NOTICE TO OWNER

Under the California Mechanic’s lien law,  it states any contractor, subcontractor, supplier, laborer,  or other person(s) or entities who assists to amend your property, but is not paid for this/her work or supplies, has a right to execute a lien against your property, land, or home where the job was performed to sue you in court to obtain payment.

This signifies that after a court hearing, your home, land, or a court officer could sell the property and the results of the sale used to satisfy what you owe.  This can occur even if you have paid your contract in full even if the contractor’s subcontractors, laborers, or suppliers remain unpaid.

To protect their right to file a claim or lien against your property, land, home, business certain petitioners such as subcontractors or material suppliers are required to present you with an official paper called a “Preliminary Notice” document.    Contractors and laborers who contract directly with owners are not required to provide  a “Preliminary Notice” since you are aware of their existence as an owner.  A “Preliminary Notice” does not place a lien against your home, land, property or business.  Its purpose is to notify you of person(s) or entities that may own a right to file a lien against your home, land, property, business if there is no receipt of payment for their services.  In order to preserve their lien rights a contractor, subcontractor, supplier, or laborer, must register a mechanical lien with the county recorder, which in turn becomes a recorded lien against your home, land, property, business.  Generally, the maximum time allowed for filing a mechanics’ lien against your property is 90 days after substantial completion of your project.

TO INSURE EXTRA PROTECTION FOR YOURSELF AND YOUR PROPERTY, YOU MAY WISH TO CONSIDER EMPLOYING ONE OR MORE OF THE FOLLOWING ITEMS.

(1)    Require that your contractor provides you with a “Payment and Performance” bond (not a license bond), which renders the bonding company will either bring to completion the project or pay damages / compensation up to the total value of the bond.  This “Payment and Performance” bond, as well as, a copy of the construction contract, needs filing with the county recorder, by you, for your additional protection.  The “Payment and Performance” bond cost generally runs from 1 to 5 percent of the contract amount contingent upon the contractor’s bonding eligibility; if a contractor cannot procure such bonding, it may indicate his or financial inability.

(2)    Require payments be made directly to subcontractors and material suppliers through a joint control agreement.  Funding services may be available for a charge in your area, which will authorize a voucher or other means of payment your contractor.  These services, in addition, may provide you with lien waivers and other manners of protection.  Any joint control agreement should include the addendum approved by the registrar.

(3)    When making payments, joint checks for payment is the best method, make checks out to both your contractors and subcontractors or material suppliers involved in the project, which could send preliminary notices to you.  These are the individual(s) or entities that have indicated they may have lien right on your property; therefore, joint checks, will assist you in protecting yourself.  This assists ensuring all persons due payment are actually paid.

(4)    Become familiar with the “Wavier and Release” forms that should be signed by all persons and entities involved in the project.  As different project phases, complete a request for payment is made.   However, before making any further joint payments require your contractor to provide you, signed by each subcontractor, laborer, and material supplier involved in that portion of the work, for which payment(s) were made, unconditional “Wavier and Release” forms. Your contract should have the “Waiver and Release” forms if not, the statutory lien releases, may be located in stationery stores or online –  www.cslb.ca.gov/consumers/legalissuesforconsumers/mechanicslient/ are set forth in the exact language in Section 2362 of the Civil Code.   The material suppliers, subcontractors, and laborers that you obtain release forms from are the persons or entities who have filed or will file preliminary notices with you. Assuming that you are not certain of the material suppliers, subcontractors, and laborers working on your project, obtain a complete and ongoing list from your contractor. Projects involving improvements e.g. single-family residence or individuals owning a duplex, the person(s) signing these releases forfeit the right to file a mechanics’ lien against your property. This protection may still be important in other types of construction but may not be a complete.

Protecting yourself under this option requires you to be certain that all material suppliers, subcontractors or laborers have signed the “Waiver and Release” form. Whenever you receive a filed mechanic’s lien against your property, you only have one recourse, which is a recorded voluntary “Release of Mechanics Lien” signed by the person(s) or entities that originally filed the mechanics lien; unless the lawsuit to enforce the lien against your property was not timely filed.  Do not make any final payment until removal of all such liens, consult your attorney immediately if you receive a lien filed against your property.

CONTRACTORS by law are required to be licensed and regulated by the Contractors State License Board, which has jurisdiction to investigate complaints against contractors if a complaint is filed with three years of the date of the alleged violations.  Refer any questions pertinent to a contractor to the Registrar, Contractors State License Board, PO Box 26000, Sacramento, California 95286

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