Legal Question in Construction Law in California

Re: Preliminary Notices

It sounds as though you're surprise that your supplier is sending out pre-liens. You need to realize that subs and suppliers are required by law to send pre-liens, although many don't.

Whether a supplier will sign and return a lien release usually depends on which lien release you supplied them with. If it was an unconditional lien release, a savvy supplier won't sign it and return it until the check has cleared. If it is a conditional release, which is what I see far more commonly, then the supplier shouldn't have any qualms about signing it upon receiving a check from you, assuming all other information on the release is correct. If you are supplying a conditional release under Civil Code 3262 and the supplier is balking at signing and returning it immediately, you should point out that the specific language of the conditional release makes it ineffective until the check clears. So, they're not giving anything up by signing it immediately upon receipt of a check.

Re: Preliminary Notices

If you�re using the correct form of lien release, it shouldn�t really matter how long the supplier holds the actual paper. Whether its an interim payment or final payment, and even if the supplier conditions the release on your check clearing the bank, per the Code, the release is effective when the check clears, not when they return it to you.

Cal Civil Code Sec 3262 talks about lien releases, and gives specific language for use in lien releases such as the ones you want from the supplier.

For example, the �Conditional Waiver and Release Upon Final Payment� reads:

CONDITIONAL WAIVER AND RELEASE UPON FINAL PAYMENT (3) Where the claimant is required to execute a waiver and release in exchange for, or in order to induce the payment of, a final payment and the claimant is not, in fact, paid in exchange for the waiver and release or a single payee check or joint payee check is given in exchange for the waiver and release, the waiver and release shall follow substantially the following form:

Upon receipt by the undersigned of a check from -------- in the sum of $ -------- payable to -------- and when the check has been properly endorsed and has been paid by the bank upon which it is drawn, this document shall become effective to release any mechanic's lien, stop notice, or bond right the undersigned has on the job of -------- (Owner) located at -------- (Job Description)

This release covers the final payment to the undersigned for all labor, services, equipment, or material furnished on the job, except for disputed claims for additional work in the amount of $ --------. Before any recipient of this document relies on it, the party should verify evidence of payment to the undersigned.

Dated: ..... .....

(Company Name)

By .....

(Title)

(Emphasis added)

Hopefully this helps you out. Feel free to contact me if you have additional questions or comments.

Now the inevitable caveat: The foregoing information is provided as a courtesy and an accommodation only. The information does not constitute a legal opinion based on a comprehensive review of facts, documents and applicable law, and should no be relied upon as such. No attorney-client relationship is created, impliedly or expressly, by provision of the foregoing information.

Best of luck.