I'm a subcontractor, working on a commercial project and we are near completion but our client (general contractor) is coming up with work lists that are not in the contract and holding our payment. We did not send any prelim notice at the beginning of the project, and the it's been 9 months since we started. We have received milestone payments in the past but on our last 2 milestone payments are having issues. What can I do at this point?
To preserve your full lien rights for the work, the preliminary notice must be served no later than 20 days after you first provided work to the jobsite. If you serve the preliminary notice more than 20 days after starting work, then your lien and stop notice is effective only for unpaid services and material furnished within 20 days before service of the notice and after service of the notice. (I assume you're talking about construction work and not design work.) So if you performed any work within the last 20 days or are continuing to perform work, you should serve your preliminary notice to preserve your lien rights for at least of portion of the work.
Even though you may not have a valid mechanic's lien for the milestone payments withheld for work more than 20 days ago, you should still have contract and statutory claims against the GC. Under the prompt payment statutes (Civ. Code 8800 et seq.) you could be entitled to 2% interest per month on the wrongfully withheld payments and attorneys fees incurred in an action to recover the wrongfully withheld payments.
Thank you for your advice, Mr. Julander!
So, this is a $403K project, we are getting paid based on the milestone and $30,982 is the remaining balance for this project. So, is it correct for me put $30,982 for the prelim notice i'm sending today? Or, do I have to determine exactly how much worth of money we have performed within last 20 days and thereafter?
Thank you,
Sarah Baterdene
510-326-8218
Hi Sarah,
The estimate of total price of labor, services, equipment, or material provided and to be provided must be calculated through a reasonable and logical attempt to determine the final number. The estimate can be in compliance with the statute even if it badly misses the mark with reference to the total charges as finally tallied. If it's not too difficult, I would go back 20 days and determine from that date to the end of the project the total price of the work to be provided. It may be more than the $31k remaining milestone payment.
Thank you so much for advice.
Sarah
My pleasure. Feel free to call if you want to further discuss this.