Legal Question in Construction Law in California

Re: electrician filing lien prior to work being completed

Your question did not state how much you had to pay to get the work completed. It was also not clear what the amount of his lien was. If he knowingly filed an inflated or false lien, then he could have been liable for �slander of title.�

If he recorded a mechanic�s lien without finishing his work under his subcontract, then you are correct that the lien is premature (unless he was kicked off the project), and, thus unenforceable, but to litigate that issue would have taken more time that it seems you had considering the timing on the conventional loan. Your only other option would have been to bond around the lien. Again, it may or may not have been a feasible alternative depending on the amount of the lien. It does seem that you signed the waiver of your rights under duress, but in order to prove economic duress, you have to show that there was no other reasonable alternative other than to sign. However, I also believe that the waiver could be considered against public policy and could be deemed unenforceable.

I recommend that you speak with the Contractor�s State License Board (�CSLB�) to determine why his license now shows that it has expired. It could be that the CSLB is behind on updating their records. You can also file a complaint with the CSLB since the contractor was licensed when he did the work, but the CSLB is overworked and it will take time for them to process the complaint. Even if the contractor let his license expire after recording the lien, you can still file a claim against the bond that was in place when he did the work. Bond information can be obtained from the CSLB or the CSLB website. For new construction, the bond company would be liable for his willful violations of the Contractors State License Law such as willful deviation from plans and specs, willful deviation from trade standards as well as abandonment of his work, failure to prosecute a construction project with due diligence, and possibly other issues you did not put in your question. I would put in a bond claim as soon as possible in case he has done this to others. If the bond company denies the claim, then you must sue them in court in order to collect. There is a statute of limitations for a suit against the bond: a suit must be filed within two years of the date after the expiration of the license period during which the act or omission occurred, or within two years of the date the license was inactivated, canceled or revoked, whichever occurs first.

Obtaining a judgment in small claims court against only the contractor does not mean you will obtain payment from the bond company. If you file in small claims court, you should also name the bond company as a defendant. You can see who you should serve by getting the Agent for Service of Process for the bond company from the Secretary of State�s website (http://kepler.ss.ca.gov/list.html) or by calling the Secretary of State.

Re: electrician filing lien prior to work being completed

It is indeed difficult to take out a second for construction financing after the contractor has begun work, whether or not the lien is the filed, because the lender will be subordinated to the lien. It is better to get your loan before allowing work to begin -- it can be arranged so you draw down as needed.

When you have work under way, lenders may ask the contractor to sign a subordination agreement as a condition of making the loan.

Now that things have gone awry, I recommend acting promptly before the contractor files bankruptcy or disappears. First, check with the Contractors State License Board to verify the license status and find out whatever you can about the bond. The license non-renewal may have been because the bond lapsed or was revoked.

You should see your county small-claims advisor (at the courthouse) to discuss possible suit against the contractor. If you get a judgment and can't collect, then you can pursue the bond. I doubt the bond can be tapped unless you have a judgment.