Contractors: Payment after use, occupancy or availability for use or occupancy of work of improvement; withholding of payment; notice of withholding; notice of correction of condition; partial payment; interest; exceptions.
1. Except as otherwise provided in this section, any money remaining unpaid for the construction of a work of improvement is payable to the contractor within 30 days after:
(a) Occupancy or use of the work of improvement by the owner or by a person acting with the authority of the owner; or
(b) The availability of a work of improvement for its intended use. The contractor must have given a written notice of availability to the owner on or before the day on which he claims that the work of improvement became available for use or occupancy.
2. If the owner has complied with subsection 3, the owner may:
(a) Withhold payment for the amount of:
(1) Any work or labor that has not been performed or materials or equipment that has not been furnished for which payment is sought;
(2) The costs and expenses reasonably necessary to correct or repair any work that is not materially in compliance with the contract to the extent that such costs and expenses exceed 50 percent of the amount of retention being withheld pursuant to the terms of the contract; and
(3) Money the owner has paid or is required to pay pursuant to an official notice from a state agency, or employee benefit trust fund, for which the owner is liable for the contractor or his subcontractors in accordance with chapter 608, 612, 616A to 616D, inclusive, or 617 of NRS.
(b) Require, as a condition precedent to the payment of any unpaid amount under the construction contract, that lien releases be furnished by the contractor’s subcontractors, suppliers or employees. For purposes of this paragraph:
(1) If the amount due is paid with a check or is not paid concurrently with the owner’s receipt of the lien releases, the lien releases must be conditioned upon the check clearing the bank upon which it is drawn and the receipt of payment and shall be deemed to become unconditional upon the receipt of payment; and
(2) The lien releases must be limited to the amount of the payment received.
3. If, pursuant to paragraph (a) of subsection 2, an owner intends to withhold any amount from a payment to be made to a contractor, the owner must, on or before the date the payment is due, give written notice to the contractor of any amount that will be withheld. The written notice must:
(a) Identify the amount that will be withheld from the contractor;
(b) Give a reasonably detailed explanation of the reason the owner will withhold that amount, including, without limitation, a specific reference to the provision or section of the contract, and any documents relating thereto, and the applicable building code, law or regulation with which the contractor has failed to comply; and
(c) Be signed by an authorized agent of the owner.
4. A contractor who receives a notice pursuant to subsection 3 may provide written notice to the owner of the correction of a condition described in the notice received pursuant to subsection 3. The notice of correction must be sufficient to identify the scope and manner of the correction of the condition and be signed by an authorized representative of the contractor. If an owner receives a written notice from the contractor of the correction of a condition described in an owner’s notice of withholding pursuant to subsection 3, the owner must, within 10 days after receipt of such notice:
(a) Pay the amount withheld by the owner for that condition; or
(b) Object to the scope and manner of the correction of the condition in a written statement that sets forth the reason for the objection and complies with subsection 3. If the owner objects to the scope and manner of the correction of a condition, he shall nevertheless pay to the contractor, along with payment made pursuant to the contractor’s next payment request, the amount withheld for the correction of conditions to which the owner no longer objects.
5. The partial occupancy or availability of a building requires payment in direct proportion to the value of the part of the building which is partially occupied or partially available. For projects which involve more than one building, each building must be considered separately in determining the amount of money which is payable to the contractor.
6. Unless otherwise provided in the construction contract, any money which is payable to a contractor pursuant to this section accrues interest at a rate equal to the lowest daily prime rate at the largest bank in this State, as determined by the Commissioner of Financial Institutions on January 1 or July 1, as the case may be, immediately preceding:
(a) The time the contract was signed; or
(b) If the contract was oral, the time the terms of the contract were agreed to by the parties,
Ę plus 2 percent.
7. This section does not apply to:
(a) Any residential building; or
(b) Public works.
8. As used in this section, unless the context otherwise requires, “work of improvement” has the meaning ascribed to it in NRS 108.22188.
Last modified: February 27, 2006