Lawyers often receive calls from contractors and suppliers who find themselves face-to-face with a project manager who is unwilling to pay for the materials or the work done on private property.
For many subcontractors, they will be asked first thing for preliminary notices in California. If yes, then the next question is if they could serve the notice within 20 days of furnishing the labor or the materials. The answers to these two questions are critical, and they will often determine if a worker is qualified to file a mechanic’s lien. You can read more about the mechanic’s lien on this site here.
There were Many Excuses
If you are the subcontractor, you must file the mechanic’s lien every single time. Most were not able to file a preliminary 20-day notice because of some excuses. The most common reasons include “the customer has always paid on time for the last 10 years”, “I don’t want to make an impression that the project owner will not be able to pay me,” “filing is too much trouble,” or the classic, “I forgot to do it.”
Most suppliers and contractors are always getting advised that they are depriving themselves of getting paid for any private works project that they have done if they fail to serve the preliminary notice on time. This is a powerful tool available to many, so it’s essential to make a claim.
If clients always pay on time, they will understand why you are filing for a mechanic’s lien. After all, they will not run away from their payment obligations, so the mechanic’s lien is just another paper on a project owner’s desk. If filing is too much trouble, then wait until you don’t get paid, and that will bring you more headaches in the surest way possible. If you forgot to do it and your contractor also fails to pay you, then there’s nothing you can do about this.
The California Civil Code Allows Filing Preliminary Notices
If you are entering a big contract, the preliminary notice is already a given. In some cases, failure to send it can be grounds for violating the contractors’ license law, resulting in the suspension of the license. These rules are found in California Civil Code Section 8216. There are scores of requirements needed, which are far too many to itemize here.
For everyone involved, it should be sufficient that every contractor, material supplier, and subcontractor should be familiar with the California Civil Code for their protection. Here are some of the features that were included in the Civil Code:
- Without the preliminary notice, any supplier or subcontractor can’t file a mechanic’s lien on a specific property in which they have provided labor or supplied materials.
- The notice will only allow the filing of a mechanic’s lien for the entire value of the labor provided or the materials. The cost will include the 20 days prior to the serving of the mechanic’s lien, and it will end when the job is considered complete under California law. It is important to file a preliminary 20-day notice for all the parties involved. For example, the mechanic’s lien is not allowed to be filed for materials or labor supplied by the worker 21 days or earlier before the serving of the Preliminary notice.
- If the general contractor has a direct written contract with the property owner, he’s not required to mail the notice. He can file for a mechanic’s lien later on. But if there’s a lender or financier involved; it is crucial to note that the prime contractor still requires to serve the preliminary notice to the construction lender.
- If the price that needs to be paid to the subcontractor exceeds $400, failure to serve the preliminary notice is a violation of the state laws, and there might be a disciplinary action taken against him.
It is Important to Make the Claim On Time
When a contractor fails to pay for the materials or the labor supplied, the subcontractors will turn to the owner as a viable payment source. In general, there are no payment bonds for private work. Without a timely and proper serving of the preliminary notice, most workers or suppliers will find themselves without any rights to obtaining the payment due to them.
It is legally acceptable to serve a preliminary notice once the contract for the project is signed. This can be applied before the materials are delivered, or work is performed as long as everything in the agreement has been finalized. If there are complaints from the owners, which rarely happens, then the response should be, it is required by the law.
If every contractor makes preliminary notices a part of their routine, even if they’ve got the smallest of contracts, they will rest assured that they have a protection level just by following the law. Read more about the secrets of successful self-employed contractor here: https://www.thebalancesmb.com/how-to-succeed-as-self-employed-contractor-4117107. They will benefit from this even when working for an old and trusted customer who may go bankrupt unexpectedly.
By following the guidelines in filing and serving outlined in the Civil Code sections 8200 to 8216, contractors get a layer of protection that will help them get paid after they have performed the work or supplied the materials. If you are the subcontractor, you will prevent making your customers’ financial problems from becoming your own when you file for a mechanic’s lien.
If you need help with these, there are online services that you can take advantage of. Many companies will be happy to verify your project and provide you with a premier collection agency that will give you the added leverage that you need.