Legal Question in Construction Law in California
Subcontractor suing us
In 9/05, we contracted with an established roofing company with an impeccable reputation. They finished the job in Nov., so we paid the balance due. The man who collected our check also signed a materials & labor lien release which ''released [our home] from any liability for all materials...delivered to said property for or on account of [the roofer].''
On 1/4/06, we got notice from the County Recorder that a mechanics' lien, dated 12/29/05, was placed on our home by the roofer's materials supplier. The roofer said this was ''standard procedure'' and not to worry about it. Because we had their signed lien release, I didn't worry about it until we got the official mechanics' lien on 3/1, saying we owed the supplier $1500. Their attorney says ''a contractor cannot release a material supplier's lien claim, only a material supplier can.''
Now the roofer has disappeared, and the supplier has filed a Notice of Pendency of Action against us (and 3 others). We've filed against the surety bond (along with 15 others for $75,000 in total claims).
Is the roofer's lien release invalid? Should we pay the $1500 to avoid court? Do we & the 15 others have a criminal case against the roofer? We want to keep costs in check; what's your advice?
4 Answers from Attorneys
Re: Subcontractor suing us
The roofer cannot release claims of his suppliers or subcontractors. The supplier should have sent you a document called a 20-day preliminary notice and this is to put the property owner on notice to get a lien release from the supplier.
The filing of a Notice of Pendency of Action means a lawsuit has already been filed. And having $75,000 against a $10,000 bond is not a good thing.
Criminal prosecutions in type of case are EXTREMELY rare and you will spend thousands of $$ to defend yourself against the lawsuit. You are better off just paying the $1500 and pursuign the bond claim and/or small claims court.
Re: Subcontractor suing us
The Notice of Pendency of Action will show the case number and other information. Were you served with the Summons and Complaint? If not, go to the court where the suit was filed and have the clerk make you a copy. If you have been served, you need to get an answer on file to avoid defaulting.
The 20-day notice is critical; unless the subcontractor served it, he can't enforce his lien. Only contractors and suppliers dealing direct with the owner are exempt from the requirement to give a 20-day notice.
Most $1,500 claims would be filed in Small Claims Court. If that's where this is, you may find it worth your time to defend, as neither side can bring a lawyer to court. The best defense would be failure to serve a 20-day notice.
Re: Subcontractor suing us
Unless you actually got releases from each sub and supplier, you could end up paying twice. If the roofing company has disappeared, you are in trouble. You can't recover from a ghost. Get a good attorney to negotiate your problems. Feel free to contact me for help.
Re: Subcontractor suing us
The contractor's release is no good against the material supplier. If the supplier sent you a 20-day preliminary notice, then he may enforce his lien. If he did not, the lien is no good, and you should advise him to release it or he will have to pay your costs to release it yourself.
For $1500.00, it's not worth all the pain. Pay the supplier (even though you're paying twice) to establish damages against the roofing contractor for failing to pay the material supplier. Then sue the roofer in the small claims court.
The ''Notice of Pendency of Action'' is legally referred to as a ''Lis Pendens.'' It operates like a lien on the property to notify lenders and real estate buyers that there is a dispute over the value of your home. It's a ''pending action'' When a lis pendens is recorded against your property, you cannot refinance or sell your home unless you remove the lis pendens by paying the one who recorded it. Another reason to pay the supplier now is to remove the ''cloud on title'' caused by the lis pendens. Good luck.
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