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Mechanics lien dispute incomplete work - how to void and resolve

CaliforniaBonding Off LienConstruction ContractLien on FundsMechanics LienPayment DisputesSubstantial Completion

Hello - question; we are a general contractor, who contracted a cabinet subcontractor for a residential project. Have been trying to for 6-8 weeks to get sub back onsite to finish cabinets, as not complete/onsite and many outstanding corrections. Sub has placed a lien and stop notice and is demanding payment of invoices (which would equal 97% paid) of contract balance, there is excessive outstanding cabinet corrections, missing cabinets and incomplete finish carpentry. To date have paid 86% of subcontractor contract. $796,112.78 Total Contract $682,395.00 Paid to date $113,000.00 Balance $78,000.00 Approved bank funds, HOLD/not paid due to non-performance $26,000.00 Balance (apprx) $80,000.00. Demanding pmt of : $110,000.00 Per contract outstanding work/cabinets not completed equal If we hire another sub to complete just corrections only, $38,500.00. Lien has stopped all funding project. Cannot pay other trades currently. Tried all avenues to come to terms, perform or quit, partial pmt, progress pmt, will not meet to review pickup list, requested schedule for completion. Only feedback is demand to pay invoices. The lien/stop has not recorded at this time. Client has engaged a lawyer (non Construction) to pressure to resolve legally. What can I do to resolve or pushback to sub to completed/get project completed, and/or release lien/stop notice. Lien/Stop notice filed in vengeance, as substantial outstanding work, sub not workable to agreement. Holding up entire project. Thank you for your assistance.

2 replies

Mar 27, 2020
If the lien has been recorded (it's a bit unclear from your question), you could obtain a lien release bond. That should free up the funding for the project. You may be able to recover your bond expenses from the subcontractor if your contract permits. The lien release bond would also take away some of the subcontractor's leverage, so you can either negotiate for a resolution or pursue hiring a substitute subcontractor and pursue your legal claims for breach of contract in court.
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Mar 27, 2020
Since you advise that "the lien/stop has not recorded at this time," but you also say that the "sub placed a lien and stop notice," it sounds like the documents were served but not recorded. Note that stop payment notices do not get recorded like a mechanics lien --- they are simply served. But much of what you decide to do forward probably will turn on your construction subcontract with the subcontractor. You likely have notice obligations regarding default/termination and there are a whole host of other rights, duties, and obligations that will flow from the subcontract. Sounds like you may want a construction lawyer to write a reply letter regarding the subcontractor's possible abandonment of the project and possible direct and consequential damages flowing therefrom.
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