Las Vegas is one of the fastest-growing U.S. metros, with that growth fueling a robust pipeline of large-scale commercial, hospitality, mixed-use, and infrastructure projects. Major mixed-use developments, ongoing freeway expansions, and the forthcoming Southern Nevada Supplemental Airport project near Jean, Nev., are all driving demand for construction services. That demand, coupled with rising labor costs and material tariffs, is contributing to an increase in construction costs in Southern Nevada.
In contrast, its Northern Nevada counterpart, Reno, is undergoing steady expansion centered around industrial, residential, medical and entertainment developments. The Tahoe-Reno Industrial Center continues to attract major logistics and tech facilities, while Downtown Reno projects, such as the upcoming Revival Reno and the $1 billion Grand Sierra Resort expansion that calls for an arena, housing and hotel components, are reshaping the city’s core.
Reno’s construction sector faces stronger pressure from workforce housing needs and renovation of older infrastructure, compared to the mostly greenfield growth in Las Vegas.
What does this mean for Nevada property owners?
Currently, it is becoming increasingly more difficult to find experienced contractors who are willing to take on new projects, particularly if the projects are small, and when they can be found, they are often more expensive than anticipated. While this presents an opportunity for skilled contractors entering the market, it has also created an opening for unlicensed individuals trying to make a quick buck, often at the expense of an unwitting homeowner.
New Requirements from AB 39
With very few exceptions, contractors must be licensed through the Nevada State Contractors Board (NSCB) to perform work on someone else’s property. Since taking effect on Oct. 1, 2023, licensed contractors are bound by AB39’s requirements that added a new section to NRS 624.970, imposing enhanced requirements on residential improvement contracts, often referred to as home improvement or remodel contracts.
The goal of AB 39 is to protect homeowners from being taken advantage of by an unscrupulous contractor. As such, one of AB 39’s requirements is that a licensed contractor on a home improvement contract may only request an initial deposit or down payment of $1,000 or 10% of the total contract price, whichever is less. This limit applies unless the contractor has satisfied certain conditions established by the NSCB.
In a high-demand climate like Las Vegas or an evolving market like Reno, here are the steps property owners should take to protect themselves and ensure that they are hiring trustworthy contractors:
1. Verify the contractor’s license classification and monetary limit.
Use the NSCB website to determine what type of license(s) the contractor holds, such as a “B-2: Residential and Small Commercial” or “A-7: Excavating and Grading.” Additionally, identify the contractor’s monetary limit on the license (e.g., up to $100,000, unlimited, etc.).
Property owners should confirm that the contractor holds the proper license for the work and that the contractor’s bid limit meets or exceeds their project’s expected cost.
2. Check the complaint and disciplinary history.
It’s critical to review for any complaints, suspensions, or disciplinary actions against a contractor in the past five years.
Much of this information is publicly available through the NSCB database, making it an easy but often overlooked step if the price is right. This step might be the deciding factor for signing a contract with a contractor that has a clear record, or someone with a history of complaints or disciplinary actions.
3. Ask for proof of insurance.
Licensed contractors should carry valid and current general liability and workers’ compensation insurance, and should be willing to provide copies of their insurance certificates demonstrating that they have the proper coverage.
Before entering into any contract, it’s essential to confirm that the other party carries adequate insurance to protect you from being held responsible if something goes wrong, whether it’s property damage, a workplace injury, or another unforeseen incident.
4. Get multiple bids for better leverage.
Nevada-licensed contractors can only bid work up to their approved bid limit. Property owners should get at least three bids from contractors whose bid limits exceed the anticipated project cost. Be wary of unusually low bids because this may indicate that the contractor has underbid the project, which could result in cost-cutting measures during the course of construction that compromise the quality of the work, which can lead to costly and time-consuming disputes.
5. Always request a written bid instead of verbal quotes.
Whenever possible, always rely on written bids instead of verbal quotes. Written documentation ensures that the scope, pricing, and terms are clearly defined and prevents misunderstandings about what was promised. Unlike verbal conversations, written bids create a record that can be referenced later and, if necessary, enforced.
6. Request a written contract.
Ensure the contract meets all AB 39 requirements, including identification of the contractor’s license number, monetary limit, and address, as well as the contract price, a detailed description of the scope of work, payment schedules, permit obligations, etc.
Whether you are a Las Vegas business owner launching a new commercial build or a Reno homeowner planning kitchen or solar upgrades, keeping pace with construction trends and changes in the law is vital. By verifying license classifications and monetary limits, insisting on legally compliant contracts, checking insurance and NSCB records, and comparing multiple estimates, property owners can confidently hire licensed, trustworthy contractors and avoid costly disputes or regulatory trouble.
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Craig Weaver is a Director at Fennemore’s Reno office, practicing in the Business and Finance group. He is an experienced litigator and transactional attorney working with contractors and property owners on construction projects in both Nevada and California, ranging from small home improvement projects to complex commercial and industrial developments. Craig can be reached at cweaver@fennemorelaw.com.