I was hired by my father, a contractor, to help frame a house. The homeowners hired a “consultant” to run the project which ended up with an incomplete set of engineered plans, that somehow made it through the planning department. It got to a point where the job slowed down waiting for clarification on engineering details, which essentially stopped the cash flow. We had two employees quit as the money had stopped coming in. Myself and another carpenter stayed to complete the project. Eventually the consultant complained that we were taking to long and hired another contractor to finish the job, we were about 75-80% complete by the time we were run off the job. That left around $25K remaining in the (verbal)contract, and I was owed just over $10k for wages unpaid. Do I have any recourse in this situation?

Senior Legal Associate Levelset

I’m sorry to hear about that, and no one should have to fight tooth and nail for what they’ve already earned. With that in mind, let’s look at a few recovery options that might help to speed up payment.

First, it’s worth noting that a mechanics lien is generally considered the most powerful tool for recovery when construction payments go sideways. By filing a mechanics lien, a claimant actually takes an interest in the underlying project property. If that lien remains unpaid, and if the lien is ultimately enforced, a mechanics lien filing could even result in the foreclosure of that property. But lien claims rarely come to that – typically, they’re resolved before any legal action becomes necessary, and claimants, their customers, and property owners have time to negotiate payment once a lien is filed.

Before resorting to a lien claim, though, many claimants find that they can recover payment with the mere threat of a lien claim. By sending a document like a Notice of Intent to Lien, a lien claimant can show their customer and the property owner they mean business. Because a mechanics lien is such a powerful tool, an owner will very typically want to avoid lien claims on their property – so by informing them that a lien claim might be on the horizon, it can put pressure on the owner and their contractor/project manager to fix the issue before it goes any further. Plus, if the warning of a lien filing doesn’t do the trick, a claimant can always proceed with their lien claim.

Finally, there are always other options outside of the mechanics lien process that can lead to payment recovery, like threatening or pursuing claims under California’s prompt payment laws or legal claims like breach of contract or unjust enrichment. When a payment demand is sent with a threat to take legal action, and when that demand is sent via an attorney, a claimant might be able to avoid having to take legal action to recover payment.

If push comes to shove, options, like filing a lawsuit, going to small claims court, or sending a debt to collections might be options, as well.

Lastly, here are some resources that should be valuable for learning more about the options described above:
(1) How Do Mechanics Liens Work? 17 Ways a Lien Gets You Paid
(2) California Lien & Notice Overview, FAQs, and Statutes
(3) What Is a Notice of Intent to Lien and Should I Send One?
(4) Can You File a Lien Without a Written Contract?
(5) How To Make A Claim Under Prompt Payment Laws.

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