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How do I file a lien on a project that is past the 90 day period?

We have contract with a customer that we installed a new HVAC system in his home and after installation (before we had completed job to 100%) he expressed his 3 day right to cancel after the 3 days. He has demanded for us to come and remove the equipment under the condition that he not be at the location. We had refused this as we will not go to his home with out him there. He is refusing to pay any amount on his contract. We are unsure of what our legal rights are and what our next step should be.

1 reply

Oct 17, 2017

In California, the three day right to cancel is supported in a few different places - the most prevalent being California's Home Solicitation Sales Act, California's post-disaster repair provisions, the Truth in Lending Act, and the California Business and Professions Code. Which applies, if any, depends on the particular situation. Generally, in cases in which there is no financing through which a security interest is to be granted in the property, the Truth in Lending Act and Business and Professions Code do not apply - which leaves the Home Solicitation Sales Act.

Keep in mind: the Home Solicitation Sales Act does not apply if the contract was negotiated at the contractor's place of business.

If it does apply, however, the Act requires that the homeowner be given 3 business days from signing the contract as a "cooling off" period in which the contract can be cancelled with no penalty. This is to mitigate the pressure to sign a contract that people feel when the sale/negotiation is taking place in their home (or some other place that is not the seller's/contractor's place of business). However, service and repair contracts that are specifically requested/initiated by the customer and the work is $750 or less.

If the Act (and the general Home Improvement Contract rules) apply - the homeowner must be given the 3-day cancellation period. This means that the consumer may cancel the contract within 3 days. Under California law, if the contract is canceled under the 3-day cancellation provision, the seller is required to return any money that was paid within 10 days of receiving the written cancellation request. The consumer/buyer must make available to the seller at buyer's residence, in substantially as good condition as when received, any goods delivered under the contract or sale - and, if the buyer fails to do so - they remain liable for the performance of all obligations under the contract.

So, some things to check out are: whether the cancellation was given in writing within the applicable 3-day period; whether the homeowner is making the materials available to you; whether the contract was negotiated at your place of business; etc. Note, however, if the homeowner is making the materials available, and you do not get them within 20 days the homeowner has the right to keep and/or dispose of the materials as s/he wishes (if the contract was appropriately cancelled). This is something that has a lot of potential different parts - so it would likely be a good idea to enlist the help of a local attorney who can look at all the information in person to get a better view of the situation.

Regarding the lien issue - unless there was a lender, a preliminary notice is not required for parties in California who contract directly with the property owner. However, in order to be enforceable, a lien must be filed within 90 days from the completion of work. Liens filed after this period are past-due, and unenforceable.

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