If a subcontractor does not pay a material supplier who has not filed a preliminary notice with the owner of the property, does the material supplier have any means to get money from the owner of the property where the material has been installed?

2 years ago

I am the sub who is behind paying for his material because of disputes on another project. A rep from the supplier came to the job and threatened to lien the property. I tried to get an installment agreement to pay off the debt. The monthly I could afford was not enough so they demanded payment in full or else they would lien the property and go after my license. The general contractor freaked and paid them 5,000 and I was supposed to match that to keep the supplier from releasing the hounds. Well I somehow scraped that up but missed my mortgage payment which disqualified me from getting an equity loan which would have paid them off. I had already put time and money into making repairs on my house to qualify. Now the general wants to pay them again and deduct that from money that he owes me. I do not believe that the material supplier filed a preliminary notice, hence my question. Thank you.

Senior Legal Associate Levelset

I’m sorry to hear about that – I can’t imagine how frustrating this must be, especially considering all of the efforts made to resolve the payment issues. In California, a material supplier must provide preliminary notice in order to file a mechanics lien on a given project. The failure to send notice to all required parties, and in compliance with the form and time requirements set forth is fatal to a lien in California. Generally speaking, when a mechanics lien is not available, other recourse for nonpayment (such as litigation or an action in small claims court) will not involve a property owner – the dispute will likely remain between the parties under contract (or at least those providing labor and/or material to the project).

Chief Legal Officer Levelset

In California a material supplier to a subcontractor is required to provide a preliminary notice in order to later file a valid and enforceable mechanics lien. In order to protect the entire amount of materials supplied, the notice must be provided within 20 days of first furnishing the materials. If that deadline is missed, it’s not necessarily fatal to a subsequent lien claim, but a late notice only protects amounts furnished within the 20 days preceding the date the notice was given. To be effective, the notice must be given to the property owner, the direct contractor, and the construction lender (if there is one).

While a lien may not be ultimately effective if the required notice is not given (and for a whole host of other reasons) that doesn’t necessarily mean that an (improper) lien could not be filed. County recorders rarely work as gatekeepers to prohibit the filing of liens that may be invalid. Accordingly, even if the lien is not ultimately valid, it may be filed and necessitate a fight about it. Although, if a lien is filed improperly, the claimant may be liable for damages.

Note, however, that whether or not a lien is filed (or proper), the underlying obligation to pay remains. But in that situation the ability of the supplier to recover would be limited to recovery through the sub with whom they contracted.

I’m sorry about the situation you have found yourself in – and I’m hopeful that it can be worked through without too much further difficulty. As you know, cash-flow is crucial and issues on other projects can ripple through your whole project portfolio. Being proactive about providing visibility regarding your suppliers, and making sure your own lien rights are protected can sometimes help streamline the payment process so you don’t find yourself in this situation again.

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