October 20, 2006

InBusiness Las Vegas
Q&A October 20, 2006
Pezzillo Robinson PC
Brain J. Pezzillo, Esq.

Q: As a contractor what remedies are available to me when I am not paid on a Tenant Improvement?

A: In 2005 the Legislature passed a new law which requires Lessees of property to post a payment bond to ensure that payment is received by those who perform the job of completing the tenant improvement. In the past, contractor's would often find themselves in the position of entering into a contract with a person leasing space in a retail or commercial location, building out the Lessee's space and then find that the Lessee did not have sufficient funds to make required payments.

Under the new law (NRS 108.2403) before a Lessee can cause a tenant improvement to be commenced, the Lessee must record a notice of posted security with the county recorder and either: (1) establish a construction disbursement account in an amount which is not less than the amount of the prime contract; or, (2) record a surety bond in the amount of the prime contract.

In the event that the Lessee fails to establish a construction disbursement account or record an appropriate surety bond, the prime contractor who has, or will furnish labor and/or materials may stop work. In the event of a work stoppage, the Lessee has 25 days to meet the above requirements. If the Lessee fails to remedy its failure with 25 days, the prime contractor may terminate its contract with the Lessee.

This remedy is in addition to any addition to one's contractual and mechanic's lien rights.

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