Home>Levelset Community>Legal Help>We was brought on board as the Project Management Firm of record to build a new ground up SFR in West Los Angeles, CA. However, we agreed to put $100K into the Final Framing Phase in which the owners, (Investors) , can get their draw reimburesemt relesed to keep the project moving. After invoicing the owner fo the final Framing Progress Payment, they walked without paying, and hired another company to complete the project.

We was brought on board as the Project Management Firm of record to build a new ground up SFR in West Los Angeles, CA. However, we agreed to put $100K into the Final Framing Phase in which the owners, (Investors) , can get their draw reimburesemt relesed to keep the project moving. After invoicing the owner fo the final Framing Progress Payment, they walked without paying, and hired another company to complete the project.

We were brought on-board to Manage the Project, and hire all Trades, and the owners, (Investors) agreed to pay all progress payments upon receipt of invoices from my Firm. Upon the last phase of Framing, the owners advised us of running short on money to continue, I agreed to pay the labors. in the sum of $100K to keep the project moving. However, we had about 5% of Framing to conclude, and we paid monies to the laborers as inducement to wrap up. We invoiced the owners in the sum of $100K in which they ignored us by messaging our chain email threads without acknowledging payment reimbursement. We never filed lien notices to the Hard Money Lender during any phases of the project.

1 reply

Nov 6, 2018

I'm very sorry to hear about that. First, it's worth noting that when hired directly by the property owner (or ownership team), it's very important to send preliminary notice to the construction lender(s), when present. Whenever notice is required but not properly sent, any subsequent lien claim would likely be invalid under § 8200(c) of the California Civi Code ("Compliance with this section is a necessary prerequisite to the validity of a lien claim or stop payment notice under this title."). Of course, there are other options for recovery beyond mechanics lien claims. One option may be to send a Notice of Intent to Lien. While this is not a required document in California - it can be a very effective one. A Notice of Intent to Lien acts as a warning - it states that if payment isn't made soon, a lien claim will be filed. This notice can be sent regardless of whether a claimant might ultimately utilize a lien claim. Considering how drastically a mechanics lien can affect a project, owners and lenders will typically take the threat of lien very seriously. You can learn more about it here: What is a Notice of Intent to Lien? Another option may be to send a demand letter for payments not made. Sending a demand threatening specific legal action if payments aren't made can go a long way toward recovery - especially when sent through an attorney. Threatening claims such as breach of contract, unjust enrichment, or a claim under the California prompt payment laws can all be effective - among a number of other potential options. Finally, yet another potential option might be to notify subcontractors, suppliers, and laborers of the payment problems and encouraging them to consider sending a Notice of Intent to Lien or other communications, if unpaid. Those parties may have preserved their right to lien, and their threats of lien could be effective too. Plus, the more noise from the payment chain, the more likely the owner may be to take action. Finally, considering the large amounts at issue here, it would likely be wise to reach out to a local construction attorney to discuss the situation. They will be able to review any relevant information and documentation and advise you on the best route to proceed. Good luck!

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