USA Statutes : nevada
Title : Title 54 - PROFESSIONS, OCCUPATIONS AND BUSINESSES
Chapter : CHAPTER 627 - DISBURSEMENT OF MONEY BY CONSTRUCTION CONTROLS
This chapter may be cited as the
Construction Control Law.
(Added to NRS by 1965, 1179)
As used in this chapter the words and
terms defined in NRS 627.030 to 627.170
, inclusive, shall, unless the context
otherwise requires, have the meaning ascribed to them in NRS 627.030
to 627.170 , inclusive.
(Added to NRS by 1965, 1179)
“Categories of
disbursements” means categories of construction funds to be disbursed in
payment of work, labor and material bills due for construction, repair,
alteration or improvement of premises. Such categories shall be in
writing and include but not be limited to structural masonry, masonry
veneer, plumbing, electrical work, carpentry, reinforcing steel,
structural steel, earthwork, heating and ventilating and
air-conditioning, glass and glazing, lath and plaster or sheetrock,
insulation and soundproofing, finish flooring, painting and decorating,
concrete or asphalt paving, and shall provide for the complete, full and
final disbursement of all of the construction funds.
(Added to NRS by 1965, 1179)
“Complete plans and specifications” means all written instruments,
diagrams, drawings, notations, provisions, statements and lists of
materials used by artisans, workmen, contractors or subcontractors in the
construction, repair, alteration or improvement of premises and approved
by the appropriate city or county board, agency, commission, building
department or council and upon which the building permit has been issued.
(Added to NRS by 1965, 1179)
A “construction
control” is any person that engages in the control or disbursement of any
funds payable or paid to laborers, materialmen, material suppliers,
contractors, subcontractors, architects, engineers or others, for the
purpose of satisfying bills incurred in construction, repair, alteration
or improvement of any premises or that engages in the processing or
approval of any mechanic’s lien release, voucher or authorization for
payment of a labor bill, or material bill where such bill is incurred in
the construction, repair, alteration or improvement of any premises.
(Added to NRS by 1965, 1179)
“Construction loan deed of trust” means any deed of trust recorded or to
be recorded as security for a loan for the construction, repair,
alteration or improvement of any premises, and includes a construction
loan mortgage.
(Added to NRS by 1965, 1179)
“Crossing categories of disbursement” means the exhausting by
disbursement of funds held within a category of disbursement and
thereafter the disbursement of funds out of another category to pay for
bills applicable to the exhausted category. A construction control does
not cross categories of construction if it removes from one category of
disbursement funds found to be in excess of the costs of construction to
be performed under that category after giving at least 10 days’ written
notice in person or by mail to each person entitled to be paid from that
category. Notice by mail is deemed to be given when deposited in the
mail, postage prepaid, directed to the most recent address of the
recipient known to the construction control.
(Added to NRS by 1965, 1180)
“General
contract of construction” means a written contract signed by the owner of
premises and by a contractor who contracts with other contractors,
subcontractors or material suppliers to perform work or labor, or supply
materials to such premises.
(Added to NRS by 1965, 1180)
“Improvement” means any
existing or proposed structure, building, edifice or addition to real
property added to or placed on or under the surface of real property.
(Added to NRS by 1965, 1180)
“Lender” means any bank or savings
and loan association authorized to do business under the laws of the
State of Nevada or laws of the United States of America making a loan or
providing moneys for construction, repair, alteration or improvement of
any premises or any person doing business in the State of Nevada,
providing moneys to be used in the payment of bills incurred in the
construction, repair, alteration or improvement of any premises.
(Added to NRS by 1965, 1180)
“Owner-contractor contract” means any written contract entered into
between an owner of premises who is a contractor having the work done and
another person for the performance of work or labor, or the supplying of
materials, or both, to such owner-contractor having the work done.
(Added to NRS by 1965, 1180)
“Premises” means real property or
any interests therein.
(Added to NRS by 1965, 1180)
“Related
construction control” means a construction control owned, in whole or in
part, by the lender, by one or more of the stockholders of the lender, by
one or more of the associates or partners of the lender, or designated by
the lender or the lender and the borrower of funds or by the borrower
alone or by a person at the request of the lender.
(Added to NRS by 1965, 1180)
“Restored category of disbursement” means a category of disbursement
that has been exhausted below a level sufficient to pay bills to which
have been added other funds sufficient to cover such bills.
(Added to NRS by 1965, 1180)
A “subcontract” is a written
contract signed by a contractor who is not the owner of premises and
another person for the performance of work or labor or the supplying of
materials to bring about the construction, repair, alteration or
improvement of any premises.
(Added to NRS by 1965, 1180)
“Total cost of
construction” means the total sum payable to a general contractor to
complete the construction, repair, alteration or improvement of the
premises, or the aggregate total sum payable to others under
owner-contractor contracts to complete construction, repair, alteration
or improvement of the premises.
(Added to NRS by 1965, 1180)
1. Except as otherwise provided in subsection 2, the following
shall not be a construction control or subject to the provisions of this
chapter:
(a) A contractor licensed under the laws of the State of Nevada,
paying a subcontractor, supplier of material, laborer or other person for
bills incurred in the construction, repair, alteration or improvement of
any premises.
(b) A subcontractor licensed to do business under the laws of the
State of Nevada, paying a subcontractor, supplier of material, laborer or
other person for bills incurred in the construction, repair, alteration
or improvement of any premises.
(c) An owner-contractor paying a contractor, subcontractor,
supplier of material, laborer or other person for bills incurred in the
construction, repair, alteration or improvement of any premises.
(d) A lender of construction loan money, provided that he disburses
the money directly to a contractor authorized by the borrower to do the
work, or disburses the money directly to the owner of the premises.
(e) A lender of construction loan money, to an owner of a
residential property or to an owner of not more than four units if the
loan is made to repair or improve such property and the construction
costs are $10,000 or less, or 35 percent of the appraised value of the
improvements and repairs, whichever is greater.
2. The provisions of this chapter apply to a contractor who is
required to obtain the services of a construction control pursuant to the
provisions of NRS 624.264 , 624.323
or 624.960 .
(Added to NRS by 1965, 1183; A 2001, 2983 ; 2003, 1903 )
SURETY BONDS
1. The provisions of this section do not apply to:
(a) Savings and loan associations, state banks and national banking
associations licensed to do business in the State of Nevada, under the
laws of the State of Nevada or under the laws of the United States.
(b) Title insurers or underwritten title insurance companies
authorized to do business in the State of Nevada.
(c) Lenders of construction loan money for dwelling units who are
approved by the Federal Housing Administration or Department of Veterans
Affairs and who have been licensed and authorized to do business in the
State of Nevada.
2. Except as otherwise provided in subsection 1 and NRS 627.183
, as a condition to doing business in
this state, each construction control shall deposit with the State
Contractors’ Board and keep in full force and effect a surety bond, in
the amount set forth in subsection 4, which is executed by some
corporation authorized to issue surety bonds in this state.
3. The surety bond must be in substantially the following form:
Bond No.
CONSTRUCTION CONTROL BOND
Know All Men by These Presents:
That I, ................................, having a principal place
of business in ....................................................,
Nevada, as principal, and ................................, a corporation
licensed to execute surety bonds under the provisions of the Nevada
Insurance Code, as surety, are held and firmly bound to the State of
Nevada, for the use of any person by whom funds are entrusted to the
principal or to whom funds are payable by the principal, in the sum of
................ Dollars, lawful money of the United States of America,
to be paid to the State of Nevada, for which payment well and truly to be
made we bind ourselves, our heirs, executors and successors, jointly and
severally, firmly by these presents:
The Condition of the Above Obligation Is Such That:
Whereas, Under the Construction Control Law, certain duties,
obligations and requirements are imposed upon all persons,
copartnerships, associations or corporations acting as construction
controls;
Now, Therefore, If the principal and its agents and employees shall
faithfully and in all respects conduct business as a construction control
in accordance with the provisions of the Construction Control Law, this
obligation shall be void, otherwise to remain in full force and effect;
Provided, However, That the surety or sureties may cancel this bond
and be relieved of further liability hereunder by delivering 30 days’
written notice of cancellation to the principal; however, such
cancellation shall not affect any liability incurred or accrued hereunder
prior to the termination of such 30-day period;
Provided Further, That the total aggregate liability of the surety
or sureties herein for all claims which may arise under this bond shall
be limited to the payment of ................ Dollars.
In Witness Whereof, The principal and surety have hereunto set
their hands this ..................... day of the month ................
of the year........... .
.......................................................
By.......................................................
Principal
(Surety)
By.......................................................
Attorney
4. Each construction control shall initially deposit a surety bond
that complies with the provisions of this section or a substitute form of
security that complies with the provisions of NRS 627.183 in the amount of $20,000. Not later than 3
months after the initial deposit and annually thereafter, the
construction control shall:
(a) Submit to the State Contractors’ Board a signed and notarized
affidavit attesting to the average monthly balance in the trust account
maintained by the construction control; and
(b) Deposit a surety bond that complies with the provisions of this
section or a substitute form of security that complies with the
provisions of NRS 627.183 in the
following amount based upon the average monthly balance in the trust
account maintained by the construction control:
AVERAGE MONTHLY BALANCE AMOUNT OF BOND OR
SECURITY REQUIRED
Less than
$2,000,000.................................................................
........................ $20,000
$2,000,000 or more but less than
$4,000,000.................................................... 40,000
$4,000,000 or more but less than
$6,000,000.................................................... 60,000
$6,000,000 or more but less than
$8,000,000.................................................... 80,000
$8,000,000 or more but less than
$12,000,000................................................ 120,000
$12,000,000 or more but less than
$20,000,000.............................................. 200,000
$20,000,000 or
more.......................................................................
.................... 250,000
(Added to NRS by 1965, 1181; A 1971, 842, 1924, 1958; 1995, 1096;
1999, 3760 ; 2001, 282 )
1. As a substitute for the surety bond required by NRS 627.180
, a construction control may, in
accordance with the provisions of this section, deposit with any bank or
trust company authorized to do business in this state, in a form approved
by the State Contractors’ Board:
(a) An obligation of a bank, savings and loan association, thrift
company or credit union licensed to do business in this state;
(b) Bills, bonds, notes, debentures or other obligations of the
United States or any agency or instrumentality thereof, or guaranteed by
the United States; or
(c) Any obligation of this state or any city, county, town,
township, school district or other instrumentality of this state, or
guaranteed by this state.
2. The obligations of a bank, savings and loan association, thrift
company or credit union must be held to secure the same obligation as
would the surety bond. With the approval of the State Contractors’ Board,
the depositor may substitute other suitable obligations for those
deposited which must be assigned to the State of Nevada and are
negotiable only upon approval by the State Contractors’ Board.
3. Any interest or dividends earned on the deposit accrue to the
account of the depositor.
4. The deposit must be in an amount at least equal to the required
surety bond and must state that the amount may not be withdrawn except by
direct and sole order of the State Contractors’ Board. The value of any
item deposited pursuant to this section must be based upon principal
amount or market value, whichever is lower.
(Added to NRS by 1999, 3760 )
DUTIES AND LIABILITIES
Every construction
control shall:
1. Obtain a true copy, certified as true by a registered architect
or licensed professional engineer and signed by the person or persons who
executed the general contract of construction or the owner-contractor
contracts, respectively, as owner, of the complete plans and
specifications to be used in the construction subject to the construction
control.
2. Obtain from the lender a written statement of the total net
amount of money, credits or loan proceeds that will be available for
disbursement or, as a lender engaging in construction control functions,
review and ascertain its total net amount.
3. Obtain a true copy, signed by all the parties thereto, of the
general contract of construction or all owner-contractor contracts,
pursuant to which the construction will be performed.
4. Obtain a true copy, signed by the parties thereto, of all of
the subcontracts entered into with a contractor if the construction is to
be performed pursuant to a general contract of construction.
5. Compare the total amounts to be paid pursuant to all of the
subcontracts with the total amount payable to the general contractor, and
compare the amount payable with the total net loans proceeds available
for disbursement as construction loan funds.
6. Compare the total amounts to be paid pursuant to all
owner-contractor contracts entered into with the total net loan proceeds
available for disbursement as construction loan funds.
7. Establish, in writing, the categories of disbursement and the
amounts of money apportioned to each category for disbursement.
8. Disburse or authorize the disbursement of money from a
particular category only for bills incurred within that category.
9. Disburse or authorize the disbursement of funds if the total
net loan proceeds exceeds in amount or equals the total payable by the
terms of:
(a) The general contract of construction, or the subcontracts
entered into with the general contractor, whichever is greater; or
(b) The total payable by the terms of all owner-contractor
contracts.
10. Receive funds before authorizing disbursement, if other funds
are needed to create an excess of funds as required pursuant to
subsection 9.
11. Restore categories of disbursement in the order in which they
become exhausted and to the amount exhausted from any available funds in
its hands and from other funds supplied by the borrower or borrowers.
12. Obtain from the obligee a mechanic’s lien release covering all
work, labor and materials performed or supplied to the time specified in
the lien release and for the amount payable pursuant to the terms of the
release, before the disbursement of any money for payment of such bills.
13. Upon receipt of written notice of a change order entered into
after the beginning of construction which requires expenditure of extra
money and the amount thereof, require that any category of disbursement
affected thereby be increased and restored to the extent of the amount of
such extras from any available funds in its hands and from other funds
supplied by the borrower before the disbursement of additional funds from
that category.
14. Before disbursing money to a subcontractor or supplier, obtain
from that subcontractor or supplier a true copy of the bill, in those
instances in which the category was established based upon a proposal or
bid of that subcontractor or supplier and not upon a firm contract.
(Added to NRS by 1965, 1182; 1997, 1057)
Any lender desiring to use the services of a
construction control shall first obtain the written assent of the
borrower specifying by name the construction control to be used. The
lender and borrower shall be deemed to have appointed that construction
control as their agent for the particular construction loan for which its
services are requested and the acts of the construction control are
binding upon the lender and borrower severally. If a related construction
control or the employee or agent of a related construction control, or a
lender acting as a construction control or any employee or agent of a
lender acting as a construction control, violates any of the provisions
of this chapter, otherwise than as the result of a good faith error in
mathematical computation, then:
1. With respect to a particular loan subject to construction
control, the construction control and the lender shall each, jointly and
severally, be liable for payment of any mechanic’s lien filed against the
premises subject to construction to the extent that such a lien is the
result of a violation of any provision of this chapter.
2. Any mechanic’s lien claimant damaged by the violation of any
provision of this chapter may jointly or severally proceed with an action
on the bond referred to in NRS 627.180 ,
and the rights and remedies under the bond or lien claims and any direct
right of action against the lender or construction control are
cumulative, and the lien claimant prevailing in any such action is
entitled to reasonable attorney’s fees.
(Added to NRS by 1965, 1183; A 1995, 1527)
