Architect, Engineer, and Design Professional Liens in California: A Different Animal than the Mechanics’ Lien

Most in the construction industry are familiar with the rules of California mechanics’ liens. They know that the Preliminary Notice of Civil Code Section 8034 and 8200-8216 is often the foundational document and that the deadline to record a mechanics’ lien is generally triggered by events occurring at the end of construction, including completion of the work of improvement and the recording of the notice of completion or notice of cessation. Most of these rules are found in California Civil Code sections 8160-8494.

Read Article

The Public Works Affidavit vs. Counteraffidavit Process

In some cases, when a California Stop Payment Notice is served, the direct contractor will serve an “Affidavit” on the public entity, demanding that the public entity release all funds withheld. Upon receipt of such an Affidavit, the public entity will serve the subcontractor or supplier who served the Stop Payment Notice with a copy of the Affidavit, along with a Demand For Release of Funds. If the Stop Payment Notice claimant does not respond with a “Counteraffidavit” by the date stated on the notice sent by the public entity, then the public entity will release the funds to the direct contractor and the Stop Payment Notice claimant will relinquish its Stop Payment Notice rights. If the Stop Payment Notice claimant is served with such an Affidavit and Demand For Release of Funds, the claimant should fill out the “Counteraffidavit” form (available at www.porterlaw.com) and serve it on the public entity and the direct contractor. This should at least temporarily stop release of the funds by the public entity and preserve the Stop Payment Notice remedy. (See Civ. Code §§ 9400-9414.)

Read Article

Construction Project “Stop Work Notice” Unintended Trap for Prime Contractors

California law provide “original”, “prime” or “direct” contractors with apparent relief from their contractual obligations when owners of property on which the original contractor works fail or refuse to pay them. This law can be found in the “10 Day Stop Work Notice” specified in Civil Code sections 8830-8848. Unfortunately, the applicable statutory procedures have a number of important shortcomings of which contractors, subcontractors and suppliers should be aware.

Read Article

When Service of a “Payment Bond Notice” is Required Before Bringing a Lawsuit on a Payment Bond Claim on California Construction Projects

The payment bond is a valuable source for payment to subcontractors and suppliers who have not been paid for work performed on California construction projects. Although a payment bond is typically associated with public works projects, payment bonds can also be used on private works projects. If there is a payment bond on the project there are important deadlines which must be followed. If the original contractor was required to post a payment bond for the project, then follow the deadlines described below. (See California Civil Code sections 8600 – 8614 for private works and §§ 9550-9566 for public works).

Read Article

Federal Public Works Construction Collection Remedies: The Miller Act Payment Bond Claim

Federal public work construction projects are unique in that there are no Stop Payment Notice or Mechanics Lien remedies available. Furthermore, although a remedy is available by proceeding against the original contractor’s payment bond under a federal law known as the “Miller Act” and its corresponding Federal Regulations (40 USCS 3131 et seq. and 48 CFR 28.101-1 et seq.), this remedy is not available to all subcontractors or suppliers. In addition, there are circumstances where a different form of security can be substituted for the payment bond (40 USCS 3131(b)(2)).

Read Article

Defeating the Ten-Year Statute of Repose For Latent Construction Defects

It is an all-too-common scenario in California construction: Nine and a half years after completion of a major California construction project, immediately before the 10-year “statute of repose” for suing on “latent” construction defects expires, a lawsuit claiming damages for “recently discovered” latent construction defects is filed. The property owner sues the contractor for the alleged defects. The direct contractor sues all its subcontractors for indemnity and defense. The attorneys spontaneously generate. Experts proliferate. Claimed defects are extrapolated. Four or five years later, after a few dozen attorneys earn a small fortune in fees, the insurance companies make payments. Attorneys collect more fees. The owners take what remains. They repair nothing… and buy vacation homes.

Read Article

Sacramento Superior Court Supports Disgorgement from Building Contractor Lacking License During Any Part of a Construction Project; Contractor Compelled to Refund All Payments Received During Entire Project

This is a follow-up to my August 2008 article advising that, based on a series of recent cases, California courts would be entitled to order any building contractor or subcontractor who performed construction work with a contractor’s license that was suspended during part of the project to refund all sums the contractor was paid for all work on the entire project. This rule would apply not only to work performed by the contractor while the license was suspended, but also to work performed while the license was properly in place. This follow up article is to inform you that the Sacramento Superior Court has clearly adopted this doctrine.

Read Article

Contractor Lacking License at Any Time During Construction Project Can be Compelled to Refund All Payments Received During Entire Project; A Prejudgment Writ of Attachment May Secure Refund

The above title would tend to trigger a “double take” and at least a few questions: Did I read that correctly? Do you mean that if my contractors’ license is suspended at any point during a construction project, I could be required to repay every penny I received for my work throughout the entire project? Even for work done while my license was properly in place? Contractors and Subcontractors may be surprised to learn that the answer to all of these questions is “Yes.” Here is why…

Read Article

The Porter Law Newsletter

Get highlights and insights of the most important legal information delivered right to your email inbox.