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My bonded drywall contractor did not pay his supplier, who has filed a lien and complaint to forclose on my new home. Do I have any protection from his bonding company?

CaliforniaBond ClaimsPayment Disputes

I hired a drywall/stucco sub who was licensed and bonded ($15K). The sub failed to pay a supplier, who filed a lien on my new home (for $6100) and has now sued to foreclose. The sub did not furnish lien releases. I filed a claim against his bond, but Surety says I don't have any damages yet. I there a way to protect myself and make the surety stand up for its bonded contractor?

1 reply

Jan 8, 2019
I'm sorry to hear about that. When a California contractor or sub is bonded, that bond is in place to protect property owners from harm caused by that contractor. Whenever the contractor or sub is in violation of the CA Business and Professions code, a claim against their bond may be appropriate. Of course, a claim against the license bond is only appropriate in certain situations. Specifically, where a violation has occurred, bond claims can be made by: homeowners contracting for home improvements, property owners contracting for a single family dwelling, persons damaged as a result of willful and deliberate violation, among others. Two violations jump out as potential causes for bond claims when dealing with a contractor or sub who fails to make payment - §7108 (Diversion of funds or property received for prosecution or completion of a specific construction project or operation, or for a specified purpose...), and §7120 (Willful or deliberate failure to pay for materials or services rendered when the contractor has the capacity to pay or has received sufficient funds to make payment...). Of course, there could be other violations that apply. Regarding whether damages have been incurred - where a mechanics lien has been filed and suit initiated, arguing that no damage has taken place may be hard to do. However, the surety may be waiting for payment to be made to the lien claimant or some other resolution of that dispute prior to issuing payment for the claim - which isn't all that uncommon. It's also common that a surety would want to avoid paying a claim made, and compelling the payment of a claim could take legal action. To determine how best to proceed, especially considering a foreclosure suit is on the table, it would be wise to reach out to a local attorney familiar with real estate and construction law in California. They will be able to take a deeper look at the relevant documentation and advise on how best to proceed. Plus, it's a good idea to secure representation prior to going to court anyway.
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