Home>Levelset Community>Legal Help>I’m a GC contracted with the Property Owner to build 3 food court restaurants concurrently at his commercial building. I was contracted to finish in 4 months to spend whatever OT to finish the work. Their net pay is 30 days from billing and as you can figure out I was only able to invoice 2 times previously. Now that the job is done, they won’t pay the remaining $400k because they want to take care of their punch list items. So far, I have been paid $600k, but it’s been over a month and won’t pay. In good faith with all my clients, never had to send prelim notices before. What do I need to collect the remaining $400k?

I’m a GC contracted with the Property Owner to build 3 food court restaurants concurrently at his commercial building. I was contracted to finish in 4 months to spend whatever OT to finish the work. Their net pay is 30 days from billing and as you can figure out I was only able to invoice 2 times previously. Now that the job is done, they won’t pay the remaining $400k because they want to take care of their punch list items. So far, I have been paid $600k, but it’s been over a month and won’t pay. In good faith with all my clients, never had to send prelim notices before. What do I need to collect the remaining $400k?

1 reply

Nov 7, 2018

In California, every party other a wage laborer is generally required to provide a preliminary notice in order the retain the ability to file a mechanics lien. For GCs (and anybody who contracts directly with the property owner), however, the preliminary notice is only required to go to the construction lender, if any. If there is no construction lender on a job, any direct contractor is not required to send a preliminary notice to maintain lien rights. If a preliminary notice is required, it must be sent within 20 days from first furnishing labor or materials to the project in order to fully protect lien rights. It may be given later, but if it is it only protects the value of the labor or material furnished beginning 20 days prior to the date on which the preliminary notice was provided.

If the preliminary notice requirement is met or if none was required, a mechanics lien may be filed in with the county recorder for the county in which the improved property is located. In California, a mechanics lien must be filed within 90 days of the completion of the project as a whole (or a shorter time period from the filing of a notice of completion or cessation, if filed) and an action to enforce must be initiated within 90 days from the date of the liens' recording.

There are strict requirements regarding the language and contents of the lien, as well as the timing requirements. More information can be found here: https://blog.zlien.com/construction-payment/mechanics-lien-california/

If a mechanics lien is not an available path to recovery, there are always options such as a breach of contract lawsuit or even the use of collections agencies.

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