The Qualifier Leaves, the Bond Lapses, and the Contract Is Signed
North Valley Cabling LLC holds a Nevada low-voltage contractor license. Its qualifying party, Ben, resigns on March 3. The company's $15,000 surety bond lapses on March 15 because the owner missed a renewal payment; its general liability policy expires March 31. On March 20, North Valley signs a $42,000 contract to wire a new medical clinic, and the owner tells the client that 'the license is fine-Ben is still listed online.' Ben's name remains on the Board's website until April 10. The first crew is scheduled for April 2. No replacement qualifier has been identified. The company has two other contracts in progress and three bids outstanding. The owner plans to keep using Ben's name on bids because the license number is still active in the database. The clinic's facilities manager asks for a certificate of insurance through project completion and for the license number.
1. What licensing-condition failures exist as of March 20, and what should North Valley have done after Ben resigned?
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As of March 20, North Valley has at least three licensing-condition problems:
- No qualifying party. Ben resigned March 3. Under the Board's rules the company had a short window-commonly 10 days-to notify the Board and a limited period, often 30 days, to replace him. It cannot keep bidding or signing contracts while unqualified. The website listing is stale and is not authority to contract.
- Lapsed bond. The $15,000 surety bond lapsed March 15. A contractor license is not in good standing without the required bond; the Board can suspend or refuse to renew.
- Lapsed insurance. The general liability policy expires March 31, so by the April 2 start there is no coverage unless renewed.
Signing the $42,000 clinic contract on March 20 violated the condition that the licensee maintain a qualifier, bond, and insurance. The owner's statement that 'the license is fine' is misleading. North Valley should have notified the Board immediately, stopped bidding, renewed the bond and insurance, and recruited a replacement qualifier before contracting. Using Ben's name on new bids after he left would aggravate the violation.
2. Can North Valley complete the clinic contract? What steps must it take before work continues, and what are the risks?
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North Valley should not start work on April 2. Before any work, it needs:
- a replacement qualifying party approved by the Board-a person who actually meets the experience and examination requirements and is listed for the company;
- the surety bond reinstated or replaced;
- continuous general liability coverage;
- written confirmation from the Board that the license is active and in good standing, not just a website printout.
If those are in place, the company can perform the contract, but it should notify the clinic in writing of the lapse and cure. If it cannot cure, it should not proceed; the owner should be told the contract cannot be performed and any deposit handled lawfully. Proceeding without a qualifier or bond exposes North Valley to discipline for contracting without a license, civil penalties, loss of the right to collect, termination by the client, and potential personal liability for the owner. A 'we will fix it later' approach does not cure a condition that exists when the contract is signed.