Legal Question in Construction Law in California

Re: Non-payment for work completed

Yes, there are a number of other things that you can do. First, remember that under the prompt payment statutes the GC can withhold 150% of the amount that is legitimately in dispute. So, if the work really is questionable, this will have to be resolved through the courts (or some other form of dispute resolution).

If, however, the GC is playing the old game of claiming poor work just as an excuse to withhold payment, I would report him to the CSLB and also make a claim on his license bond. It's only $10,000, but it will get his attention. But to enable you to collect on the bond you have to identify the contractors licensing law that he is willfully violating. If you're pretty good at research, take a look around Business & Professions Code 7200. There are a bunch of requirements for contractors in this section and you should be able to identify a couple that he is purposely violating.

Reporting to the CSLB may not get much of a response since the problem is between two contractors and the CSLB tends to concentrate on homeowner problems.

The property owner has already been notified of the lien if it has been recorded. This is one of the duties of the recorder when you record a lien. It is the duty of the GC to get rid of the lien and the owner could put some pressure on the GC, so it isn't a bad idea to contact the owner.

Recording liens and sending preliminary notices are simple items that shouldn't require an attorney. There are, however, a number of deadlines for these actions, so it's important that whoever does these in your company be well versed in these deadlines. It may take an experienced attorney to train someone, but once they're up to speed, they'll be able to do these steps easily. I've seen software programs for generating preliminary notices.

Also, for smaller problems ($7500 if an individual, $5000 if a corporation) in the future, don't forget to use small claims court. You can foreclose (sue on) a lien in small claims court.

Re: Non-payment for work completed

You should do a couple things.

First, and I'm sure your attorney knows this, you have a limited amount of time (90 days) to file a complaint to foreclose on the lien or the lien becomes null and void.

Second, you should have someone within your company who understands lien law so that you can file liens yourself. You'll run into it from time to time and you'd better be ready and able to record a lien because it is the best leverage you have for getting paid.

You should probably hire a firm to train your office on lien rights. It is much cheaper than hiring an attorney to handle the problems when they come up.

Feel free to contact me with further questions.

Regards,

Ben

Re: Non-payment for work completed

Representing subcontractors in situations like this is about 1/2 of my work load. In my experience, it is usually necessary to file a lawsuit if the lien is not paid within 30 days of the lien being recorded.

I disagree with the advice given by another attorney who recommended training your staff to do your own liens. Your staff should be familar with lien law, but I recommend things outsourcing taskes like 20-day preliminary notices and recording liens to vendors who handled these types of matters on a daily basis.

I litigate these types of cases all over the state, so feel free to contact me if you need further assistance.