1. Except as otherwise provided in NRS 338.595, a subcontractor may withhold from a progress payment or retainage payment an amount sufficient to pay the expenses the subcontractor reasonably expects to incur as a result of the failure of his or her subcontractor or supplier to comply with the subcontract or applicable building code, law or regulation.

2. A subcontractor shall, within 10 days after the subcontractor receives:

(a) A progress payment or retainage payment from a contractor for an amount that is less than the amount set forth in the applicable progress bill or retainage bill; or

(b) A progress bill or retainage bill from his or her subcontractor or supplier,

give a written notice to his or her subcontractor or supplier of any amount that will be withheld pursuant to this section.

3. The written notice must:

(a) Set forth:

(1) The amount of the progress payment or retainage payment that will be withheld from his or her subcontractor or supplier; and

(2) A detailed explanation of the reason the subcontractor will withhold that amount, including, without limitation, a specific reference to the provision or section of the subcontract, or documents related thereto, or applicable building code, law or regulation with which the subcontractor or supplier has failed to comply; and

(b) Be signed by an authorized agent of the subcontractor.

4. The subcontractor shall pay to his or her subcontractor or supplier the amount withheld by the public body, contractor or subcontractor within 10 days after:

(a) The subcontractor receives a written notice of the correction of the condition that is the reason for the withholding, signed by an authorized agent of his or her subcontractor or supplier; or

(b) The contractor pays to the subcontractor the amount withheld,

whichever occurs later.

(Added to NRS by 1999, 1988; A 2003, 2449; 2013, 3808; 2015, 2628)