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What document should I file to claim money owed on a commercial/public project type?

CaliforniaBond ClaimsMechanics LienRecovery Options

I am a sub-sub contractor working directly with the subcontractor. I have been told that the project is a commercial project, but there are also characteristics of a public project type as well (based on sureties & who the property owners are). The GC will not be able to pay us --should I file a lien claim or a stop notice/bond claim in order to enforce my rights to get paid? This is a closed project.

1 reply

May 24, 2018
That's a really good question, and it's not one that's particularly easy to answer. When there's a mix of public and private resources on a project, it can be hard to tell which payment rules to apply (that is, lien laws, bond claim laws, or some other remedy). If a project is private and no bond is associated with the project, obviously a payment bond claim won't be effective. In that case, a mechanics lien would probably be more appropriate. On the other hand, if a project is truly public, there's a chance that the project property cannot be liened - in which case a bond claim is often the appropriate recovery method. While not always clear, if the controlling contract can be obtained between the property owner and the developer (and it often can when a public entity is involved), that agreement may shed light on potential remedies. Typically, such an agreement will either require that payment bonds be present on the project or provide for remedial actions when a mechanics lien is filed (which would seem to indicate that a lien filing is possible). So the overall agreement could be very helpful in determining what remedy to pursue. Changing gears somewhat, there's another recovery option available in California that applies to both public and private projects: a Stop Payment Notice. While a public Stop Payment Notice and a private one must be made separately, they operate much in the same manner. The Stop Payment Notice is sent to the Owner and Lender if private, or sent to the Public Entity, GC, and Surety if public. What makes a Stop Payment Notice effective is that it stops the flow of payment on a project. The party who receives a proper Stop Payment Notice must withhold the amount of the claim from their disbursements. So after a lender or public entity receives such a notice, any future payments released will be reduced until the issue has been resolved. Anyway - as for which recovery method to pursue, it can be a tough call when a project is not clearly public or private. Naturally, it can feel like a shot in the dark when there's uncertainty. However, it's worth noting that a claimant could certainly make multiple claims when it's unclear which recovery option would be the most appropriate. If one of the claims made is ineffective or creates compounding issues, a claimant can typically release their claim with little issue as long as their claims are made in good faith.
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