Nevada General Contractors: License Limits, Bonds and Project Insurance

The Board's limit under NRS 624.220 is the maximum a contractor may undertake on one or more contracts on a single construction site or subdivision site for a single client. A GC building tenant improvements, a parking structure and site work for the same owner on one parcel should add those contracts together before assuming each fits. A permanent increase or a single-project increase is available, and the project version must be filed at least 5 working days before the bid and approved before submission.

Teaming has its own trap. Under NRS 624.740, two licensees with monetary limits cannot jointly bid as a joint venture without securing an additional license for the venture, so a JV formed for one large job needs time to license before bid day.

The limit also runs downhill. NRS 624.3015 makes it a ground for discipline to knowingly bid with or contract with a contractor for work beyond its limit or scope, or with an unlicensed contractor. A subcontract prequalification form that captures each trade's license number, classification and limit is a simple control, and it is the same information a project liability or wrap-up underwriter often asks for.

The Board fixes a GC's license bond under NRS 624.270 using its financial and professional responsibility and the size of its operations. After at least 5 consecutive years as a Nevada licensee, the Board may relieve a contractor of the bond, but it can reinstate the requirement on new evidence, and it must require one when the Labor Commissioner reports three substantiated wage claims against the contractor within 2 years.

Claims on the bond come from owners damaged by a failure to perform or to remove liens, from the contractor's employees and suppliers and from people injured by unlawful acts in performing a contract. Under NRS 624.273, the surety must tell the Board within 30 days after it is served or an action is commenced, and it may pay valid written claims without waiting for a court or file an interpleader against all claimants.

Any payment returns to the GC through the general indemnity agreement, usually the same one that backs its performance and payment bonds. A string of license bond claims can therefore affect the contract surety program a GC depends on for public work.

A GC chasing public work usually meets qualification before bonding. Under NRS 338.1379, a contractor applies to the State Public Works Division or the local government to qualify as a bidder, the agency must decide within 45 days and qualification may be for one project or for a period of time. On contracts over $250,000, NRS 338.1389 gives a 5 percent bid preference to a GC that holds a Contractors Board certificate of eligibility, which requires a CPA affidavit showing at least $5,000 a year in qualifying Nevada taxes for the preceding 60 months.

Once awarded, NRS 339.025 requires performance and payment bonds on contracts over $100,000 at amounts the owner fixes, not less than 50 percent each. On State Public Works Division jobs, each subcontractor whose work exceeds $50,000 or 1 percent of the project, whichever is greater, must also bond to the Division, which a GC should price into its subcontractor buyout.

On the payment side, a sub-subcontractor or supplier that wants to reach the GC's payment bond must send the GC written notice within 30 days of its first work and again within 90 days of its last, under NRS 339.035. Logging those notices as they arrive gives the GC and its surety an early view of lower-tier payment risk.

Nevada writes payment timing into its contractor statute. Under NRS 624.609, a private owner pays the prime on the agreed schedule or, without one, within 21 days of a payment request, and retention the agreement allows may not exceed 5 percent of a payment. NRS 624.624 then requires a higher-tiered contractor to pay its subcontractor by the earlier of the agreed date or 10 days after it is paid for that work, also with retention capped at 5 percent.

Lien rules reach the GC directly. NRS 108.246 requires a prime contractor to tell the owner, before signing, about the notice of right to lien that suppliers and subcontractors may send, and to give a copy to each subcontractor; failing to do so is a ground for discipline. When a lien does record, NRS 108.2415 allows its release with a surety bond of 1.5 times the lienable amount, and a GC can bond off all lien rights on a job with a bond of 1.5 times the prime contract.

Nevada licenses pure, association, agency, rental and sponsored captives under NRS chapter 694C, with minimum capital of $200,000 for a pure captive. A Nevada GC with credible liability and auto losses may compare a company of its own with a cell in a sponsored captive.

A Nevada captive may not provide personal auto directly, and for workers' compensation it may write excess comp for its parent or reinsure a certified self-insured employer's program, so primary comp typically stays with a carrier or a certified self-insurance arrangement. Feasibility depends on the GC's data, capital and contracts.

For residential contracts entered on or after February 24, 2015, NRS 40.693 voids subcontract clauses that require a subcontractor to indemnify or defend the GC for the GC's own negligence or for work another trade altered. Indemnity tied to the subcontractor's own scope remains enforceable, and the duty to defend arises when the GC forwards a defect notice that reasonably points to that scope.

The statute also sets the order of recovery. Where the claim falls within the subcontractor's liability policy and the GC is an additional insured, the GC must pursue that coverage before it can pursue the subcontractor for defense costs. That makes the additional insured endorsement, its completed operations reach and the policy's residential wording central to a Nevada GC's risk transfer.

If the GC or owner runs a wrap-up instead, the contract documents must disclose the premium credit or how it is calculated, and as far as known the limits, scope, term, deductible trigger and remaining limits. If the credit is not disclosed before bids are due, a participant is generally not bound by its bid unless it can raise the bid to cover the difference. Separately, NRS 40.646 requires the GC to forward a defect notice to responsible trades within 30 days, or it may lose the right to sue them.