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Should we processed and send a notice of intent?

We received an email notification from a GC – Narrowback Construction yesterday regarding a project at 28 2nd St Building-San Francisco, that we haven’t been paid on. They owe us $72,069.00. This is the first time that we are hearing of any problems or issue with our work and they are not responding and letting us what the issue is. Plus, the manufacturer has inspected and issue the roof warranty to us but, I have not provided to the GC because we have not been paid. Here is the email that I received: Hi Stephanie, I have now received all of these invoices, thank you. I am unable to remit in full since we are currently at risk of being sued for your work. As I have updates on whether or not our claim will be accepted, I will let you know what can be remitted to you. I would say you should consider notifying your insurance. My phone has spotty service where I am sheltering, but it's best to reach me via email or text The office line has not been on my radar since we moved offices and were dealing with Covid updates in March. Hope you're taking care, Catie

1 reply

Apr 9, 2020

It's perfectly reasonable to ask a customer to provide a detailed, written breakdown of the alleged issues in your work. That way, everything's transparent and you can proceed as necessary. Plus, if you understand what's wrong with the work - then you may be able to fix the apparent issue.

California limits the amount that can be withheld from progress and retainage payments

Further, note that the amount a customer withholds on a California project must directly tie to the allegedly deficient work. So, a customer can't just withhold all payment because there's some alleged issue with the work. Rather, they'll need to tailor the amount being withheld to the alleged issue. The amount that can be withheld is capped at 150% of the value of the disputed work. To quote California Civil Code § 7108.5: "In the event that there is a good faith dispute over all or any portion of the amount due on a progress payment from the prime contractor or subcontractor to a subcontractor, the prime contractor or subcontractor may withhold no more than 150 percent of the disputed amount." And, the same is true for retainage payments. Finally, if the customer has been improperly withholding payments - they could be liable for paying you interest on top of what's owed. So, threatening to pursue that interest with a prompt payment or retainage claim could be helpful in forcing partial payment or at least an explanation.

Forcing a customer to pay what's owed

Notifying the customer that your roof passed the manufacturer's inspection and using that as leverage could be useful. If you've successfully called their bluff, that might lead to payment. Or, that might provide the customer ammunition they need to fight off any allegations about your work. As you indicated above, though - hanging onto the actual warranty, itself, could be valuable leverage. Further, if a customer refuses to pay what you're owed, sending a Notice of Intent to Lien to both the customer and the property owner can put some urgency on them. Mechanics lien claims can be filed even if there's a dispute over workmanship - so they should know the project isn't immune to payment claims if they don't do things by the book. And, by notifying the owner of the potential lien claim - that can put additional pressure on the customer to make things right. It's also pretty common for the owner to be completely oblivious to their contractor's disputes - and it's possible that this could be the first time the owner's heard about alleged issues with your work. Finally - nobody wants to file a mechanics lien claim. But liens get the job done and they cut through the BS. So, going forward and actually filing a claim could lead to faster payment. More on making CA claims here: (1) California Mechanics Lien Guide and FAQs; and (2) How to File A California Mechanics Lien – Step By Step Guide To Get You Paid.

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