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How will CA Assembly bill 1701 affect lien rights of subs

Subs of all tiers will need to provide payroll reports and proof of wage/fringe payments, otherwise we as the GC are jointly liable regardless if sub has already been paid + interest. If we hold back funds until wage/fringe information is provided, does the sub have lien rights for whole value of their billing to us?

1 reply

Dec 27, 2017

Unfortunately, AB 1701 is completely silent as to lien rights, so how the new regulations affect the ability to lien won't be completely clear until there is some jurisprudence on the matter. California's mechanics lien statute doesn't shed much light on the scenario, either. At their core, mechanics liens are available for amounts that are due to parties who have performed lienable work. Following AB 1701, a general contractor is entitled to withhold payments as "disputed" if a subcontractor does not timely provide the information requested. Thus, since a general contractor is entitled to withhold that amount, it might not be considered due to the subcontractor, and, conceivably, a lien might not be able to be filed for that amount. On the other hand, California grants lien rights pretty broadly and the lien statute is not cut-and-dry regarding lienable amounts. So it's possible that a court could consider an amount withheld pursuant to AB 1701 as lienable. Again, this is conjecture - this issue will likely not be clear until it has been taken to court.

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