
8-17 information set forth in paragraphs (a), (b) and (c) from a subcontractor
8-18 with respect to a subcontract that has not been fully performed, the
8-19 owner shall notify the subcontractor in writing of the following:
8-20 (a) The date the owner made a specified payment to his contractor;
8-21 (b) Whether the owner has paid the entire amount of a specified
8-22 payment to his contractor; and
8-23 (c) The amount withheld by the owner from a specified payment to the
8-24 contractor and the reason for the withholding.
8-25 Sec. 10. NRS 624.020 is hereby amended to read as follows:
8-26 624.020 [1. For the purpose of this chapter, “contractor”] For the
8-27 purposes of this chapter, unless the context otherwise requires:
8-28 1. “Contractor” is synonymous with “builder.”
8-29 2. [Within the meaning of this chapter, a] A contractor is any person,
8-30 except a registered architect or a licensed professional engineer, acting
8-31 solely in his professional capacity, who in any capacity other than as the
8-32 employee of another with wages as the sole compensation, undertakes to,
8-33 [or] offers to undertake to, [or] purports to have the capacity to undertake
8-34 to, or submits a bid to, or does himself or by or through others, construct,
8-35 alter, repair, add to, subtract from, improve, move, wreck or demolish any
8-36 building, highway, road, railroad, excavation or other structure, project,
8-37 development or improvement, or to do any part thereof, including the
8-38 erection of scaffolding or other structures or works in connection
8-39 therewith. Evidence of the securing of any permit from a governmental
8-40 agency or the employment of any person on a construction project must be
8-41 accepted by the board or any court of this state as prima facie evidence that
8-42 the person securing that permit or employing any person on a construction
8-43 project is acting in the capacity of a contractor pursuant to the provisions of
8-44 this chapter.
8-45 3. A contractor [within the meaning of this chapter] includes a
8-46 subcontractor or specialty contractor, but does not include anyone who
8-47 merely furnishes materials or supplies without fabricating them into, or
8-48 consuming them in the performance of, the work of a contractor.
9-1 4. A contractor [within the meaning of this chapter] includes a
9-2 construction manager who performs management and counseling services
9-3 on a construction project for a professional fee.
9-4 Sec. 11. NRS 624.610 is hereby amended to read as follows:
9-5 624.610 1. If [, through no fault or act of a prime contractor or
9-6 anyone employed by him, the] an owner fails to [pay that contractor:
9-7 (a) Pursuant to their schedule for payments under the contract, or within
9-8 a reasonable time after maturity and presentation of charges if no schedule
9-9 is established;
9-10 (b) Any sum certified by the architect, engineer or other supervisory
9-11 agent of the owner; or
9-12 (c) Such sum as is otherwise properly due, or if] :
9-13 (a) Pay the contractor in the time and manner required by subsection
9-14 1 or 4 of section 8 of this act; or
9-15 (b) Give the contractor written notice of any withholding in the time
9-16 and manner required by subsection 3 or 4 of section 8 of this
9-17 act,
9-18 the contractor may stop work after giving written notice to the owner at
9-19 least 10 days before stopping work. If a contractor stops work pursuant to
9-20 this subsection, the contractor may terminate the contract by giving
9-21 written notice of termination to the owner after stopping work but at least
9-22 15 days before terminating the contract. If the contractor is paid the
9-23 amount due before the date for termination of the contract set forth in
9-24 the written notice, the contractor shall not terminate the contract and
9-25 shall resume his work.
9-26 2. If theowner throughhis own act or neglect, or through an act or
9-27 neglect of his agent, excluding acts of God, floods, fires [or strikes,] ,
9-28 labor disputes, strikes or reasonable adjustments to work schedules,
9-29 causes the work to be stopped for a period of [5 working] 15 days or more,
9-30 the contractor may[, after 5 working days’] terminate the contract if:
9-31 (a) The contractor gives written notice of his intent to terminate to the
9-32 owner[, stop work or terminate the contract and] at least 10 days before
9-33 terminating the contract; and
9-34 (b) The owner fails to allow work to resume within the time set forth
9-35 in the written notice given pursuant to paragraph (a).
9-36 3. If a contractor stops work pursuant to subsection 1, the owner may
9-37 terminate the contract by giving the contractor written notice of his intent
9-38 to terminate at least 15 days before terminating the contract.
9-39 4. If the contract is terminated pursuant to subsection 2, or if the
9-40 contractor stops work in accordance with this section and the contract is
9-41 terminated pursuant to subsection 1 or 3, the contractor is entitled to
9-42 recover from the owner payment [for] in an amount found by a trier of
9-43 fact to be due the contractor, including, without limitation:
9-44 (a) The cost of all work [executed.
9-45 2. If, through no fault of a subcontractor or anyone employed by him,
9-46 the contractor fails to pay that subcontractor:
9-47 (a) Pursuant to the schedule for payments under the subcontract, or
9-48 within a reasonable time after maturity and presentation of charges if no
9-49 schedule is established;
10-1 (b) Any sum certified by the architect, engineer or other supervisory
10-2 agent of the owner or contractor; or
10-3 (c) Such sum as is otherwise properly due,
10-4 or if the contractor through his own acts or neglect, excluding acts of God,
10-5 floods, fires or strikes, causes the work to be stopped for a period of 5
10-6 working days or more, the subcontractor may, after 5 working days’
10-7 written notice to the owner and the contractor, stop work or terminate the
10-8 subcontract and recover from the contractor payment for all work executed.
10-9 The subcontractor may not be held liable for nonperformance of that
10-10 subcontract and for the cost incurred by the contractor to complete the
10-11 work.
10-12 3. The provisions of subsection 2 do not apply if the contractor’s
10-13 failure to pay is caused by his need to withhold money pursuant to an
10-14 official notice from a state agency that he is liable to make payments or
10-15 contributions for the subcontractor pursuant to chapter 608 or 612 or
10-16 chapters 616A to 616D, inclusive, or chapter 617 of NRS.] , labor,
10-17 materials, equipment and services furnished by and through the
10-18 contractor, including any profit and overhead the contractor incurred or
10-19 earned through the date of termination;
10-20 (b) The profit that the contractor and his subcontractors would have
10-21 received if the contract had been performed in full;
10-22 (c) Interest at a rate equal to the rate agreed upon in the contract, or if
10-23 no interest rate is so provided, then interest at a rate equal to the prime
10-24 rate at the largest bank in this state, as determined by the commissioner
10-25 of financial institutions on January 1 or July 1, as the case may be,
10-26 immediately preceding:
10-27 (1) The time the contract was signed; or
10-28 (2) If the contract was oral, the time the terms of the contract were
10-29 agreed to by the parties,
10-30 plus 2 percent; and
10-31 (d) The reasonable costs, including court costs, incurred by the
10-32 contractor and his subcontractors in collecting the amount
10-33 due.
10-34 At any action brought to enforce the rights or obligations set forth in this
10-35 subsection, the trier of fact may award reasonable attorney’s fees to the
10-36 contractor or, if the trier of fact determines that the contractor stopped
10-37 work or terminated the contract without reasonable cause, the trier of
10-38 fact may award reasonable attorney’s fees to the owner.
10-39 5. If a contractor stops work pursuant to subsection 1, each
10-40 subcontractor with whom the contractor has contracted who has not fully
10-41 performed under that contract may also stop work on the project. If a
10-42 contractor terminates a contract pursuant to this section, all such
10-43 subcontractors may terminate their contracts with the contractor.
10-44 6. The right of a contractor to stop work or terminate a contract
10-45 pursuant to this section is in addition to all other rights that the
10-46 contractor may have at law or in equity and does not impair or affect the
10-47 right of a contractor to maintain a civil action or to submit any
10-48 controversy arising under the contract to arbitration.
11-1 7. No contractor or his subcontractors, or their respective sureties,
11-2 may be held liable for any delays or damages that an owner may suffer
11-3 as a result of the contractor, subcontractor or lower-tiered subcontractor
11-4 stopping his work or terminating a contract for reasonable cause and in
11-5 accordance with this section or section 6 of this act.
11-6 Sec. 12. NRS 624.620 is hereby amended to read as follows:
11-7 624.620 1. Except as otherwise provided in [subsections 2, 3 and 5,]
11-8 this section, any money remaining unpaid for the construction [or
11-9 remodeling of a building] of a work of improvement is payable to the
11-10 contractor within 30 days after:
11-11 (a) Occupancy or use of the work of improvement by the owner or by a
11-12 person acting with the authority of the owner; or
11-13 (b) The availability of a [constructed or remodeled building] work of
11-14 improvement for its intended use. The contractor must have given a written
11-15 notice of availability to the owner on or before the day on which he claims
11-16 that the [building became available.
11-17 2. The] work of improvement became available for use or occupancy.
11-18 2. If the owner has complied with subsection 3, the owner may:
11-19 (a) Withhold payment for the amount of [any disputed or uncompleted
11-20 items if he notifies the contractor in writing at the time of withholding as to
11-21 any disputed items.] :
11-22 (1) Any work or labor that has not been performed or materials or
11-23 equipment that has not been furnished for which payment is sought;
11-24 (2) The costs and expenses reasonably necessary to correct or
11-25 repair any work that is not materially in compliance with the contract to
11-26 the extent that such costs and expenses exceed 50 percent of the amount
11-27 of retention being withheld pursuant to the terms of the contract; and
11-28 (3) Money the owner has paid or is required to pay pursuant to an
11-29 official notice from a state agency, or employee benefit trust fund, for
11-30 which the owner is liable for the contractor or his subcontractors in
11-31 accordance with chapter 608, 612, 616A to 616D, inclusive, or chapter
11-32 617 of NRS.
11-33 (b) Require, as a condition precedent to the payment of any [money]
11-34 unpaid amount under the construction contract, that [waivers of] lien
11-35 releases be furnished by the contractor’s subcontractors, suppliers or
11-36 employees. For purposes of this paragraph:
11-37 (1) If the amount due is paid with a check or is not paid
11-38 concurrently with the owner’s receipt of the lien releases, the lien
11-39 releases must be conditioned upon the check clearing the bank upon
11-40 which it is drawn and the receipt of payment and shall be deemed to
11-41 become unconditional upon the receipt of payment; and
11-42 (2) The lien releases must be limited to the amount of the payment
11-43 received.
11-44 3. If pursuant to paragraph (a) of subsection 2, an owner intends to
11-45 withhold any amount from a payment to be made to a contractor, the
11-46 owner must, on or before the date the payment is due, give written notice
11-47 to the contractor of any amount that will be withheld. The written notice
11-48 must:
11-49 (a) Identify the amount that will be withheld from the contractor;
12-1 (b) Give a reasonably detailed explanation of the reason the owner
12-2 will withhold that amount, including, without limitation, a specific
12-3 reference to the provision or section of the contract, and any documents
12-4 relating thereto, and the applicable building code, law or regulation with
12-5 which the contractor has failed to comply; and
12-6 (c) Be signed by an authorized agent of the owner.
12-7 4. A contractor who receives a notice pursuant to subsection 3 may
12-8 provide written notice to the owner of the correction of a condition
12-9 described in the notice received pursuant to subsection 3. The notice of
12-10 correction must be sufficient to identify the scope and manner of the
12-11 correction of the condition and be signed by an authorized representative
12-12 of the contractor. If an owner receives a written notice from the
12-13 contractor of the correction of a condition described in an owner’s notice
12-14 of withholding pursuant to subsection 3, the owner must, within 10 days
12-15 after receipt of such notice:
12-16 (a) Pay the amount withheld by the owner for that condition; or
12-17 (b) Object to the scope and manner of the correction of the condition
12-18 in a written statement that sets forth the reason for the objection and
12-19 complies with subsection 3. If the owner objects to the scope and manner
12-20 of the correction of a condition, he shall nevertheless pay to the
12-21 contractor, along with payment made pursuant to the contractor’s next
12-22 payment request, the amount withheld for the correction of conditions to
12-23 which the owner no longer objects.
12-24 5. The partial occupancy or availability of a building requires payment
12-25 in direct proportion to the value of the part of the building which is
12-26 partially occupied or partially available. For projects which involve more
12-27 than one building, each building must be considered separately in
12-28 determining the amount of money which is payable to the contractor.
12-29 [4.] 6. Unless otherwise provided in the construction contract, any
12-30 money which is payable to a contractor pursuant to this section accrues
12-31 interest at a rate equal to the lowest daily prime rate at the [three largest
12-32 United States banking institutions on the date the contract is executed plus]
12-33 largest bank in this state, as determined by the commissioner of financial
12-34 institutions on January 1 or July 1, as the case may be, immediately
12-35 preceding:
12-36 (a) The time the contract was signed; or
12-37 (b) If the contract was oral, the time the terms of the contract were
12-38 agreed to by the parties,
12-39 plus 2 percent . [,from 30 days after the date on which the money became
12-40 payable until the date of payment.
12-41 5.] 7. This section does not apply to:
12-42 (a) Any residential building; or
12-43 (b) Public works.
12-44 8. As used in this section, unless the context otherwise requires,
12-45 “work of improvement” has the meaning ascribed to it in NRS 108.221.
12-46 Sec. 13. NRS 99.040 is hereby amended to read as follows:
12-47 99.040 1. When there is no express contract in writing fixing a
12-48 different rate of interest, interest must be allowed at a rate equal to the
12-49 prime rate at the largest bank in Nevada, as ascertained by the
13-1 commissioner of financial institutions, on January 1 or July 1, as the case
13-2 may be, immediately preceding the date of the transaction, plus 2 percent,
13-3 upon all money from the time it becomes due, in the following cases:
13-4 (a) Upon contracts, express or implied, other than book accounts.
13-5 (b) Upon the settlement of book or store accounts from the day on
13-6 which the balance is ascertained.
13-7 (c) Upon money received to the use and benefit of another and detained
13-8 without his consent.
13-9 (d) Upon wages or salary, if it is unpaid when due, after demand
13-10 therefor has been made.
13-11 The rate must be adjusted accordingly on each January 1 and July 1
13-12 thereafter until the judgment is satisfied.
13-13 2. The provisions of this section do not apply to money owed:
13-14 (a) For the construction [or remodeling of a building] of a work of
13-15 improvement pursuant to NRS 624.620; or
13-16 (b) By a contractor to his subcontractor pursuant to NRS 624.630.
13-17 H