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Legal Alert: Nevada Supreme Court Limits Pay-If-Paid Clause Ruling To Contracts Entered Into Before 2003

11/05/2008

The Nevada Supreme Court has limited its June 2008 ruling holding pay-if-paid and mechanics lien waiver provisions void against public policy to those provisions entered into in contracts prior to the 2003 legislative amendments. In Lehrer McGovern Bovis v. Bullock Insulation, 124 Nev.Adv. Op. 92 (Oct. 2008), the Supreme Court withdrew its previous opinion at 124 Nev.Adv.Op. 39, 185 P.3d 1055(2008), and attempted to limit both the requirement for a mechanics lien waiver review and the edict declaring pay-if-paid provisions unenforceable to those contracts entered into before 2003 changes to NRS 108.2453, 108.2457, 624.624 and 624.626 took effect. While the opinion language remains questionable and will allow for some serious arguments on the subject, the changes made will support the general contractor argument that if a pay-if-paid provision protects the subcontractor's right to receive payment from the owner, the provision may be enforceable.

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