Licensed contractors, licensed sub-contractors of any tier, design professionals, suppliers of labor or materials to those parties, and equipment lessors. [CC §§8010, 8018, 8014, 8024, 8026, 8028, 8046, 8400, 8404] Suppliers to suppliers are not entitled to bring any claim. NOTE that unlicensed contractors may be required to return all payments, including payments made for subs and materials, even if the owner knew the contractor was unlicensed from the outset. This also includes a general contractor that does not perform any work on the project themselves. [Ahdout v. Hekmatjah, 213 Cal.App.4 th 21 (Ct.App. Div. 4, 2013)] A design professional may file a mechanics lien following the procedure set out here, or may, in certain circumstances, file a design professional’s lien. The design professional’s lien is only allowed in very limited circumstances. It is only allowed (a) if a building permit is obtained, (b) if the design professional has a written contract with the landowner and the contracting party is still the landowner at the time the lien is recorded, (c) the work of improvement has not commenced prior to the filing of the design professional’s lien; (d) the landowner defaults in or refuses to pay the design professional, and (e) the design professional follows all of the steps set out in this summary. A design professional is not entitled to a lien on a single-family owner-occupied residence unless the expected construction cost exceeds $100,000, and the improvement is not constructed. [CC §§8302, 8304, 8306, 8318] Employee fringe benefit trust funds are also entitled to file mechanics liens and give stop payment notice, as are contractors who perform “site improvement” work, such as demolition, grading, or excavating [CC §8024]. Generally, one who transports materials to a jobsite has no lien rights EXCEPT where (1) the hauler owns the materials and the hauling is part of the cost; (2) the hauler participates in the work of improvement, or (3) the hauler is hired by an agent of the owner. [Ivy Trucking, Inc. v. Creston Brandon Corp., 100 Cal.Rptr.2d 582, 84 Cal.App.4th 85, (App. 4 Dist. 2000)] NOTE that where contractors or subcontractors are required to be licensed, they must have the appropriate license in order to bring any action for compensation for work performed or materials provided, and that includes both breach of contract AND mechanics lien or stop payment notice claims. In fact, if a contractor is not licensed, an owner can sue to recover compensation already paid to the contractor. Note also that a contractor who is unlicensed when entering into contract, but licensed when the work begins will have lien rights, but a contractor that starts the work without a license but obtains a license during the project will not have any lien rights for the project, nor can they bring a breach of contract claim. [B&PC §7031; Banis Restaurant Design, Inc. v. Serrano, 36 Cal.Rptr.3d 532, 134 Cal.App.4th 1035 (App. 3 Dist. 2005); MW Erectors, Inc. v. Niederhauser Ornamental and Metal Works Co., Inc. 30 Cal.Rptr.3d 755, 36 Cal.4th 412, 115 P.3d 41 (2005) White v. Cridlebaugh, (100 Cal.Rptr.3d 434, 178 Cal.App.4 th 506 (Cal.App. 5 Dist.,2009); Great West Contractors, Inc. v. WSS Indus. Const., Inc., 162 Cal.App.4th 581, 76 Cal.Rptr.3d 8 (Cal.App. 2 Dist., 2008)] When deciding whether to give a stop payment notice, there are several important considerations. A direct contractor may not give a stop payment notice to an owner, only to the construction lender or reputed construction lender. If a direct contractor gives a stop payment notice (not a bonded stop payment notice) to a lender, if the contractor provided a payment bond on the project, the lender may not be required to withhold funds. If the direct contractor gives the lender a bonded stop notice, the lender must in all cases withhold the funds. If any other claimant gives a bonded stop notice, the lender is required to withhold payment unless a payment bond has previously been recorded. Note also that where a bonded stop payment notice is given, attorney’s fees will be awarded to the prevailing party, and if the claimant recovers much less than originally sought, they might not be the prevailing party. [CC §§8200, 8520, 8530, 8558]
NOTE: Giving a stop payment notice is not a prerequisite to claiming a lien against the property, unless the owner demands in writing that the claimant serve a stop payment notice. If the owner so demands, then the claimant who fails to give the stop payment notice will lose his or her lien rights. Note also that filing a preliminary notice is a prerequisite to filing a stop payment notice. [CC §8520]
There is also a provision for an OWNER to provide security to a direct contractor, when the project exceeds $5 million, or for a TENANT to provide security to the direct contractor where the project exceeds $1 million. See “Other Remedies” section at the end of this summary.
PAYMENT BOND:
Any claimant providing work (i.e., labor or materials, etc.) to the direct contractor providing the bond, regardless of whether the claimant provided work to the contractor directly or through one of the contractor’s direct subcontractors. [CC §§8608, 8612]
Mechanics, material suppliers, contractors, subcontractors, equipment lessors, artisans, architects, licensed surveyors, builders, laborers (including union trust funds), haulers of hazardous waste, and others, or materials to at least a subcontractor may obtain stop payment notice. The direct contractor cannot give a stop payment notice or assert a claim against the payment bond, nor can suppliers to suppliers. [CC §9100 and Editor’s Notes thereto; §8024] Claimants furnishing labor, services, equipment or materials to the direct contractor, subcontractor, architect, project manager, or other person having charge of all or part of the public works contract, apparently including subs of every tier, may bring a claim against the payment bond. [CC §9100] [Eggers Industries v. Flintco, Inc., 201 Cal.App.4th 536, 133 Cal.Rptr.3d 836 (Cal.App. 3 Dist., 2011)][§§9000, 9100, 9300, 9554, 9566; Union Asphalt, Inc. v. Planet Ins. Co., 27 Cal. Rptr. 2 nd 371, 21 Cal. App. 4 th 1762 (1994)]
Generally, one who transports materials to a jobsite has no lien rights EXCEPT where (1) the hauler owns the materials and the hauling is part of the cost; (2) the hauler participates in the work of improvement, or (3) the hauler is hired by an agent of the owner. [Ivy Trucking, Inc. v. Creston Brandon Corp., 100 Cal.Rptr.2d 582, 84 Cal.App.4th 85, (App. 4 Dist. 2000)]
In determining whether a claimant was a subcontractor or a material supplier, one need not actually construct any part of the project, whether on or off site. The essential issue is whether the claimant constructs a “definite, substantial part” of the improvement, not whether the claimant performed the work at the site of the improvement. Custom-making the item according to the architect’s specifications may be sufficient to make someone a subcontractor. [Theisen v. County of Los Angeles (1960) 54 Cal.2d 170, 183, 5 Cal.Rptr. 161, 352 P.2d 529, italics added.] The fact that the subcontractor in turn contracts with someone else for that person or company to actually perform that portion of the work does not turn the subcontractor into a material supplier. It is relevant whether the claimant constructs a definite, substantial part of the work of improvement in accord with the plans and specifications of such contract, not that he enters upon the job site and does the construction there. In this case, the portion of the project was custom made doors according to the architect’s specifications. [Eggers Industries v. Flintco, Inc. 133 Cal.Rptr.3d -836 (Cal.App. 3 Dist.,2011)]
STOP PAYMENT NOTICE:
Unexpended construction funds. A stop payment notice may be either bonded or not bonded. [CC §§8510, 8520, 8532, 8536] If a bonded stop notice is timely given and the lender or owner fails to withhold the funds, the lender or owner will be personally liable to the claimant. It operates by requiring the holder of the funds to retain funds sufficient to cover the claim. NOTE, however, that where a payment bond has been recorded before the lender has received the stop payment notice, a construction lender has the option of not withholding funds, thereby requiring the claimant – other than a direct contractor who filed a bonded stop payment notice – to instead file a claim against the payment bond. [CC §§8136, 8138; Brewer Corporation v. Point Center Financial, Inc., 223 Cal.App.4 th 831 (Ct.App. 4 Dist. 2014)] If the stop payment notice given to a lender is not bonded, or if the notice is given by someone other than a direct contractor and a payment bond is recorded before the lender is given the notice, then the lender is not required to withhold funds; otherwise the lender IS required to withhold funds. [CC §8536] Note that where a construction lender objects to the sufficiency of the sureties on the bond for a bonded stop payment notice, the claimant has 20 days to substitute a bond executed by an admitted surety insurer. If the claimant fails to do so, the lender may disregard the bonded stop payment notice and release funds held in response to the notice. [CC §8534]
LIEN:
The work of improvement itself, the land it is on, and a convenient space surrounding it. [CC §8440] Note that where a tenant has contracted for the construction, an owner may exempt its property interest from the lien by recording and posting on the project site (they must do BOTH) a “Notice of Nonresponsibility” within 10 days after the owner learns of the work of improvement. The notice must be given after construction has commenced – a premature notice is ineffective. [CC §§8442, 8444] Tectonics Const., Inc. v. MGP VIII Properties, LLC, Not Reported in Cal.Rptr.3d, 2011 WL 6004289 (Cal.App. 2 Dist.,2011)] Such a notice will not, however, protect an owner who participates in the contract to make the improvements or if the lease requires the tenant to make the improvements. [Howard S. Wright Constr. Co. v. Superior Court, 106 Cal.App. 4th 314 (Dist.1 2003)] NOTE ALSO that the claim of a subcontractor or direct contractor will be limited, as each is entitled to recover only the amount due to it less all other claims for labor, services, equipment or materials included within his or her contract. [CC §8434; Appel v. Superior Court of Los Angeles County, 153 Cal.Rptr.3d 798, (Cal.App. 2 Dist.,2013)]
PAYMENT BOND:
The payment bond, where the owner, contractor or sub has provided one. [CC §§8600, 8603, 8606]
OTHER:
There are provisions for collecting against the retainage, if any is withheld. See “Other Remedies” section at the end of this summary. [CC §8800 et seq.] NOTE that a subcontractor claimant will not be allowed to bring a quantum meruit claim against an owner, though the owner may remain indebted to the direct contractor for the outstanding amount. [Ross F. Carroll, Inc. v. JCW-Cypress Home Group, 2009 WL 2172514, Not reported in Cal.Rptr.3d (Cal.App. 3 Dist. July 22, 2009)]
STOP PAYMENT NOTICE:
Funds to be paid to direct contractor. If the direct contractor disputes the validity of the claim, the public entity may permit the contractor to file a release bond and the public entity must release the funds withheld.
PAYMENT BOND:
The contractor’s payment bond, or, if public entity fails to ensure that a contractor provides a sufficient bond with a valid insurer, or fails to ensure that the contractor provides a payment bond at all, then the public entity will be liable to unpaid subcontractors. [Electrical Electronic Control, Inc. v. Los Angeles Unified School Dist., 24 Cal.Rptr.3d 316, 126 Cal.App.4th 601(App. 2 Dist. 2005)]
RETENTION:
There is a provision to recover unpaid retention. [PCC §7107] If retention is wrongly withheld, the public entity will be liable for damages at the rate of 2%/month. The funds cannot be withheld for any reason other than to provide security against mechanics liens or deficiencies in the contractor’s performance. [East West Bank v. Rio School District, 185 Cal.Rptr.3d 676, 235 Cal.App.4 th 742 (Ct.App.2 Dist. 2015)] Note, however, that from now until January 1, 2020, retainage is not to be withheld on a Department of Transportation project. [PCC §7202]
DIRECT CONTRACTORS:
A claimant with a contract directly with the owner (both contractors and suppliers) must give the preliminary notice to the construction lender. The notice is not required to be given to the owner. [CC §8200]
All licensed contractors who are contracting directly with the owner must include specific notices in the contract with the owner. The notice varies, depending on whether or not the contract is a home improvement contract, and whether the contract is for service and repair. NOTE THAT failure to include the information leaves the contractor subject to disciplinary action, and may also constitute a misdemeanor. [B&P §§7030, 7159, 7159.5, 7164]
STOP PAYMENT NOTICE, LIEN, AND PAYMENT BOND:
Every claimant, except the direct contractor (see subsection immediately above), trust funds, and people performing actual labor for wages. [CC §§ 8410] NOTE that if materials, services, labor, or equipment are furnished under more than one subcontract, the preliminary notice must be given separately with respect to each customer. [CC §8206] Note that contractors and suppliers who contract directly with the owner must give the preliminary notice to the construction lender. [CC §8200; Brewer Corporation v. Point Center Financial, Inc., 223 Cal.App.4 th 831 (Ct.App. 4 Dist. 2014)] A design professional must give the owner a demand for payment. [CC§8304]
HOME IMPROVEMENT OR SWIMMING POOL WORK:
There is a special notice a direct contractor is required to give a homeowner when doing home improvement or swimming pool construction, prior to entering into the contract. A ‘home improvement contract’ is a contract exceeding $500, between a contractor and an owner or tenant, and regardless of the number of units in the building. It must be in writing, and there is certain information, including a few paragraphs pertaining to the Contractor’s State License Board (the CSLB) that must be included in the contract. Failure to include these paragraphs is a misdemeanor. There are numerous other requirements pertaining to information that must be included in the home improvement contract itself, which are not discussed here. [B&P §§7159, 7159.5]
NOTE ALSO that all contractors who have had their license suspended or revoked two or more times within an eight-year period, must disclose this to the owner on any residential project of four or fewer units. [B&P §7030.1]
STOP PAYMENT NOTICE:
All claimants except for laborers and claimants with a direct contract with the direct contractor. Remember that the direct contractor cannot give any kind of a stop payment notice on a public project. [CC §9300]
PAYMENT BOND:
All claimants except for (a) laborers and (b) claimants with a direct contract with the direct contractor. Because of some inconsistencies in the statute, however, it is recommended that claimants contracting with the direct contractor give the notice as well. See discussion of final notice, below, if claimant fails to give a preliminary notice. [CC §§9300, 9560; American Buildings Co. v. Bay Commercial Construction, Inc., 21 Cal. Rptr.2d 539, 99 Cal.App.4th 1193 (App. 3 Dist. 2002)]
DIRECT CONTRACTORS, CONTRACTUAL NOTICE:
The notice that is required to be included in the contract is given to the party with whom the contractor is contracting. [B&P §§7030, 7164] (For the notice to the construction lender, see requirements set out below.)
STOP PAYMENT NOTICE:
Owner or reputed owner, construction lender or reputed construction lender (if any), and the direct contractor or reputed direct contractor to which the claimant provides work or materials directly or through one or more subcontractors. NOTE that where claimant gave notice to reputed lender, who was listed in the “Preliminary Information” sheet provided by the owner at the outset, but the actual lender was someone different, the court still enforced the stop payment notice against the actual lender. Note that the direct contractor only needs to give the preliminary notice to the construction lender or reputed construction lender. [CC § 8200; Force Framing, Inc. v. Chinatrust Bank (U.S.A.), 187 Cal.App.4th 1368, 114 Cal.Rptr.3d 855, (Cal.App. 4 Dist.,2010)]
ALL CLAIMANTS ON PROJECTS OTHER THAN HOME IMPROVEMENTS OR SWIMMING POOLS:
-OWNER or reputed owner (except that claimants contracting directly with the owner do not need to give this notice to the owner)
-DIRECT CONTRACTOR or reputed direct contractor to which the claimant provides work, either directly or through one or more subs. (NOTE that there is a case where a subcontractor contracting directly with the direct contractor was excused from providing the direct contractor with a copy of the preliminary notice, because the direct contractor had notice of the sub’s claim, knew the sub’s identity, and owned no real property against which the sub could file a lien, but it is NOT recommended to rely on this case; claimant should give the notice in all cases.) Industrial Asphalt, Inc. v. Garrett Corp. 180 Cal App. 3d 1001, 226 Cal. Rptr. 17 (1986).) [CC § 8200]
-CONSTRUCTION LENDER or reputed construction lender, if any [CC § 8200]
-PAYMENT BOND PRINCIPAL and SURETY, for claim against payment bond. Note, though, that often there isn’t a payment bond early on in a project, so the notice to the principal and surety may not be required until much later. See discussions below pertaining to claims against the payment bond. [CC §§8612, 8614]
-COUNTY RECORDER is recommended but not required, because if the Notice is filed with the County Recorder, then the Recorder is required to notify the claimant of the filing of a Notice of Completion or Notice of Cessation. [CC §8214]
It is no longer required to send the notice to the claimant’s SUBCONTRACTOR/CUS-TOMER, if any, but a claimant may choose to do so. [CC §8200]
NOTE THAT where the claimant is a direct contractor or a sub with unpaid laborers, there is a notice that must be given to the laborer and the laborer’s bargaining representative, if any. [CC §§8104, 8200] In addition, a design professional must give the owner a demand for payment. [CC §8304]
HOME IMPROVEMENT OR SWIMMING POOL WORK:
The contractor must give the owner a copy of the contract, signed by the contractor and the buyer, prior to starting work. This contract will contain a lot of information and various warnings, which are not set out here. Regarding the notice pertaining to license suspensions or revocations, presumably the notice is given to the property owner. [B&P §§7159; 7030.1]
STOP PAYMENT NOTICE AND PAYMENT BOND:
Direct contractor, and public agency concerned. [CC §9300] If the public agency is the Department of Public Works or the Department of General Services, send notice to Office of the disbursing officer of the department constructing the work, or serve the officer personally. It is no longer required to send the notice to the subcontractors with whom the claimant has contracted, but it is recommended to do so. [CC §9302]
DIRECT CONTRACTORS:
The notice to the construction lender must be given within 20 days after claimant first furnishes labor, materials, etc. (If given later, will only cover materials, etc. supplied 20 days prior to giving notice, and thereafter.) If notice is given by registered or certified mail, service is complete at the time it is deposited as certified or registered mail. [CC §§8116, 8200, 8204] The notice that must be included in all contracts must be included in all contracts in which the contractor is the prime contractor. [B&P §7030]
STOP PAYMENT NOTICE AND LIEN, ALL OTHER CLAIMANTS:
Within 20 days after claimant first furnishes labor, materials, etc. (If given later, will only cover materials, etc. supplied 20 days prior to giving notice, and thereafter.) If notice is given by registered or certified mail, service is complete at the time it is deposited as certified or registered mail. [CC §§8116, 8204] The design professional’s preliminary notice must be given to the owner after a building permit has been obtained but at least ten days before filing his or her lien, and the lien must be filed before work commences on the project. [CC §8304]
PAYMENT BOND:
Same as above – BUT if no preliminary notice is given, AND either (a) all progress payments, except for those disputed in good faith, have been made to the claimant’s customer (a sub with a direct contract with the direct contractor); or (b) the claimant’s customer is a sub that has been terminated from the project and all undisputed payments were made as of the termination date, THEN the claimant may preserve its claim by giving final notice to surety and bond principal within 15 days after Notice of Completion is filed, or within 75 days after completion of project, if no Notice of Completion is filed. IT IS STRONGLY RECOMMENDED, HOWEVER, that the preliminary notice be timely given. This is discussed further in the sections pertaining to final notice, below. Though the statute does not specify, it is recommended that this 15-day notice be received by the surety and bond principal within that time period. [CC §8612]
HOME IMPROVEMENT OR SWIMMING POOL WORK:
The contractor must give the owner a copy of the contract, signed by the contractor and the buyer, prior to starting work. Numerous notices are required to be provided to the owner in or with the contract prior to entering into a contract to perform work on the residential property. [B&P §§7159; 7030.1]
STOP PAYMENT NOTICE AND PAYMENT BOND:
Within 20 days after claimant first furnishes labor, materials, etc. (If given later, covers only materials, etc. supplied 20 days prior to giving notice, and thereafter.) If notice is given by registered or certified mail, service is complete when it is deposited as certified or registered mail. [CC §9304; American Buildings Co. v. Bay Commercial Construction, Inc., 21 Cal.Rptr.2d 539, 99 Cal.App.4th 1193 (App. 3 Dist. 2002) (Allowing a claim that was timely given under the final notice deadline, though a preliminary notice had also been given, but was too late to cover the vast majority of the claimant’s claim.)]
DIRECT CONTRACTORS:
Notice to construction lender – same as notice for all other claimants, discussed immediately below.
STOP PAYMENT NOTICE, LIEN AND PAYMENT BOND:
-The name and address of the owner or reputed owner.
-The name and address of the direct contractor.
-The name and address of the construction lender, if any.
-A description of the site sufficient for identification, including the street address of the site, if any. If a sufficient legal description of the site is given, the effectiveness of the notice is not affected by the fact that the street address is erroneous or is omitted.
-The name, address, and relationship to the parties of the person giving the notice. (In other words, is the claimant, for example, a subcontractor, and if so, with whom did they contract, and what is the connection to the owner and direct contractor.)
-If the person giving the notice is a claimant, the notice must also include a general statement of the work provided, the name of the person to or for whom the work is provided, and a statement or estimate of the claimant’s demand, if any, after deducting all just credits and offsets. (Also recommend including all of this information when sending a notice on behalf of a claimant.)
-A general description of the work to be provided.
-An estimate of the total price of the work provided and to be provided.
-The statement attached, in boldface type.
-NOTE that a notice is not invalid by reason of any variance from the requirements of this section if the notice is sufficient to substantially inform the person given notice of the information required by this section and other information required in the notice. [CC §8102]
NOTE that if an invoice for material or certified payroll contains the required information, a copy of the invoice or payroll is sufficient.
NOTE that where the claimant is a subcontractor that has not paid all compensation owed to a laborer, the claimant must include the name and address of the laborer and any other person or entity to which payments are due, as well as the total number of straight time and overtime hours worked, and the amounts due and owing. [CC §§8102, 8104, 8202]
A design professional’s preliminary notice must include a demand for payment, and must state that a default has occurred under the contract and the amount of the default. [CC §8304]
HOME IMPROVEMENT OR SWIMMING POOL WORK:
The contractor must give the owner a copy of the contract, signed by the contractor and the buyer, prior to starting work. This new contract form requires a lot of information and several warnings to the customer, not all of which are set out here. Please contact Levy von Beck & Associates for some of the required information.
Among other things, the notice of suspensions or revocations must be written either in capital letters in 10-point roman boldface type or in contrasting red print in at least 8-point roman boldface type, and must disclose any disciplinary license suspension or license revocation during the last eight years resulting from any violation of the relevant statutes. [B&P §§7159 – 7159.6; 7164, 7030.1]
-An estimate of the total price of the work provided and to be provided.
-NOTE that a notice is not invalid by reason of any variance from the requirements of this section if the notice is sufficient to substantially inform the person given notice of the information required by this section and other information required in the notice. [CC §§9303, 8102]
DIRECT CONTRACTORS:
For the notice to construction lender, the requirements are set out immediately below. For the notice to be included in the direct contract, the notice must be printed in at least 10-point type on all written contracts. [B&P §7030]
STOP PAYMENT NOTICE, LIEN AND PAYMENT BOND:
-As to construction lender, must be delivered to the manager or other responsible officer or person at the office of the construction lender, at the address shown on the construction loan agreement or construction trust deed, either by personal service or registered or certified mail, express mail, or overnight delivery by an express service carrier. Proof of delivery is required. (Do NOT deliver it to the main branch of the bank or the registered agent listed with the Secretary of State. The owner is required to provide the direct contractor with a copy of the construction trust deed, which will contain the required information.) [CC §§8108, 8710]
-As to owner or agent, must be delivered personally by leaving it at business or residence with person in charge OR by registered or certified mail, express mail, or overnight delivery by an express service carrier to home or office, or to address on building permit, direct contract, or construction trust deed. If they cannot otherwise be served, it may be left at the person’s home or office and then mailed to them as well. Proof of delivery is required.
-For serving another claimant, the address to use is the address shown on the claimant’s contract, preliminary notice, claim of lien, stop payment notice, or claim against a payment bond, or on the records of the Contractors’ State License Board.
-For serving a surety, use the surety’s address shown on the bond for service of notices, papers, and other documents, or on the records of the Department of Insurance.
-If a person cannot be otherwise served, send the notice addressed to the lender or contractor. [CC §§8106, 8108, 8110]
-PROOF OF SERVICE IS REQUIRED, in the form of a declaration showing type of description or notice given, the date, place and manner of notice, and facts showing that the notice was given in the manner required by statute; the name, address and (if appropriate) the title or capacity of person given notice. If notice is given by mail, the declaration must be accompanied by documentation either (1) from the USPS showing payment was made to mail the notice using registered, certified or express mail; (2) from an express service carrier showing that payment was made to send the notice using an overnight delivery service; or (3)in the form of a return receipt, delivery confirmation, signature confirmation, tracking record, or other proof of delivery or attempted delivery provided by the USPS, or a copy of the record of delivery and receipt from the USPS showing date of delivery and to whom delivered, or if not delivered, by the returned envelope itself; or (4) a tracking record or other documentation from the express service carrier showing delivery or attempted delivery. [CC §8118]
HOME IMPROVEMENT OR SWIMMING POOL WORK:
All forms – no method specified. As to the disclosure of license revocations or suspensions, it may be given in a bid, estimate, or other document prior to entering into a contract. No specific method of providing it to the owner is discussed. [B&P §7030.1]
STOP PAYMENT NOTICE AND PAYMENT BOND:
Same as for private works. Personal service or by first class mail, registered mail, or certified mail to home or any office specified by the public entity in the contract or elsewhere for service of notice, papers or other documents. [CC §§9302, 8106, 8108, 8110]
For serving a surety, use the surety’s address shown on the bond for service of notices, papers, and other documents, or on the records of the Department of Insurance. [CC §8108]
An interim notice is not required.
An interim notice is not required.
STOP PAYMENT NOTICE:
To the construction lender: All claimants. To the owner: All claimants other than the direct contractor may give a stop payment notice to the owner. The owner must withhold funds unless a payment bond has been recorded. Note: One who receives from the owner a written demand to file a notice must do so, or will forfeit the right to claim a lien. Note that a construction lender may choose not to withhold funds pursuant to a stop payment notice if the notice is unbonded. [CC §§8520, 8522, 8530, 8532, 8536]
LIEN:
All claimants. [CC §§8304; 8400, 8402, 8404, 8414, 8416]
PAYMENT BOND:
All claimants who fail to give a preliminary notice – but it doesn’t hurt to give the final notice anyway. [CC §8614]
STOP PAYMENT NOTICE:
Every claimant except the direct contractor. [CC §§9352, 9100]
PAYMENT BOND:
Every claimant who did not give the preliminary notice – but recommend giving the final notice anyway. Laborers are not required to give the notice, but recommend giving it anyway. [CC §9560] If the claimant was required to give the preliminary notice (i.e., they contracted with someone other than the direct contractor), but they did not give the preliminary notice, then they may, in certain circumstances, preserve their right to bring a claim against the payment bond by timely giving this final notice. Although there is an argument to the contrary (using §9560(b)), these claimants may NOT preserve their claim with this late notice if (1) all progress payments, except for those disputed in good faith, have been made to the first-tier subcontractor to whom the claimant has provided materials or services; or (2) the first-tier subcontractor to whom the claimant has provided materials or services has been terminated from the project pursuant to the contract, and all progress payments, except those disputed in good faith, have been made as of the termination date. [CC §9560]
STOP PAYMENT NOTICE:
Owner or owner’s architect (if any) and construction lender, if any. The notice to the construction lender must be given to the manager or other responsible officer AT THE BRANCH HOLDING AND ADMINISTERING THE CONSTRUCTION FUNDS. [CC §8506]
LIEN:
County recorder where property is located, and owner or reputed owner. [CC §8416]
PAYMENT BOND:
Surety and bond principal. [CC §8612]
STOP PAYMENT NOTICE:
State project: Director of department that let contract.
Any other project: Given to with controller, auditor, or other public disbursing officer whose duty it is to make payment pursuant to the contract, or with the commissioners, managers, trustees, officers, board of supervisors, board of trustees, common council, or other body awarding the contract. [CC §9354] (Recommended giving notice to direct contractor, too.)
PAYMENT BOND:
Surety and bond principal. [CC §9560]
STOP PAYMENT NOTICE:
Notice must be received within 30 days after Notice of Completion or Notice of Cessation is filed, or within 90 days after completion of project if no Notice of Completion or Notice of Cessation is filed. For a direct contractor filing a bonded stop payment notice, the notice must be received within 60 days after a Notice of Completion or Notice of Cessation is filed, or within 90 days after completion of project otherwise. To be safe, recommend ensuring notice is received within 90 days after claimant’s last delivery if no Notice of Completion or Notice of Cessation is filed. IF, HOWEVER, the owner records a Notice of Completion or Notice of Cessation and fails to timely notify the contractor or a lien claimant who has given a preliminary notice, then the deadline for filing the lien is extended to 90 days after the Notice was recorded. The owner is required to send notice of the recording to the contractor and any claimant that has given a preliminary notice. The owner must give this notice within 10 days of recording the notice of completion or cessation. NOTE, HOWEVER, that this requirement of sending out a copy of the Notice of Cessation or Notice of Completion, and the possibility of extending the lien-filing deadline, only applies to non-residential properties, and residential properties of five or more units. [CC §§8508, 8412, 8414, 8190, 8520 Schor at §6.03[D]]
NOTE THAT completion occurs when any of the following events take place: (1) actual completion of the work of improvement; (2) The occupation or use of the improvement by the owner, accompanied by cessation of labor; (3) Cessation of labor for a continuous period of 60 days, (4) Recordation of a notice of cessation after cessation of labor for a continuous period of 30 days. NOTE that these rules apply even if work is resumed thereafter and a notice of acceptance is later recorded. [CC §8180; Golden State Boring & Pipe Jacking, Inc. v. Eastern Municipal Water District, 228 Cal.App.4 th 273 (2014)]
NOTE THAT a direct contractor may give a “stop work notice” if the contractor is not paid the amount due pursuant to a written contract within 35 days after the payment is due, and there is no dispute as to the contractor’s performance. Five days before giving the stop work notice, the claimant must post the notice of intent to give a stop work notice, and give a copy of the notice to all of its subcontractors. [CC §§8832, 8834] This procedure is not further discussed in this summary.
LIEN:
-By direct contractor, filed and sent after completing its contract but within 90 days after completion, or within 60 days after Notice of Completion or Notice of Cessation filed, whichever is earlier. [CC §8412] Service by registered mail, certified mail, or first-class mail, evidenced by a certificate of mailing, postage prepaid, is complete at the time of the deposit of that first-class certified or registered mail. [CC §8416] A lien filed before completion of the contract may be deemed premature and therefore invalid. [Howard S. Wright Construction Co. v. BBIC Investors, 136 Cal. App. 4 th 228 (2006)] If, however, the owner records a Notice of Completion or Notice of Cessation and fails to timely notify the contractor, then the contractor’s deadline for filing its lien is extended to 90 days after the Notice was recorded. The owner is required to send notice of the recording to the direct contractor and to all claimants who have given preliminary notice within 10 days of recording it. NOTE, HOWEVER, that this requirement of sending out a copy of the Notice of Cessation or Notice of Completion, and the possibility of extending the lien-filing deadline, only applies to non-residential properties, and residential properties of five or more units. [CC §§8412, 8190] NOTE that a lien may be filed and perfected after the owner files for bankruptcy, though foreclosure proceedings may not be commenced during that time. In fact, a notice of lien must be filed in the bankruptcy proceedings to inform the debtor and creditors of the claimant’s intention to enforce the lien.[Pioneer Const., Inc. v. Global Inv. Corp., 135 Cal.Rptr.3d 785 (Cal.App. 2 Dist., 2011)]
-By design professionals, notice must be recorded before work on the improvement commences, but after a building permit has been obtained. NOTE that the lien expires (a) upon commencement of the work if no suit is filed, or (b) upon the expiration of 90 days after recording the claim of lien, unless the design professional commences an action to enforce the lien within that time. [CC §§8304, 8306] IF, HOWEVER, the design professional’s lien expires because of the commencement or work on the improvement (but not if it expires because of the 90 day deadline just described), and the design professional remains fully or partially unpaid, then the design professional can convert his or her lien into a mechanics lien WITHIN 30 DAYS OF THE EXPIRATION OF HIS OR HER LIEN. To do so, the design professional must record a mechanics lien for the amount of the unpaid professional lien. The lien must state that it is a converted design professional lien but shall be recorded and enforced as a mechanics lien. No other preliminary notice is required, and the lien is effective as of the date of recording the lien. [CC §8319]
-By all other claimants, filed and sent after completion of the claimant’s contract, and within 90 days after completion of the entire project where no Notice of Completion is filed, or within 30 days after Notice of Completion or of Cessation recorded, whichever is earlier. (A lien filed before completion of the contract may be deemed premature and therefore invalid. [Howard S. Wright Construction Co. v. BBIC Investors, 136 Cal. App. 4 th 228 (2006)]) IF, HOWEVER, the claimant gave a preliminary notice, and the owner records a Notice of Completion or Notice of Cessation but fails to timely notify the claimant of the recording of the Notice, then the claimant’s deadline for filing its lien is extended to 90 days after the Notice was recorded. The owner is required to send the contractor notice of the recording within 10 days of recording it. If the owner or lessor of a project other than a personal residence of four or fewer units fails to give a notice of completion or cessation to the claimant who has given a preliminary notice, then the deadline is not shortened, on any project. [CC §8190] NOTE, HOWEVER, that this requirement of sending out a copy of the Notice of Cessation or Notice of Completion, and the possibility of extending the lien-filing deadline, only applies to non-residential properties, and residential properties of five or more units, and residential properties of four or fewer units where the owner does not live there. [CC §§8190, 8414] NOTE that a lien may be filed and perfected after the owner files for bankruptcy, though foreclosure proceedings may not be commenced during that time. [Pioneer Const., Inc. v. Global Inv. Corp., 135 Cal.Rptr.3d 785, (Cal.App. 2 Dist., 2011)]
NOTE ALSO that when the notice must also be sent to the owner, the notice must be sent prior to filing, as proof of service must be included when the lien is filed. Service is completed upon mailing, however. [CC §8116]
Note: Where the project involves the construction of two or more separate residential units (including one structure with several condominiums) the time for filing a lien against each unit begins to run upon the completion of each unit. If, however, the claimant is unable to attribute the amounts to different units, the claimant is still entitled to its lien. [CC §8448]
NOTE ALSO that completion means (1) Actual completion of the project; (2) The occupation or use of the improvement by the owner, or his agent, accompanied by the cessation of labor on the project; (3) Cessation of labor for a continuous period of 60 days; OR (4) Recordation of a notice of cessation after a cessation of labor for a continuous period of 30 days.. [Civ. Code §§8066, 8180] NOTE ALSO that a contract is “complete” for purposes of filing a lien when all work under the contract has been performed, excused, or otherwise discharged. [Schor at 6.02[B], Howard S. Wright Construction Co. v. BBIC Investors, 136 Cal. App. 4 th 228 (2006)]
PAYMENT BOND:
If the preliminary notice was not required to be given, then final notice should be received within 15 days after Notice of Completion was filed, or within 75 days after actual completion of the improvement, if no Notice of Completion is filed. However, it never hurts to give this notice regardless of whether the preliminary notice was given. (See the discussions above pertaining to stop work notices and lien notices, for the definition of ‘completion.’) [CC §8612]
If the preliminary notice was required to be given by a claimant who has no direct contractual relationship with the contractor, and the claimant did not give the preliminary notice, then the statute is not entirely clear. The apparent statutory intent is that in that situation, the claimant may enforce his or her claim by giving late notice IF (a) all progress payments, except for those disputed in good faith, have been made to the claimant’s customer, i.e., a subcontractor who has a direct contractual relationship with the direct contractor to whom the claimant has provided materials or services; OR (b) the claimant’s contractor is a subcontractor that has been terminated from the project, and all progress payments, except those disputed in good faith, were made as of the termination date. To enforce the claim, the claimant must then give written notice to the surety and the bond principal within 15 days after recordation of a notice of completion, or, if no notice of completion has been recorded, the time for giving written notice to the surety and the bond principal is extended to 75 days after completion of the work of improvement. This provision does not apply to a laborer. The way the statute is written, though, there is an argument to be made that where a claimant did not give the preliminary notice, even if it was required, the claimant may be able to preserve its claim by timely giving the notice as described in this paragraph. [CC §8612]
STOP PAYMENT NOTICE:
If notice of completion, cessation or acceptance is recorded, stop payment notice must be received within 30 days of recording. If none is recorded, then within 90 days after cessation or completion. [CC §9356]
NOTE THAT for public works, the date of completion is determined by the date of acceptance by the public body, or where there is a cessation of labor on any public work for a continuous period of 60 days. A notice of cessation may be recorded after a continuous cessation of labor of at least 30 days. [CC §§9200, 9202]
PAYMENT BOND:
If the claimant did not have a contract directly with the direct contractor, and the claimant did not timely give the public works preliminary bond notice the claimant may enforce a claim by giving written notice to the surety and the bond principal, that is received within 15 days after recordation of a notice of completion. If no notice of completion has been recorded, the time for giving written notice to the surety and the bond principal is extended to 75 days after completion of the work of improvement. This provision apparently does not apply – though there is currently an argument that it MAY apply – to laborers and to subs and suppliers if (a) all progress payments, except those disputed in good faith, have been made to the claimant’s customer, who has a direct contract with the direct contractor; or (b) the subcontractor with the direct contractual relationship with the direct contractor has been terminated from the project and all progress payments, except those disputed in good faith, have been made as of the termination date. There is an argument, however, that under subsection §9560(b), a claimant can still have a claim even if the customer has been paid, though that does not seem to have been the legislature’s intent. [CC §9560]
NOTE THAT for public works, the date of completion is determined by the date of acceptance by the public body, or where there is a cessation of labor on any public work for a continuous period of 60 days. [CC §9200]