Construction Laws and Customs: Nevada

Prompt Payment Acts and Retainage

1. Does your state have any statutes governing the timing of payments to contractors or subcontractors on publicly owned or financed construction projects? If so, what do those statutes require regarding:
  • Payments by owners to prime contractors?

  • Payments by prime contractors to subcontractors?

  • Penalties for failure to comply with requirements of the statute?

  • A contractor’s right to stop work for failure to receive payment?

The following Nevada statutes mandate times for payment on publicly owned or financed projects:

Payments by Owners

For NDOT projects, the Director of NDOT may make progress payments to the prime contractor at the end of each calendar month, or as soon as is practicable, if the contractor is satisfactorily performing the work as it is completed. No more than 95 percent of the total contract price may be paid using these progress payments. The remaining 5 percent, but no more than $50,000, must be withheld until the contract is completed satisfactorily and accepted by NDOT. (NRS 408.383(1).)

For public works projects other than NDOT projects, the public body must make progress payments to the prime contractor within either:

  • 30 days after the date that the public body receives the progress bill.

  • A shorter period, if specified in the provisions of the contract.

(NRS 338.515(1).)

95 percent of the amount of any progress payment must be paid, and five percent must be withheld as retainage until 50 percent of the work that the contract requires has been performed (NRS 338.515(1)). Once 50 percent of the work has been completed, the public body may pay:

  • Any of the remaining progress payments without withholding further retainage.

  • Any of the retainage that had been withheld from the previous progress payments.

(NRS 338.515(2).)

Payment by Prime Contractors

For NDOT projects, the prime contractor must pay its subcontractors and suppliers within 15 days after receiving payment from NDOT, including any interest that the prime contractor receives (NRS 408.383(9)).

For non-NDOT projects, the prime contractor must pay its subcontractors and suppliers within ten days after the prime contractor receives payment from the public agency (NRS 338.550(1)). This includes any interest that the contractor receives.

Penalties

Interest is charged on the amount payable if the prime contractor on a NDOT project fails to disburse payments to its subcontractors or suppliers within 15 days after receiving payment from NDOT. The interest accrues at a rate equal to the lowest daily prime rate at the three largest banks in the United States on the date the subcontract or order of supplies was executed, plus two percent (NRS 408.383(10)).

In the case of non-NDOT projects, interest is charged if the owner does not pay the contractor for amounts due, within ten days of receiving payment from the government body. The interest accrues at a rate equal to that quoted by at least three insured banks, credit unions, or savings and loan associations in Nevada, as the highest rate paid on a Certificate of Deposit whose duration is approximately 90 days on the first day of the quarter. (NRS 338.530 and 338.515(6).)

If a prime contractor on a non-NDOT public works project fails to make payment to the subcontractor or supplier within ten days after receiving payment, then the contractor must pay interest on all overdue amounts, at a rate equal to the lowest daily prime rate at the three largest banks or other financial institutions of the United States on the date the contract was executed, plus two percent (NRS 338.565(1)).

Right to Stop Work

Nevada’s prompt payment statutes do not address a contractor’s right to stop work on publicly owned projects in the event of nonpayment.

Link to article
practicallaw.com
March 3, 2017

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