A homeowner files a complaint with the NSCB claiming a contractor abandoned a $75,000 project. If the contractor is found liable, what is the maximum amount the Nevada Residential Recovery Fund will pay?
Correct Answer
A) $40,000
The Nevada Residential Recovery Fund has a maximum payout limit of $40,000 per claim for damages caused by licensed contractors.
Why This Is the Correct Answer
The Nevada Residential Recovery Fund caps individual claim payouts at $40,000, regardless of the actual damages suffered. Even though the abandoned project is valued at $75,000, the Fund will not pay more than $40,000 per claim. The homeowner would need to pursue other legal remedies to recover the remaining balance.
Why the Other Options Are Wrong
Option B: $15,000
$15,000 is far below the Fund's actual per-claim cap of $40,000. This figure may be confused with smaller bond amounts or other state fund limits. The Nevada Residential Recovery Fund specifically provides up to $40,000 per claim.
Option C: $75,000
$75,000 represents the actual project value, but the Recovery Fund does not pay full damages in all cases. The Fund has a statutory cap — currently $40,000 per claim — that limits total payouts regardless of how large the loss is.
Option D: $50,000
$50,000 exceeds the statutory cap of $40,000 per claim. This distractor tests whether candidates know the exact cap versus a round number that might seem reasonable. The correct cap is $40,000.
Memory Technique
Associate $40,000 with 'forty grand for the fund.' You can also remember that $40,000 is the cap — anything above that and the homeowner is on their own for the excess. 'Forty is the floor and the ceiling for recovery.'
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