Wronged by a licensed contractor? Nevada has a fund for that

Kelly Lange thought she did everything right.

The Las Vegas homeowner knew she should use a licensed contractor for a planned kitchen remodel. She picked an established company, checked their online reviews, and made sure their license and bonding was current.

“I work for a (public) utility here in town,” she said, “so I knew everything that I was supposed to do.”

But what she expected to go smoothly instead turned into a yearlong headache. It started with delays — work that was supposed to start in October got pushed back to December, then again to January. Then, there were excuses that seemed suspect. Then, without warning, and without returning the money she had already paid, the business closed and stopped answering her calls.

Lange knew she could file a claim against the now-shuttered company’s bond. She, and a few others in similar positions, did just that. That helped her recoup some, but not all, of her money.

Luckily, Nevada has a unique safety net in place for people just like her. The Residential Recovery Fund allows single-family homeowners to recoup their financial losses after a licensed contractor fails to properly perform work. There are some limitations — homeowners have to live at the residence and they have to exhaust other means of recovery — but the fund offers some recompense for those wronged by licensed contractors.

On Jan. 18, Lange was one of more than two dozen people whose cases appeared before the Nevada State Contractors Board, which administers the Residential Recovery Fund. The homeowners were awarded a total of nearly $400,000 from the fund, which had nearly $6 million in it as of December 2023.

Since being established by the Nevada State Legislature in 1999, the Residential Recovery Fund has awarded approximately $15 million to 1,648 homeowners. The fund is kept flush through fees charged to all licensed contractors.

Lange received approval for $10,204. Next Gen Kitchen and Bath, the company Lange contracted with, had four claims against it at the hearing.

Amounts awarded at the hearing ranged from around $1,300 to the maximum amount allowable by state law: $40,000.

One homeowner who received the maximum amount allowed paid more than $120,000 to now-defunct Lifetime Power LLC, which completed no work. She told the board she is seeking legal recourse against a partner company she believes should be held responsible, but she thanked the board for doing what it could for her.

“A number of these homeowners have been through a long, drawn-out process,” said David Behar, the director of investigations at the Nevada State Contractors Board. “They’re frustrated. They’ve been out a lot of money. They haven’t had repairs done to their homes. They’ve been incomplete because they’ve been waiting to try to get money to be made whole again. That’s one of the things that this process allows, is for them to maybe finally get some closure.”

In the majority of the cases heard last week, the at-fault companies had completed no work at all. In one case, the company performed shoddy work that will need to be redone. In another, a company installed an incompatible solar system.

S&E Contracting Inc, which operated as Made in the Shade until its license was revoked by regulators in September, had 13 claims against it heard at the most recent hearing. Their abandoned contracts accounted for nearly half of the $400,000 awarded at the hearing.

All but one of the 13 claims against Made in the Shade were for projects beyond what the company was bonded for. Accepting projects above their monetary limit is a red flag that a company may be untrustworthy and incapable of completing what it has promised, noted contractors board member Boyd Martin. Another company was found to be working outside of their license — for example, completing tile work when licensed only for general landscaping.

The Nevada State Contractors Board recommends homeowners accept at least three bids on projects and verify that contractors are properly licensed and bonded for the type of work to be done — something that can be done for free online.

“Do not take their word for it,” Behar said, adding that the contractors website will also list whether a contractor has faced disciplinary actions. “We try to highlight people that are unlicensed contractors, the ones that are targeting people that are more vulnerable, that maybe don’t understand the process and that they wouldn’t be eligible for the recovery fund.”

Homeowners should also be aware that state law largely limits the amount a contractor can collect as a deposit to $1,000 or 10% of the contract price, whichever is less. Lawmakers established those limits in Assembly Bill 39 of the 2023 Legislative Session.

Homeowners wronged by an unlicensed contractor are not eligible for the Residential Recovery Fund, but the contractors board does have a criminal division that investigates their wrongdoings.