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WAIVER OF LIEN RIGHTS IN NEVADA: What a Dichotomy this Presents

Not to Be a Copycat…

Will the Scales of Justice Bring a Balance to the PPI??

Will the Scales of Justice Bring a Balance to the PPI??

 

 

 

 

However, as one whom brings issues to light and to the best of my ability I do attempt to advocate for the Boots on the Ground Contractors in the Property Preservation Industry. I read an article on Foreclosurepedia, Contractual Lien Waivers Illegal in Tennessee. Well this got me to thinking, Nevada has some pretty stringent laws so how about we takea look at some of Nevada’s laws…I have included a couple of sections of Nevada Revised Statutes(NRS) Chapter 108 STATUTORY LIENS

 

Lien claimant” defined.

1.  “Lien claimant” means any person who provides work, material or equipment with a value of $500 or more to be used in or for the construction, alteration or repair of any improvement, property or work of improvement. The term includes, without limitation, every artisan, builder, contractor, laborer, lessor or renter of equipment, materialman, miner, subcontractor or other person who provides work, material or equipment, and any person who performs services as an architect, engineer, land surveyor or geologist, in relation to the improvement, property or work of improvement.

2.  As used in this section, “laborer” includes, without limitation, an express trust fund to which any portion of the total compensation of a laborer, including, without limitation, any fringe benefit, must be paid pursuant to an agreement with that laborer or the collective bargaining agent of that laborer.

NRS 108.2457  Term of contract that attempts to waive or impair lien rights of contractor, subcontractor or supplier void; requirements for enforceability of waiver or release of rights of lien claimant; effect of payment in form of two-party joint check; forms.

1.  Any term of a contract that attempts to waive or impair the lien rights of a contractor, subcontractor or supplier is void. An owner, contractor or subcontractor by any term of a contract, or otherwise, may not obtain the waiver of, or impair the lien rights of, a contractor, subcontractor or supplier, except as provided in this section. Any written consent given by a lien claimant that waives or limits any lien rights is unenforceable unless the lien claimant:

(a) Executes and delivers a waiver and release that is signed by the lien claimant or the lien claimant’s authorized agent in the form set forth in this section; and

(b) In the case of a conditional waiver and release, receives payment of the amount identified in the conditional waiver and release.

2.  An oral or written statement purporting to waive, release or otherwise adversely affect the rights of a lien claimant is not enforceable and does not create any estoppel or impairment of a lien unless:

(a) There is a written waiver and release in the form set forth in this section; and

(b) The lien claimant received payment for the lien and then only to the extent of the payment received.

3.  Payment in the form of a two-party joint check made payable to a lien claimant and another joint payee who are in privity with each other shall, upon endorsement by the lien claimant and the joint check clearing the bank upon which it is drawn, be deemed to be payment to the lien claimant for only:

(a) The amount of the joint check;

(b) The amount the payor intended to pay the lien claimant out of the joint check; or

(c) The balance owed to the lien claimant for the work, materials or equipment covered by the joint check, whichever is less.

4.  This section does not affect the enforceability of either an accord and satisfaction regarding a bona fide dispute or any agreement made in settlement of an action pending in any court or arbitration, provided the accord and satisfaction or settlement makes specific reference to the lien rights waived or impaired and is in a writing signed by the lien claimant.

5.  The waiver and release given by any lien claimant is unenforceable unless it is in the following forms in the following circumstances:

(a) Where the lien claimant is required to execute a waiver and release in exchange for or to induce the payment of a progress billing and the lien claimant is not in fact paid in exchange for the waiver and release or a single payee check or joint payee check is given in exchange for the waiver and release, the waiver and release must be in the following form:

It appears that Nevada has very similar laws and that anyone holding a contract that forces a “Lien Waiver” is a voided contract. Now as one whom has repeatedly torn contracts apart and explained how to add addendums and make changes to contracts, ( if you’d like information on the video series Understanding Contracts please contact us), it would be remiss not to explain the servealbility clause of a contract here.

The severability clause states that the terms of the contract are independent of each another, so that if a term in the contract is deemed unenforceable by a court, the contract as a whole will not be deemed unenforceable. It may contain two parts: (a) savings language to preserve the validity of all other terms in the event that one provision is determined to be unenforceable; and (b) reformation language to scale back overly broad provisions to terms and scope that are enforceable (such as limiting the time and geographic scope of non-compete covenants).

The severability clause is frequently one of the most variable (or inconsistent) clauses in an agreement as lawyers creatively attempt to maximize the scope of restrictive covenants. It is also interesting to note that virtually all executive employments contain savings clause language, but surprisingly few contain reformation language.

1.1 Severability—Renegotiation

If any term or other provision of this Agreement is determined to be invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible. AGREEMENT AND PLAN OF MERGER Among CGI GROUP INC., CGI FEDERAL INC., CGI FAIRFAX CORPORATION and STANLEY, INC. Dated as of May 6, 2010 (Law Firms: Cravath, Swaine & Moore; Fasken Martineau DuMoulin LLP; Holland & Knight LLP)

1.2 Reformation (“Blue Pencil”)

Each term and provision of this agreement shall be valid and enforceable to the fullest extent permitted by law and any invalid, illegal or unenforceable term or provision shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid, illegal or unenforceable term or provision.

OR

If the final judgment of such court or arbitrator declares that any term or provision hereof is invalid, void or unenforceable, the parties agree to reduce the scope, duration, area or applicability of the term or provision, to delete specific words or phrases, or to replace any invalid, void or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the original intention of the invalid or unenforceable term or provision. AGREEMENT AND PLAN OF MERGER, DATED AS OF MARCH 2, 2009, BY AND AMONG FIRST SOLAR, INC., FIRST SOLAR ACQUISITION CORP., OPTISOLAR INC. AND OPTISOLAR HOLDINGS, LLC (Law Firms: Cravath, Swaine & Moore; Covington & Burling)

2.1 Judicial Interpretation

Michael R. Greco, a partner with Fisher & Phillips LLP, asserts Caution Required: Severability Clauses in Non-Compete Agreements. He states “The manner in which courts treat overly broad non-compete agreements varies from state to state. Generally speaking, there are three approaches. In some states (e.g., Vermont), if a covenant is overbroad by an inch, it might as well be overbroad by a mile because overly broad covenants will be invalidated. In other states (e.g., Arizona), overly broad covenants will be blue-penciled—meaning that courts will strike through offending language but will stop short of rewriting the agreement. In still other states (e.g. Ohio), courts are free to reform restrictive covenants so that its restrictions are reasonable under the circumstances.”

2.2 In Terrorem Clauses

In the case of employment agreements, the uncertainty of scope may serve an employer’s in terrorem goal. (See, e.g. Non-Compete Agreements With Step-Down Provisions. Will Arizona Courts Enforce Them?). But it can also promote uncertainty. Gervas W. Wall of Deeth Williams Wall LLP writes. “I do not recommend that parties draft in the alternative to permit the blue pencil of the trier of fact to choose the acceptable alternative. In my view, this promotes a fundamental uncertainty about what the parties have in fact agreed upon, and it creates an undesirable reliance upon litigation to construe the parties’ intentions.”The Boilerplate: What does it Accomplish?

So remember that just because the NRS here in Nevada states the contract is VOIDED, a judge can rule that that particular section of a contract can be “severed” from the contract. Now with all the madness and other illegal improprieties that may or may not be going on in the PPI I’m guessing that many judges will be appalled at the blatant disregard for laws that the National Association of Mortgage Field Services Members are flaunting across the country just to capture the all mighty dollar,something tells me that this may not be an avenue the courts will go versus voiding the contracts.

Again folks, another argument to be added to the growing list of reasons that the Property Preservation Industry to have labor organized in a professional manner. Something to seriously think about over this holiday season as you’re evaluating your businesses needs going into the upcoming New Year. One thing you may want to do is study your contracts and severability clause blunders.

So How many of you Nevada Property Preservation Specialists have contracts that are Void?

Until Next Time

Happy Gardening

Written By:Aaron Aveiro

Images courtesy Google Images

Opinions expressed are not necessarily those of Aladay LLC Ownership.

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Organic Farmer, Property Preservation Specialist and Custom Glass & Wood Worker. Blogger extraordinaire...Business consultant, Instructor for NAARPI International. Advocate for the BOTG of the PPI
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