Legal Question in Construction Law in California

Customer Not Paying Final Invoices

We are at the tail end of a $160,000 (fixed price with allowances) kitchen remodelling project. The customer has psychological problems and has been irrational. She blamed us for delays/problems not of our making. She claims she doesn't have to pay the fixed prices and doesn't have to pay the actual amounts for the items w/ allowances. There are 3 items left- a painting repair, installing screws, and the final inspection. She has withheld $6,500 ($2,000 from one invoice and $4,500- all of the last invoice because she claims that a pot rail was in the contract- it isn't. I notified her that we were invoking our right to stop work for nonpayment and that we would complete the work when full payment was received. We argued/negotiated back and forth-she suggested we end our relationship (w/o paying)she will finish the project (It's tempting) I countered with pay half($3,200)and end the relationship. She countered with payment of $2,500 after final inspection.(She has had other workers on site doing work besides the kitchen) Should we place lien? As she hasn't paid for work completed, are we responsible to correct anything sited in the final inspection or in the future other than latent structural defects? We want this over.


Asked on 1/26/06, 2:32 am

2 Answers from Attorneys
Gary Redenbacher Redenbacher & Brown, LLP

Re: Customer Not Paying Final Invoices

Ah yes, the age old problem of the homeowner refusing to pay the last invoice.

This situation requires a long answer. First, recognize that not finishing the project will allow another contractor to come in to finish the job. My experience is that the contractor who finishes the work ALWAYS finds fault with the previous contractor. Thus, you automatically end up with a defect claim back at you. On the other hand, if you finish the project, there is less of a chance of a defect claim coming back at you. This doesn't mean that a defect claim won't still come back, but the risk is diminished.

You are in luck that only $6500 is at issue. If you are a sole proprietor, you'll be able to go to small claims court and request all of it. (Corporations, partnerships, etc. can only ask for $5000, individuals can ask for up to $7500.) You are allowed to record a lien and foreclose it in small claims court. Admittedly, some small claims court judges have never seen this before, so you may end up confusing them. I also have to admit the small claims judges I've seen appear to be biased in favor of homeowners. And, as the plaintiff in small claims you have no right to appeal a bad decision.

You can record the lien and hope that it also helps as a bargaining chip before having to go to court. Remember that it must be foreclosed within 90 days of recording. (Be aware that there are deadlines everywhere in mechanics lien procedures.)

If the inspector finds something you did that isn't in compliance, you can be held responsible for correcting it. It would work as an offset against your claim against the homeowner.

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Answered on 1/26/06, 3:38 am
Philip Iadevaia Law Offices of Philip A. Iadevaia

Re: Customer Not Paying Final Invoices

While it may be said that the customer is always right, both parties are wrong if they have to resort to litigation. My suggestion, and this is not ''legal'' advice, is to revoke your right to stop work, finish the job as fast as possible, give her some extra goodies, and then record a lien and sue the homeowner for breach of contract and foreclosure if she doesn't pay the original contract price. As for correcting problems on final insp., you will be required to fix them. Good luck.

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Answered on 1/26/06, 12:16 pm


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