Green construction is one of the fastest growing fields in the construction industry. With heightened attention now given to environmental impact, homeowners and businesses alike are doing what they can to go green. Green construction projects can, however, pose unique issues.
The recent bankruptcy of Summerlin Energy did not involve these unique issues, though. Summerlin Energy is a contractor who installed solar panels on residential buildings. Last November, the company suffered a huge loss when Henrey Bankey, CEO of Summerlin Energy, was murdered. Not long after Bankey passed away, the company fell apart. In February, Summerlin Energy filed for bankruptcy. Due to unpaid amounts to suppliers, a large number of former customers now face mechanics liens on their properties. Many of them don’t even have functional solar panels.
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Fallout From Solar Contractor’s Bankruptcy
Summerlin Energy was sued after accruing nearly $1M in unpaid bills from its suppliers. At the same time, a mountain of complaints from customers had formed, posing more potential legal battles. Summerlin also faced investigations from contractors boards in Nevada and California. As a result, Summerlin Energy filed for bankruptcy. Just under 300 customers of Summerlin Energy are listed as creditors, as well as at least two suppliers. The solar contractor serviced clients from Nevada, California, Arizona, and Texas.
Many customers of Summerlin Energy were left either empty handed or with partially completed projects. Some homeowners have completed projects, but will have to pay for their solar panels a second time. Others have paid substantial deposits but will likely never receive the systems they were promised. The worst case scenario, one that many of these homeowners face, is that the panels were delivered but not installed. Those customers have already paid Summerlin, will have to pay someone else to come in and finish the installation, and will likely have to pay again for the panels in the form of a lien. While paying upwards of $15,000 for nothing would be devastating, I’m not sure how to describe paying 3 times to install the same solar panels.
Homeowners do have some relief, though. The Nevada State Contractors Board provides limited relief funds for homeowners who suffer injury at the hands of licensed contractors. Homeowners are usually limited at $35,000 in recovery, but claims against a single contractor are capped at $400,000. In this case, over 133 complaints have been filed for over $1M. Because the claims against Summerlin exceed $400,000, not everyone will be made whole. As a result, claims will be paid on a pro rata basis, and homeowners will be limited to just under 40% of their claim total.
Summerlin Energy’s suppliers, Sun Valley Electric and Soligent, have filed a total of around 160 liens. Sun Valley is owed, it claims, around $725,00, while Soligent is owed around $500,000. While this situation is brutal for homeowners, the amounts owed the suppliers are quite substantial. Sun Valley and Soligent are aiming to recover their losses while also taking some of the burden off of homeowners by recovering some losses via lawsuit against the solar contractor.
Green construction has enormous benefits, but is also subject to growing pains. Because green construction is still relatively new, regulations may not be keeping up. One of the primary issues will be understanding how mechanics liens and bond claims apply to these projects can be tricky. However, classic construction payment issues are still prevalent. Solar contractors are still contractors, and the issues of the construction payment chain persist. That is, until we can reach a construction payment utopia.
Previously, we have provided many other considerations in Nevada lien law. Additional information regarding Nevada Lien Laws and Notice Requirements can be found in levelset’s resources, here: Nevada Lien and Notice FAQs.