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In this blog, presented by SunRay Construction Solutions and Richard L. Peel, Esq., Managing Partner and Founder, Peel Brimley LLP, construction professionals in Nevada can find out about why contracts are important, some of the different types of contracts and learn in detail about the Nevada lien laws.
What are the Basics of Contracts?
As a contracting party, the first step that you need to take is to determine the position you occupy in the construction hierarchy. You need to determine whether you are the:
- Owner
- Architect/Engineer
- General Contractor
- Subcontractor
- Supplier
Your position, i.e., where you are a higher-tier party or a lower-tier party will help you in determining whether you want the contract one sided in your favor or in favor of the lower-tiered parties.
What are the Different Types of Contracts?
There are different types of contracts, and as a rule, every contract should be tailor-fit for that particular project.
General Rules
- Generally, no one set of documents can be considered useful for all projects.
- Standard form construction contracts, such as, AIA, EJCDC, AGC, etc. are no exception to that rule.
Standardized Documents
- When using standardized documents, you need to be aware of who that document typically protects.
- The American Institute of Architects (AIA) Documents usually protect the rights of the project architects.
- The Engineers Joint Contract Documents Committee (EJCDC) protects the rights of the project engineers.
- The Associated General Contractors of America (AGC) protects the rights of the general contractors.
Attorney Prepared Contracts
- A recommended tip is to consult an attorney and seek their help in preparing the contracts.
Review of Contracts
- If you already have the contract ready, then the best practice is to have an experienced construction attorney to review all your contracts.
What are the Nevada Lien Laws?
Let’s look at the Nevada Lien Laws.
A) Who is a lien claimant?
In Nevada, a lien claimant is any licensed contractor who provides work, materials, or equipment for a construction project with a value of $500 or more. So, the more removed you are from providing work, materials, or equipment for a project, the less likely a court is going to find that you have lien rights.
B) How to perfect a lien?
When it comes to perfecting a lien, there are several steps involved.
Step 1: Understand Nevada's Lien Laws
Take the time to familiarize yourself with the specific lien laws and regulations in Nevada. This includes knowing the types of liens recognized, the requirements for perfecting a lien, and any deadlines or procedural details you need to follow.
Step 2: Provide Proper Notice
Determine who needs to receive notice of the lien according to Nevada law. This may include the property owner, contractor, or other relevant parties. Ensure that the notice complies with Nevada's requirements in terms of content, format, and timing.
Step 3: File Required Documents
Prepare and file the necessary documents with the appropriate county office in Nevada. This typically involves completing a lien form and submitting it along with any supporting documentation, such as invoices, contracts, or other evidence of the debt or claim.
Step 4: Meet Deadlines
Stay aware of any deadlines for filing the lien or taking other required actions. Missing deadlines could result in the loss of your ability to perfect the lien and protect your interests in the property.
Step 5: Follow Proper Procedures
Adhere to all procedural requirements outlined in Nevada's lien laws. This may include serving copies of the filed documents on relevant parties, following specific notification procedures, or taking other specified actions.
Step 6: Consider Legal Assistance
If you're unsure about any aspect of perfecting a lien in Nevada or if the situation is complex, consider seeking guidance from a legal professional with expertise in lien matters. They can provide valuable advice, review your documents, and ensure that you comply with all applicable laws and regulations.
1. Notice of Right to Lien (Preliminary Notice)
a. The first thing that you need to do is give or serve your Notice of Right to Lien via certified mail.
b. It should be given by every architect, engineer, general contractor, subcontractor and supplier of every tier.
c. It must be given by those who do not have a direct contractual relationship with the owner of the real property.
d. This Notice of Right to Lien must be given within 31 days of the first date when you provided work, materials or equipment for the construction project.
e. One key point to remember is that the failure to give a Notice of Right to Lien at the beginning of the project is not fatal; however, if you give it sometime during the project, then it will relate back to 31 days from the date you give it.
i. For example, if you give the Notice of Right to Lien on February 1st 2024, then you would only have lien rights back to January 1st 2024. It would cover any work materials or equipment that you provide during that 31-day period going forward.
Many construction professionals determine based on their project or contract size, whether to give a Notice of Lien to Right or not. If the contract value is less than $5,000, then they may decide not to give the Notice of Lien to Right and if it is more than $5,000, then they may give it.
2. 15-Day Notice of Intent to Lien
a. If you are working on a project where someone can ‘reside’, then you must give a 15-day Notice of Intent to Lien. This is applicable even if you are working on mixed-use projects which include a residential component and a retail component.
b. The 15-day Notice of Intent to Lien must be given:
i. By every lien claimant.
ii. By personal service or certified mail.
iii. To the project owner and general contractor.
iv. Ideally, it should be provided more than 15 days before a Notice of Lien is recorded.
c. If you are not sure who the project owner is, you can:
i. Go to the building permit which will have the owner’s name on it.
ii. Go to the assessor’s office or the recorder’s office and look up the common address for the project to figure out the owner’s name. If there is no common address, then you can look at the APN with the recorder’s office.
iii. If you identify that the owner is an entity like a limited liability company or corporation, you can go to the Nevada Secretary of State because every entity that does business in the state is required to be ‘qualified’. You can serve an owner by serving their registered agent as depicted in the Nevada Secretary of State’s website.
3. Notice of Lien (Mechanics Lien)
a. The mechanics lien or the Notice of Lien as it is known as in Nevada must be recorded with the county recorder’s office where the project is located within the earlier of:
i. 40 days of the date a Notice of Completion is recorded against the project; or
ii. 90 days of the date the project (as a whole) is completed.
iii. The recommended tip is not wait until the last moment. If you have not been paid within 90 days of the date you last furnished work, materials or equipment to the project, then go ahead the record your lien.
b. Once the Notice of Lien is recorded, you must serve it on the owner within 30 days of recordation.
4. Foreclosure of Notice of Lien
a. Foreclosure of Notice of Lien which means filing a complaint must commence within 6 months of the date the Notice of Lien is recorded.
b. If you fail to timely commence an action, then your lien is considered to be void and ineffective.
c. This means that the general contractor or the owner can move the court to discharge your lien and they could also seek attorney’s fees.
5. Statutory Waivers and Releases of Lien Rights
a. There are four statutory forms set forth in NRS 108.2457 and these must be used as below:
i. The first form is a conditional waiver and release upon progress payments. This should be given to the higher-tier party at the time you submit your pay application.
ii. The second form is an unconditional waiver and release upon progress payments. This should be given in exchange for the payment received for the work that was subject of a prior progress billing.
iii. The third form is a conditional waiver and release upon final payment. This is to be given when you submit your final pay application.
iv. The fourth and final form is an unconditional waiver and release upon final payment. This should be given once you have received the final payment for all the work, materials, and equipment that you have provided for the construction project.
b. It is very important to provide the right form at the right time. For example, sometimes, general contractors and owners may ask you to submit an unconditional waiver and release form for progress payments even if the check has not been cleared by the bank yet.
c. As per the statutory scheme, this is illegal. So, if you are forced to do this, you should send them a cover letter, which states that you have been demanded to submit an unconditional waiver and release upon progress payment before the check is cleared by the bank, you are doing so under protest, and you reserve all your rights.
d. There is a safety measure built into NRS 108.2457, subsection 5 which states that if the check doesn't clear the bank upon which it's drawn, that you're receiving in exchange for giving the waiver and release form, then you're only giving up your lien rights to the extent of the payment received. If you have not received the payment, then you have not given up your lien rights.
6. Prohibited Actions in Nevada
a. The Nevada law prohibits contract terms that attempt to do any of the following:
i. Require lien claimants to prospectively waive lien rights.
ii. Relieve a personal obligation required by NRS 108.
iii. Make the contract subject to the laws of another state.
iv. Require any dispute resolution (that relates to a Nevada Project) to be conducted in another state.
v. Waive, release or extinguish a claim or right for delay, acceleration, disruption or impact damages or an extension of time, for delays incurred, that were:
- Unreasonable under the circumstances;
- Not within the contemplation of the parties at the time the contract was entered; or
- For which the lien claimant is not responsible.
Key Takeaway
To summarize, construction professionals should ensure that they have the right contract with all the terms and conditions clearly explained and agreed upon by all the contracting parties.
Another key step to always take is to send out all the required notices in a timely manner so that you can perfect and preserve your lien rights and get paid successfully for the work, materials or equipment you provide for a construction project.
However, if you do find yourself in a situation where you need assistance to get paid, then ensure that you get in touch with your attorney or SunRay’s legal experts well in advance, so that they can take all the required steps promptly. Call 800-403-7660 today and get paid what you deserve.
FAQs
Who can file a Nevada Mechanics Lien?
In Nevada, contractors, subcontractors, and material suppliers contributing to property improvements with a value of $500 or more can file a "Mechanic's Lien" against a homeowner's property. This serves to safeguard their rights and secure payment for the services they provide.
Does a Nevada Mechanics Lien need to include a legal property description?
No, you don't need a detailed legal property description. In Nevada, a simple "description of the property to be charged with the notice of lien sufficient for identification" is all that's required.
Is a written contract required to file a Mechanics Lien in Nevada?
No, it's not advisable to undertake work without a written contract. However, in Nevada, the lien law explicitly states that a contract can be either written or oral. Therefore, having a written contract is not a prerequisite for securing lien rights in Nevada.
