Customer is not following progress payment according to contract, we send a stop notice and she still refuse to pay, can I file a lien based on a progress payment? Project #1986330
Apr 3, 2018
This is a good question. In most states, even where a claimant will continue to provide work, a lien may be filed. However, in California, a claimant other than a direct contractor may not enforce a lien claim unless it is (a) filed after the claimant ceases to provide work, but (b) filed before either 90 days after completion of the improvement or 30 days after a Notice of Completion/Cessation has been field (whichever comes first).
For direct contractors, the time for filing a lien after the contract is completed, but before either 90 days after completion or 60 days after an owner records a Notice of Completion/Cessation (again- whichever comes first). Of course, this does not necessarily mean that a lien may not be filed for a progress payment owed. For parties other than a direct contractor, it merely means that a claimant must cease to provide work prior to filing a lien.
For direct contractors, the "completion" of the direct contract requirement sticks out- but § 8180(a) of the California mechanics lien statute defines "completion" as (1) actual completion, (2) cessation of labor accompanied by occupation or use by the owner, (3) cessation of labor for a continuous period of 60 days, or (4) recordation of a Notice of Cessation after a continuous cessation of at least 30 days. Thus, if a claimant wishes to file a lien over an unpaid progress payment, their work will have to be ceased prior to filing a mechanics lien.
Granted, there are certainly risks involved in such a work stoppage - a customer may use such an event as an opportunity to bring their own legal claims, such as a breach of contract. Informing a customer that work will be ceased and a lien will be filed if nonpayment continues may be enough in and of itself to convince them to pay what is due. If payment is still not forthcoming, a mechanics lien may be one of many available options for moving forward.