Legal Question in Construction Law in California

We are building a new house and hired a contractor to hire and supervise the subs. He hired a the drywall contractor and we paid all but the last draw. The work was of poor quallity and we had seams showing, we have a level 5 smooth drywall , so any inperfections show. The contractor admitted that the work was not done properly and started the repairs. After he got started he realized that there was a lot more work to be done and said he would not finish the work. The contractor informed him that he would not be paid any money until all the repair work was finished by him or another contractor. He again refused to complete the repairs and acknowleged that someone else could do the repairs. This whole process took 60 days too complete ( him starting the repairs and hiring someone else to finish it) When we told him how much it cost, he said no way and filed a mechanics lien for the whole amount. Our contractor looked into the lien and said that he didn't follow the proper process and the lien is not enforceable, but it is still on record. We are getting ready to change from a construction load to a 30 year fixed. I was told we could bond around the load, but this is money that I have set aside to finish the house. Who is responsible to get this off our property and who pays for the damages? Our contractor or do we have to pursue some legal action. I need the lien off .

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