Bond and deposit: Person benefited; actions; payment by surety without action by court; interpleader by surety or Board; preferred claims; prohibited claims.
1. Each bond or deposit required by NRS 624.270 must be in favor of the State of Nevada for the benefit of any person who:
(a) As owner of the property to be improved entered into a construction contract with the contractor and is damaged by failure of the contractor to perform the contract or to remove liens filed against the property;
(b) As an employee of the contractor performed labor on or about the site of the construction covered by the contract;
(c) As a supplier or materialman furnished materials or equipment for the construction covered by the contract; or
(d) Is injured by any unlawful act or omission of the contractor in the performance of a contract.
2. Any person claiming against the bond or deposit may bring an action in a court of competent jurisdiction on the bond or against the Board on the deposit for the amount of damage he has suffered to the extent covered by the bond or deposit. No action may be commenced on the bond or deposit 2 years after the commission of the act on which the action is based. If an action is commenced on the bond, the surety that executed the bond shall notify the Board of the action within 30 days after the date that:
(a) The surety is served with a complaint and summons; or
(b) The action is commenced,
Ê whichever occurs first.
3. Upon receiving a request from a person for whose benefit a bond or deposit is required, the Board shall notify him that:
(a) A bond is in effect or that a deposit has been made, and the amount of either;
(b) There is an action against a bond, if that is the case, and the court, the title and number of the action and the amount sought by the plaintiff; and
(c) There is an action against the Board, if that is the case, and the amount sought by the plaintiff.
4. If a surety, or in the case of a deposit, the Board, desires to make payment without awaiting court action, the amount of the bond or deposit must be reduced to the extent of any payment made by the surety or the Board in good faith under the bond or deposit. Any payment must be based on written claims received by the surety or Board before the court action.
5. The surety or the Board may bring an action for interpleader against all claimants upon the bond or deposit. If an action for interpleader is commenced, the surety or the Board must serve each known claimant and publish notice of the action at least once each week for 2 weeks in a newspaper of general circulation in the county where the contractor has his principal place of business. The surety is entitled to deduct its costs of the action, including publication, from its liability under the bond. The Board is entitled to deduct its costs of the action, including attorney’s fees and publication, from the deposit.
6. A claim of any employee of the contractor for labor is a preferred claim against a bond or deposit. If any bond or deposit is insufficient to pay all claims for labor in full, the sum recovered must be distributed among all claimants for labor in proportion to the amounts of their respective claims. Partial payment of claims is not full payment, and the claimants may bring actions against the contractor for the unpaid balances.
7. Claims, other than claims for labor, against a bond or deposit have equal priority, except where otherwise provided by law, and if the bond or deposit is insufficient to pay all of those claims in full, they must be paid pro rata. Partial payment of claims is not full payment, and the claimants may bring actions against the contractor for the unpaid balances.
8. The Board may not claim against the bond or deposit required pursuant to NRS 624.270 for the payment of an administrative fine imposed for a violation of the provisions of this chapter.
Last modified: February 27, 2006