Bonds and Stop Notices

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The amount of a mechanic’s lien in California is generally the lesser of: 1) the reasonable value of the work; or 2) the price agreed upon in the lien claimant’s contract. But does the same measure apply if a lien defendant was not a party to the contract? In Appel v. Superior Court of Los Angeles County, 214 Cal. App. 4th 329 (2013), the appellate court clarified that the same measure does apply.
Continue Reading New Court Decision Clarifies Mechanic’s Lien Valuation Statute

In 2010, the California Legislature enacted Senate Bill (“SB”) 189 to reorganize and simplify the laws governing works of improvement. The bill completely re-writes the statutes which provide for mechanics liens, stop notices and certain construction bonds. These revisions took effect on July 1, 2012. In addition to this reorganization, some substantive changes to the laws governing mechanics’ liens, construction bonds, and stop notices were made. As a result, all of the forms commonly used in the industry, such as the 20-Day Preliminary Notice, Notice of Completion, and Progress/Retention Payment Releases must be changed.
Continue Reading Special Advisory: New Mechanics Lien Act in California

Can a supplier of construction materials be considered a “subcontractor” for purposes of enforcing its claim on a public works payment bond? The answer is “yes” according to a recent decision of the California Court of Appeal. In Eggers Industries v. Flintco, Inc., et al., 201 Cal. App. 4th 536 (3d Dist. 2011), rev. denied (Feb. 15, 2012). The Court affirmed the rule that a “subcontractor’s status as a subcontractor must be determined based on what the subcontractor agrees to do, not what it actually ends up doing,” citing a fifty year-old California Supreme Court decision. In so holding, Eggers provides important guidance regarding the scope of recovery against a public works payment bond permitted by Civil Code sec. 3248 and its replacement, the newly chaptered Civil Code sec. 9554, which takes effect in July 2012.
Continue Reading Court Broadly Defines Subcontractors Who Qualify For Payment Bond Claims

This article is the fourth in a series summarizing construction law developments for 2010.

By Candace Matson, Harold Hamersmith & Helen Lauderdale

  1. Yassin v. Solis, 184 Cal. App. 4th 524 (2d Dist. May 2010)

Homeowners entered into an agreement with a contractor for home improvement work. The agreement called for the contractor to be paid fixed amounts upon reaching specific milestones on the project, with the final payment of $7,500 due once the work was complete and a certificate of occupancy issued. The homeowners became dissatisfied with the contractor’s work, terminated him from the project, and hired another to complete the work.
 Continue Reading The Year 2010 In Review: Prompt Payment Statutes

This article is the third in a series summarizing construction law developments for 2010.

By Candace Matson, Harold Hamersmith & Helen Lauderdale

A. Mechanic’s Liens

1. New Requirement for Mechanic’s Liens (AB 457)

Effective January 1, 2011, Civil Code Section 3084 is amended to require that mechanic’s lien claimants must give notice of certain information included in the lien claim to the property owner and accompany the notice with a proof of service affidavit.
 Continue Reading The Year 2010 In Review: Mechanic’s Liens, Lis Pendens and Construction Bonds

By Edward Lozowicki & James Higgins

California contractors and material suppliers beware. Beginning on January 1, 2011, a mechanic’s lien claimant will be required to give notice of a mechanic’s lien to the property owner. The notice must contain specific information, be included on the lien claim and be accompanied by a proof of service affidavit. Failure to comply invalidates the lien as a matter of law. (Assembly Bill 457 (2009), amending California Civil Code Section 3084.)

Continue Reading Mechanic’s Lien Update: Lien Claimants Must Now Give Owners “Notice of Mechanic’s Lien”

By Scott Hennigh

In California and most states, a contractor can get some security to assure that it will be paid for its work on a project. An unpaid contractor on a private project can go to the county recorder and record a mechanic’s lien against the property to which it provided labor, service, materials or equipment. The mechanic’s lien makes the property security for the debt owed to the contractor. Then, if the project owner still does not pay, the contractor can file a complaint requesting that a court enter judgment and order a foreclosure sale of the property so that the debt can be paid from the sale proceeds.Continue Reading Get Paid With A Powerful Alternative to California’s Mechanic’s Lien

In AF Brown Electrical Contractor, Inc. v. Rhino Electric Supply, Inc., issued March 23, 2006, the Fourth Appellate District was faced with the question of whether an electrical supplier’s conduct in filing a stop notice fell within the ambit of C.C.P. § 425.16, the anti-Slapp statute.Continue Reading Appellate Court Finds That the Filing of a Stop Notice Is Potentially Subject to the Litigation Privilege if Made in Good Faith Contemplation of Litigation

When The Owner Anticipatorily Breaches The Contract, And Therefore A Lien Recorded One Day After The Breach Is Not Premature

Howard S. Wright Construction Co. v. BBIC Investors, LLC, California Court of Appeal, First Appellate District, 2006 DJDAR 1339

Cases concerning the timeliness of recording a mechanic’s lien generally concern the latest time a party may record its lien. In Howard S. Wright Construction Co. v. BBIC Investors, LLC, 2006 DJDAR 1339, the California Court of Appeal considered the reverse issue, i.e., when is the earliest time an original contractor may timely record a mechanic’s lien under California Civil Code Section 3115? Section 3115 provides that an original contractor may record a claim of lien “after he completes his contract . . . .” In Howard S. Wright, the California Court of Appeal held that a contractor “completes its contract” within the meaning of section 3115 not only when it substantially performs its obligations under the contract, but also when the contract is terminated prematurely by the owner, or the contractor is discharged from any further obligations under the contract by the owner’s material or anticipatory breach
Continue Reading California Court Of Appeal Holds That A Contractor “Completes His Contract” Under Civil Code Section 3115