DON’T LET YOUR CLIENT GET SOAKED . . . WHAT EVERY ATTORNEY
SHOULD KNOW ABOUT SWIMMING POOL CONTRACTS

By William A. Levy, Esq.

How many times have you heard people say that they hope they never have to retain an attorney? People often associate retaining an attorney with having a problem. The truth is that people should retain an attorney to avoid a conflict. If your client is fortunate enough to retain you before he buys his pool, this article will assist you in preventing him from getting soaked.

SELECTING THE POOL CONTRACTOR

In the last several years, the Nevada Legislature and the Nevada State Contractors Board (NSCB) have enacted new regulations to weed out unscrupulous pool contractors. However, your client should still take great care before he executes a pool contract by taking the following steps. First, make sure the contractor is properly licensed with the NSCB. Not only must the pool contractor have a contractor's license, but the license must be the correct one for the service being performed (i.e., the pool contractor should have a Classification A General Engineering license). Inspect the contractor's license pocket card along with another form of identification and contact the NSCB to verify the license number and all related license information. There have been cases where the contractor misrepresents that he has a license and may even put a false license number on his business card. In other instances, contractors have misrepresented that they are licensed for the type of work being performed. Second, the client should obtain at least three written bids. They should not automatically accept the lowest. Rather, they should be concerned about special promotions that appear too good to be true. Third, the client should obtain references and check with previous customers to determine if the customer was satisfied, if the project was finished on time, and how the contractor responded to questions, problems, or complaints.

While hiring a licensed contractor will not guarantee a trouble-free project, it will provide your client with some assurance that the contractor has met certain NSCB experience, examination and financial requirements. Licensed contractors must satisfy certain conditions in order to maintain their license such as having worker's compensation insurance to cover employees that become injured on your client's property and a licensure bond to help pay subcontractors and suppliers should the contractor not pay them. Moreover, a licensed contractor is subject to being disciplined by the NSCB if he fails to perform; this threat of discipline gives your client a great deal of leverage over the contractor.

According to the NSCB, one current problem in the pool industry is with the pool “consultant”. Pursuant to NRS 624, pool contractors must be licensed. However, there are some people representing themselves as pool “consultants” in order to avoid being licensed. These pool “consultants” encourage the homeowner to pull their own permits and work with the pool “consultant” in an advisory capacity. In reality, the pool “consultant” is crossing the line and actually engaging in activities normally completed by a licensed contractor such as hiring the subcontractors and overseeing the work. Since the homeowner is not dealing with a licensed contractor, however, he does not have the same protections under the Nevada Revised Statutes nor with the NSCB.

NEGOTIATE A CLEAR, CONCISE, AND FAIR CONTRACT

Several years ago, some serious problems occurred wherein a few unscrupulous pool contractors collected more than 50% of the cost of the pool up-front and failed to complete the pool. In response, NRS 597.719 was enacted dictating specific provisions that must be included in a residential pool contract in excess of $1,000. So many homeowners were affected by these unscrupulous acts that NRS 597.719(1) provides that if a residential pool contract fails to comply with these requirements it is not only void but is unenforceable against the homeowner. These contractual provisions help ensure that all pool contracts will be clear, concise, and fair.

Some of the more important provisions the pool contract must include are: the contractor's license number, a written schedule for starting and completing each phase of the project, the amount of the advance deposit or down payment, a payment schedule, and a statement that the contractor will provide full and unconditional lien releases to the owner following the completion and payment of each stage of the project. The contract must also include a plan and scale drawing showing the shape, size, dimensions and the specifications for the construction and the equipment for the pool or spa. In addition, the pool contract should state that the work will be performed in accordance with the applicable building codes and zoning regulations and that the contractor is responsible for correcting any work that does not pass inspection at no further cost to the homeowner.

BUILDING PERMITS

Before a pool can be constructed, building permit must be pulled by the contractor. When the Building Department issues a permit for the construction of a pool, it will inspect the work at various stages to make sure it complies with the various codes and regulations. Thus, obtaining a building permit ensure that the plans, specifications and the completed project meet minimum health and safety standards as specified in the building codes.

MAKE SURE YOUR CLIENT DOESN'T PAY TWICE

To avoid having your client pay twice for their pool, make sure not only the pool contractor is paid but his subcontractors and suppliers as well. Depending on the price of the pool, one or more of the following methods can be used to protect your client.

First, request that the contractor obtain a payment and performance bond equal to the amount of the contract. If the contractor does not complete the project, the bonding company will do so and pay the subcontractors, laborers and suppliers of material who worked on the pool up to the amount of the bond.

Second, require that payments be made through a construction control account. Several companies provide this service for a fee to control the payment to the contractor by use of vouchers or other means. By using this method, an outside entity is charged with making sure that the contractor is not overpaid and that for each progress payment, including the final payment, final unconditional lien releases are provided.

Third, require the issuance of joint checks for all payments to the contractor and his subcontractors, laborers and suppliers of material on the project.

Fourth, for each progress payment, the contractor must provide the homeowner with lien releases for each laborer and supplier that performed work or supplied materials. At the conclusion of the project, require that the final payment will be made in exchange for a final unconditional lien release from the contractor as well as from all of his subcontractors and suppliers.

If your client is fortunate enough to retain you before he signs the pool contract and you follow the recommendations set forth in this article, you will save your client from getting soaked.

William A. Levy is a partner with the Las Vegas law firm of Marquis & Aurbach. He can be reached at (702) 382-0711 or visit the firm's web site at www.marquisaurbach.com