Subcontractors: Payment; withholding of payment; notice of withholding; notice of correction of condition.
1. Except as otherwise provided in this section, if a contractor or higher-tiered subcontractor enters into:
(a) A written subcontract with a subcontractor that includes a schedule for payments, the contractor or higher-tiered subcontractor shall pay the subcontractor:
(1) On or before the date payment is due; or
(2) Within 10 days after the date the contractor or higher-tiered subcontractor receives payment for all or a portion of the work, labor, materials, equipment or services described in a request for payment submitted by the subcontractor,
Ê whichever is earlier.
(b) A written subcontract that does not contain a schedule for payments, or a subcontract that is oral, the contractor or higher-tiered subcontractor shall pay the subcontractor:
(1) Within 30 days after the date the subcontractor submits a request for payment; or
(2) Within 10 days after the date the contractor or higher-tiered subcontractor receives payment for all or a portion of the work, labor, materials, equipment or services described in a request for payment submitted by the subcontractor,
Ê whichever is earlier.
2. If a contractor or higher-tiered subcontractor has complied with subsection 3, the contractor or higher-tiered subcontractor may:
(a) Withhold from any payment owed to the subcontractor:
(1) A retention amount that the subcontractor is authorized to withhold pursuant to the contract;
(2) An amount equal to the sum of the value of:
(I) Any work or labor that has not been performed or materials or equipment that has not been furnished for which payment is being sought; and
(II) Costs and expenses reasonably necessary to correct or repair any work which is the subject of the request for payment and which is not materially in compliance with the subcontract to the extent that such costs and expenses exceed 50 percent of the amount withheld pursuant to subparagraph (1); and
(3) The amount the owner, contractor or higher-tiered subcontractor 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, contractor or higher-tiered subcontractor is or may reasonably be liable for the subcontractor or his subcontractors in accordance with chapter 608, 612, 616A to 616D, inclusive, or 617 of NRS; and
(b) Require as a condition precedent to the payment of any amount due, lien releases furnished by the subcontractor and his lower-tiered subcontractors and suppliers. For purposes of this paragraph:
(1) If the amount due is paid with a check or is not paid concurrently with the contractor’s or higher-tiered subcontractor’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 subparagraph (2) or (3) of paragraph (a) of subsection 2 or paragraph (b) of subsection 2, a contractor or higher-tiered subcontractor intends to withhold any amount from a payment to be made to a subcontractor, the contractor or higher-tiered subcontractor must give, on or before the date the payment is due, a written notice to the subcontractor of any amount that will be withheld and give a copy of such notice to all reputed higher-tiered subcontractors, contractors and the owner. The written notice must:
(a) Identify the amount of the request for payment that will be withheld from the subcontractor;
(b) Give a reasonably detailed explanation of the reason the contractor or higher-tiered subcontractor will withhold that amount, including, without limitation, a specific reference to the provision or section of the subcontract, and any documents relating thereto, and the applicable building code, law or regulation with which the subcontractor has failed to comply; and
(c) Be signed by an authorized agent of the contractor or higher-tiered subcontractor.
4. A subcontractor who receives a notice pursuant to subsection 3 may provide written notice to the contractor or higher-tiered subcontractor 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 subcontractor. If a contractor or higher-tiered subcontractor receives a written notice from the subcontractor of the correction of a condition pursuant to this subsection, the contractor or higher-tiered subcontractor must:
(a) Pay the amount withheld by the contractor or higher-tiered subcontractor for that condition on or before the date the next payment is due the subcontractor; or
(b) Object to the scope and manner of the correction of the condition, on or before the date the next payment is due to the subcontractor, in a written statement which sets forth the reason for the objection and which complies with subsection 3. If the contractor or higher-tiered subcontractor objects to the scope and manner of the correction of a condition, he shall nevertheless pay to the subcontractor, along with payment made pursuant to the subcontractor’s next payment request, the amount withheld for the correction of conditions to which the contractor or higher-tiered subcontractor no longer objects.
Last modified: February 27, 2006