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Can an owner withhold funds until a Releases of a Mechanics Lien for previous months been officially recorded?

CaliforniaMechanics Lien

Hello, I am a subcontractor on a large commercial project. One of my third party suppliers submitted a notarized mechanics lien letter (it was not a notice of intent) to the recorders office during the holidays. The owner of the property has informed the General Contractor that they will not be paying ANY funds for October and beyond until the Release Mechanics Lien has been filed and the lien has been Officially removed and Recorded (which can take months, especially during times of Covid-19). Is it within their legal right to hold payment to the General Contractor and consequentially all Subcontractors on this project, if Unconditional Progress releases and Unconditional Finals for the supplier who filed the lien have been provided?

2 replies

Dec 3, 2020

It really depends on the contractual rights, duties, and obligations. An experienced construction attorney would need to review your subcontract (and perhaps additional documents) to determine the proper path forward. I do not know what a "notarized mechanics lien letter" is ---- but assuming this particular supplier is the one that has not submitted an unconditional waiver and release (and there is no conditional waiver and release with a matching payment), the owner may be able to withhold. Contact an experienced construction attorney to help you navigate through this sticky situation!

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Dec 3, 2020

In this type of situation, you might suggest that you (actually, your 3rd party supplier) will provide releases (waiver, lien release, etc.) to be held in trust by the owner until such time that you (and your supplier) are paid. 

That said, a "notice of intent" is not a lien and not a justification to not pay money that is owed.

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