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Collection option without a prelien notice

CaliforniaRetainage

We finished the work over a month ago and did not file a prelien when we started the job. The customer paid progress payments but are withholding retainage. What are our options to collecting the remain money.

3 replies

Oct 31, 2020

I your contract was directly with the owner, you are not required to give preliminary notice unless a lender is involved. So in this case, you could still record a lien as long as you are within 90 days of project completion, or 60 days from the notice of completion, if a notice of completion was filed. If your contract was with someone other than the owner, then you cannot record a lien unless you can prove that the owner had actual knowledge of your work.

If a lien is not an option, then you can proceed instead to threaten and if necessary file a normal action for breach of contract, in addition to other causes of action, against your customer. If your contract has dispute resolution procedures, you must follow those procedures which likely call for mediation, arbitration, and/or litigation. 

Absent specific procedures, I generally recommend first sending a demand letter and then filing a lawsuit if they ignore the demand letter. 

 

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Nov 1, 2020

You still have a breach of contract claim. If you're not paid, you should pursue a collection matter in the courts, depending on the amount owed. You may be able to recover attorneys' fees, costs and interest under California's Prompt Payment statutes. Good luck.

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Nov 2, 2020
If your contract is with the owner, you don’t need to send out a Preliminary Notice. You can record your mechanic’s lien within 90 days of substantial completion of the project, so you’re not too late (assuming that no Notice of Completion was recorded) to file a lien now. But If you’re a subcontractor, a Preliminary Notice is the first step before recording a lien. You can send out your Preliminary Notice now, but it will only cover work you did within 20 days of sending out the preliminary notice. Since you finished the work over a month ago, it wouldn’t cover any of your work. But you can still sue the person who hired you to recover your money. I’m happy to answer any questions you have about this.

Cathleen M. Curl, Esq.
Law Office of Cathleen M. Curl
700 El Camino Real, Suite 200
Millbrae, CA 94030
T 650-871-5955
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