Nevada Rules on ‘Work of Improvement,’ Delivery Location in Pair of Cases

September 5, 2014

A pair of Nevada Supreme Court decisions that intend to clarify lien law could be of help to suppliers, subcontractors and materialmen. In Byrd Underground, LLC v. Angaur LLC, the Nevada Supreme Court clarified that some pre-construction work on a structure, such as clearing and grading, could be considered a "work of improvement" under existing state mechanic’s lien statutes. The court deemed it a fact question for another court, a bankruptcy court, to consider what constitutes “work of improvement” in this specific case. Much of that comes down to whether the work is visible, said Nathan Kanute, an associate at Snell & Wilmer LLP.

Some previous rulings on lien claims on work like erecting an architect’s sign took an opposing stance regarding clearing and grading. However, “nothing in these provisions excludes preconstruction activities from the definition of ‘work of improvement,’” the Byrd ruling read. The court also found that construction contract and permit issue dates “are irrelevant” when evaluating delivery of materials, performance of work and/or visible commencement of construction, though judges noted the dates may be helpful in assisting the determination of the scope of the work performed.

The Court also ruled in Simmons Self-Storage Partners, LLC v. Rib Roof Inc. that a materialman's lien can be established by showing evidence that the materials were supplied for use on or incorporated into improvements to the property. The materialman “does not need to prove the materials that he supplied were used or incorporated into the property or improvements.” That impetus of proof therein, rather, is on the owner or general contractor. The court also deemed delivery to a "specific location" unnecessary. The reasoning is that claimants must be protected from others trying to circumvent their lien rights by having materials for a contracted job sent to a secondary location, “such as preparation or storage sites.”

The Simmons ruling, particularly, may have “lowered the burden of proof that should make it easier for suppliers and materialmen to establish a lien,” Kanute said.

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