Legal Question in Construction Law in California

Well, it's even hard for a judge to decide a case properly without hearing testimony and receiving evidence from both sides. Here, based on fragmentary information, I would say the contractor won't be able to enforce his lien, because it looks like he blew the limited opportunity to do so.

However, just because a contractor doesn't have a security interest anymore doesn't mean he has no claim and no possibility for a successful suit. The contractor can and may sue you as an unsecured creditor. The judge (or jury) would have to decide whether your signature on the contractor's proposal rendered it an enforceable contract or not. In the contractor's favor, this practice (of having the client sign the proposal) is a commonplace way of forming binding contracts in the small-contracting arena. You can be sure that multimillion-dollar contracts for major projects don't work that way, but in the home-improvement arena, signing the proposal is a common way of showing acceptance.

Even in the absence of a valid contract, the contractor might be able to collect the fair value of his performance under a theory of "quantum meruit" (how much it was worth).

Also, the other factors you mention as possible defenses (incomplete work, unlicensed worker in charge, etc.) may or may not be sufficient gounds to avoid liability if sued. My advice is not to get too comfortable with just removing the lien.