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Is the lien valid?

CaliforniaConstruction ContractPreliminary Notice

We had a company come out to perform remediation services to our home after an appliance leak. He said he dealt directly with insurance and had me sign paperwork, but never provided an estimate or even disclosed the pricing. Now he is threatening to lien our home because the insurance company finds the bill he submitted to be excessive in terms of hours and fees he is attempting to charge. As a homeowner, we are stuck in the middle. I believe he had me sign work authorization documents and some paperwork at the beginning, but we were not furnished copies, and again no outline of fees or actual services that were going to be performed were outlined. The contractor assured me throughout the process when I asked him on day one what my financial obligations would be, that he dealt with insurance all the time and that what he was doing was standard and that I wouldn't owe anything out of pocket. My understanding is that for him to file a lien, he would have had to provide me with a prelien notification and that it would include a set dollar amount. I believe he may have shown me a prelien document, but the dollar amount would have been blank. This seems to invalidate his claim that a prelien had been provided, and again, I was not provided with copies of such documents? I am at a loss as to how to validate the legitimacy of the fees and hours he is billing for, and the insurance company claims his practices and fees are out of line with industry standards? He also advertisers for all these services he provides and people show up with his company shirts on...but according to the CA State Licensing Board he claims to not have any employees? He apparently subbed some of the work out to another company who had workers on the job (wearing shirts that referenced the GC), and yet that company also claims to licensing board that they have no employees? We didn't even know another company was involved until he submitted a bunch of bills to the insurance company that included bills from these vendors? He is also now trying to collect and additional 20% in fees (called Overhead & Profit) on top of all these vendors bills. The fees equate to thousands of dollars, and are a major sticking point of the insurance company. The insurance company claims how he is billing represents a deviation from his previous billing practices. When I approached the contractor about revising or agreeing to negotiate his bill, he claims his attorney told him that if he lowered the bill by more than 10%, he would be constituting insurance fraud? This morning i received a Notice that he intends to file a lien. Help? How do i confirm he even filed a legitimate prelien notice? And doesn't the State of CA require an estimate or some type of contract that lists specifics services and fees?

2 replies

Feb 13, 2021
There is a lot here. If you are in direct contract with a contractor, the contractor does not need to give you a preliminary notice. What a contractor does need to give you on a home improvement project like this is a written home improvement contract. If you did not receive a home improvement contract, that is a basis for disciplinary action by the Contractors State License Board. If your contactor did not have workers compensation insurance and had employees, it could mean that your contractor's license is in suspension, and that your contractor has no basis upon which to claim compensation against you. This sounds like a very serious situation, and one where you would be greatly served by retaining an experienced construction lawyer to assist you.
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Feb 13, 2021

A contractor is not required to provide preliminary notice if he has a direct contract with the owner. Here, it would seem you contractor had a contract with your insurance company, not you. For a preliminary notice to be valid, it must be in writing and inlcude a description of the work and an estimte of the cost; it also must include a specific warning statement. It can be served by personal delivery, but is typically done by certified mail. It is hard to tell from your facts whether the contractor had an agreement with you sufficient to avoid a preliminary notice (i.e., the work authorization), so I agree you should consult with an experienced construction attorney. I would also contact the insurance company directly and find out the status of your claim.

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