Nevada Supreme Court Decides Enforceability of Contractual Lien Waiver Provisions
The Nevada Supreme Court recently addressed two issues of concern to
contractors and owners: (1) the enforceability of lien waiver
provisions, and (2) the enforceability of pay-if-paid provisions. Lehrer McGovern Bovis, Inc. v. Bullock Insulation, Inc.,
124 Nev. Adv. Op. 39 (June 2008), is the latest saga from the Venetian
mechanics' lien lawsuits. The case involved the owner and general
contractor attempting to foil a subcontractor's lien foreclosure and
breach of contract claims by asserting a lien waiver provision and a
pay-if-paid provision in the subcontract agreement. The
Court declared that Nevada's public policy "favor[s] contractors'
rights to secured payment for labor, materials, and equipment
furnished." Based on this policy, the Court struck down both the lien
waiver provision and the pay-if-paid provision. The subcontract
agreement at issue predated the legislative amendments to the
mechanics' lien statutes, NRS Chapter 108, requiring specific forms for
lien waivers and predated the amendments to NRS Chapter 624, which
created Nevada's prompt payment statutes. Although not at issue, the
Court thought it necessary to state, without explanation or analysis in
what will become known as the infamous Footnote 33, that the amendments
to Chapter 624 creating the prompt pay statutes, "make pay-if-paid
provisions entered into subsequent to the Legislature's amendments
unenforceable."
Posted by Anthony Golden at 1:14 PM
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Categories: Construction | Lien | Nevada | Waiver