3.1 Unlawful Advertising, Unlicensed Contracting Penalties & Criminal Sanctions

Statutory Prohibition Against Unlicensed Contracting (NRS 624.700)

Under NRS 624.700(1), it is unlawful for any person or combination of persons to engage in the business or act in the capacity of a contractor in Nevada, or to submit a bid on a job situated in Nevada, without an active license, unless exempt under NRS 624.031. District attorneys prosecute violations in their counties, or the Attorney General does so at the Board's request.

What Counts as "Acting in the Capacity of a Contractor"

The threshold is far lower than physically doing the work. A person acts as a contractor when it:

1. Bids: Submitting a bid is expressly covered by NRS 624.700(1)(b). Under NRS 624.020, offering to undertake, or purporting to have the capacity to undertake, construction also makes a person a contractor, even if no contract follows.
2. Contracts or Builds: It undertakes to construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building or other structure, project, development or improvement, or any part of one, directly or through employees or other contractors.
3. Manages for a Fee: It performs management and counseling services on a construction project for a professional fee (NRS 624.020(4)).
4. Pulls Permits or Hires: Securing a permit or employing anyone on a construction project is prima facie evidence of acting as a contractor (NRS 624.020(2)).
5. Advertises: Advertising as a contractor without a license in the appropriate classification is separately unlawful under NRS 624.720(1).

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Graduated Criminal Penalties (NRS 624.750)

NRS 624.750(2) sets the penalty for unlicensed contracting, unlawful advertising, license misuse and unlicensed joint ventures, unless another statute provides a greater penalty:

Key Points

• Fines Have Floors: Each level sets a minimum and maximum fine ("not less than ... nor more than"). Jail or prison is discretionary ("may be further punished by imprisonment").
• Fine Enhancement: For unlicensed contracting, the court may add up to 10% of the value of any contract entered into in violation, if the person started work or received money (NRS 624.750(3)).
• Costs and Damages: A convicted person may be required to pay court and prosecution costs, the Board's investigation costs, and damages up to the amount of the person's pecuniary gain (NRS 624.700(3)).
• Diverted Money: Willfully failing to use money received for a construction purpose and wrongfully diverting it is a separate crime. It is a gross misdemeanor at $1,000 or less and a category E felony above $1,000 (NRS 624.750(4)–(5)).
• Exam and Licensing Bars: The Board may bar a person convicted under NRS 624.700 or 624.740 from taking the exam for up to 6 months (NRS 624.245). It may refuse a license for up to 1 year to a nonlicensee who bid on a job of $1,000 or more (NRS 624.247).

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Administrative Enforcement Against Unlicensed Persons

• Cease and Desist Order (NRS 624.212): The Executive Officer shall issue a cease and desist order to anyone acting as a contractor or bidding without a valid license. It is served personally or by certified mail and is effective on receipt. Within 48 hours the person may take only the steps needed to protect the public, the project, workers, equipment and perishable goods while stopping work.
• Citation and Fine: For a first violation without theft or fraud, the Board issues an administrative citation (NRS 624.341). It fines the person $1,000 to $50,000 per violation (NRS 624.710), plus investigative costs. A second violation, or any violation involving theft or fraud, may also be referred for criminal prosecution.
• Injunction: If the order is ignored, the Board may seek an injunction, and irreparable injury is presumed.
• Contesting: The order or citation may be contested within 15 business days after service; otherwise it becomes a final order (NRS 624.345).

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Loss of Court and Lien Remedies

NRS 624.320: Proof of License in Every Collection Action

No contractor may bring or maintain an action in Nevada courts to collect compensation for work that requires a license without alleging and proving that it was duly licensed at all times during the performance of the work and when the job was bid. In practice:

1. No Enforcement: A contractor unlicensed at any point in bidding or performance cannot make the required showing, and NRS 624.700(4) makes its bid or contract void ab initio.
2. Equitable Claims: NRS 624.320 applies to any action "for the collection of compensation," so a claim for the reasonable value of the work faces the same proof requirement. For exam purposes, treat the rule as a bar to collection.
3. No Mechanic's Lien: If a license is required for the work, a contractor has a lien only if it is licensed to perform the work (NRS 108.222(2)).

Licensee Remedies Against Unlicensed Bidders

Licensees must also check others' licenses. NAC 624.640(6) requires each licensee to make sure that every person whose bid it considers is appropriately licensed.

Advertising Rules (NRS 624.720)

Advertising is heavily tested because unlicensed operators find customers through it.

Definition of "Advertising"

Under NRS 624.720(8), advertising includes, without limitation:

• The issuance of any sign, card or device
• Any sign or marking on a motor vehicle
• Signs in any building or structure, and ads in newspapers, magazines or airway transmissions
• Anything on the Internet
• Any directory listing under "contractor," with or without limiting qualifications

Core Advertising Rules

1. License Required to Advertise as a Contractor: No person, including a person exempt under NRS 624.031, may advertise as a contractor without a license in the appropriate classification (NRS 624.720(1)).
2. Unlicensed Disclosure: An unlicensed person who advertises construction work must state in the advertisement that he or she is not licensed under NRS Chapter 624 (NRS 624.720(2)).
3. Name and License Number: All advertising by a licensed contractor must include the name of the company and the license number (NRS 624.720(4)). Under NRS 624.720(8), that includes vehicle markings and websites.
4. No False or Misleading Statements: A licensee may not use advertising with false or misleading statements of material fact intended to induce someone to contract (NRS 624.720(3)).
5. No Borrowed Numbers: No one, licensed or not, may advertise using a license number that does not correspond to a valid license issued to that person (NRS 624.720(5)).
6. Bids and Contracts: Separately, every bid and contract must show the license number and any monetary limit (NAC 624.640(5)). A licensee may not bid or contract above its limit (NRS 624.3015(2)).

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Telephone Disconnection (NRS 624.720(6)–(7))

The Board can cut off the phone line an unlawful advertiser uses to find customers:

1. Notice and Hearing: The Board first gives notice and holds a hearing under NRS 624.291. Notice must be served at least 21 days before the hearing.
2. Board Order: If the Board finds a violation of NRS 624.720, it may order the person to cease and desist and to cause any telephone number in the advertising to be disconnected, in addition to any other penalty.
3. PUCN Order: If the person does not comply within 5 days after receiving the order, the Board may ask the Public Utilities Commission of Nevada to order the telephone provider to disconnect the number.
4. Fines: Unlawful advertising also carries fines of $1,000 to $50,000 per violation (NRS 624.710) and the criminal penalties in NRS 624.750.

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Helping Unlicensed Persons (NRS 624.3014, 624.3015 and 624.305)

Licensees are often disciplined for facilitating unlicensed work rather than for their own workmanship. These acts are grounds for discipline:

• Evasion (NRS 624.3014(2)): With intent to evade the law, aiding or abetting an unlicensed person, combining or conspiring with one, allowing a license to be used by an unlicensed person, acting as an unlicensed person's agent, partner or associate, furnishing estimates or bids to an unlicensed person, or soliciting a bid from a person known to be unlicensed.
• Acting Outside the License Name (NRS 624.3014(1)): Contracting under a license except in the name of the licensee shown on the license, or as an employee listed with the Board.
• Transfer Attempts (NRS 624.3014(3)): Trying to assign, transfer or otherwise dispose of a license.
• Contracting With Unlicensed Contractors (NRS 624.3015(4) and (7)): Knowingly contracting with a contractor who is not licensed. Also, agreeing with a non-employee unlicensed natural person to perform work requiring a license; that agreement is void and unenforceable.
• Automatic Revocation (NRS 624.305): A license may be used only by the person to whom it is issued. A license used by someone else, or assigned or transferred, is automatically cancelled and revoked.
• Joint Ventures (NRS 624.740): Two or more licensees with monetary limits may not jointly bid or contract without an additional joint-venture license.

Sanctions

The Board may fine a licensee up to $10,000 generally, or up to $50,000 for violations listed in NRS 624.300(3), including NRS 624.3014. It may also suspend or revoke the license, order corrective action, and require repayment of Recovery Fund payments.

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Practical Scenarios

Scenario 1: The Social Media "Handyman"

An unlicensed individual advertises "Full Bathroom & Kitchen Remodels, Plumbing, and Electrical Upgrades" online, then claims the $1,000 exemption.

• Legal Reality: The NRS 624.031(6) exemption covers only repair or maintenance under $1,000 that needs no permit and is not plumbing, electrical, refrigeration, heating or air-conditioning work. Remodels and plumbing or electrical upgrades do not qualify. Even an exempt person may not advertise as a contractor (NRS 624.720(1)), and the ad must say the person is unlicensed. The Board can issue a cease and desist order, fine $1,000 to $50,000 per violation, and after a hearing order the phone disconnected. A first criminal conviction is a misdemeanor with a $1,000 to $4,000 fine.

Scenario 2: The "Permit-Pulling Favor"

A licensed B-2 contractor pulls a permit for a home addition as a favor to an unlicensed friend who does all the work, and charges a $1,500 "permit fee."

• Legal Reality: Letting an unlicensed person use the license and aiding that person to evade Chapter 624 are grounds for discipline under NRS 624.3014(2). License use by another person triggers automatic revocation under NRS 624.305. The unlicensed friend faces a cease and desist order, fines and prosecution, and the B-2 licensee faces fines of up to $50,000 per violation.