For folks in the construction industry, a mechanics lien is one of the most valuable tools for getting paid. Every state has mechanics lien laws that protect construction professionals facing nonpayment by granting them the right to file a lien.   A construction business’s lien rights depend on their ability to follow their state’s mechanics lien requirements. These include deadlines and important steps like sending preliminary notices and notices of intent. Though this process can look different depending on what state you’re in, the importance of lien rights in securing your business is universal.  Webinar: Construction lawyer explains how to resolve payment disputes With this in […]

December 2020 Changes to Home Improvement Contract Requirements in Effect January 1, 2021: New “5-Day Right to Cancel” Requirement for Contracts with Senior Citizens, New Construction Categories Added to “Home Improvement” Type Work and New License Classification for Residential Remodeling Contractors. As most contractors are aware, contracts for home improvement work must comply with unique requirements set forth in the Business and Professions Code (“BPC”).[1] BPC section 7159 identifies the requirements for home improvement contracts exceeding $500. Right to Cancel Home Improvement Contracts Extended for Individuals 65 Years of Age or Older from Three to Five Business Days. The changes […]

December 2020 LICENSED TO CONTRACT: A Reminder About Licensing Pitfalls for Contractors and How to Avoid Them James Bond, a.k.a. 007, was famously licensed to kill.  Without this license, Mr. Bond would have been in serious trouble with the authorities.  The same is true for a contractor. By performing construction work without a valid contractor’s license, a contractor is playing a very dangerous game and could lose it all.   It is well known that all contractors in California must be licensed by the Contractors’ State License Board (CSLB).  If a contractor is unlicensed at any point while performing construction […]

December 2020 One-Year Statute of Limitations Held to Apply to Disgorgement Under California Business & Professions Code § 7031 A recent decision by the Court of Appeal for the Second Appellate District should draw the attention of contractors (as well as project owners and developers) statewide.  In Eisenberg Village etc. v. Suffolk Construction Co., Inc. (2020) 53 Cal. App. 5th 1201, the Court of Appeal ruled that the disgorgement remedy provided in Business & Professions Code § 7031(b) is a penalty and therefore subject to a one-year statute of limitations pursuant to Code of Civil Procedure § 340(a).  The Court […]

October 2020 The Nevada Court of Appeals recently clarified the effect that a surety bond has on a validly recorded mechanic’s lien.  In Ascent Construction, Inc. v. Sonoma Springs Ltd. P’ship, 460 P.3d 481 (Nev. 2020), the Appellate Court found that NRS 108.2275 allows a district court to reduce the amount of a lien upon motion, even if the moving party has recorded a surety bond on the property in response to the lien.  Ultimately, the Appellate Court found that a surety bond does not wipe out a mechanic’s lien, rather, “some of the lienholder’s rights and duties [are] transferred […]

October 2020 Mechanic’s Liens are powerful tools for contractors, subcontractors, and material suppliers who find themselves dealing with a customer who is refusing to pay for work or materials supplied on a project.  However, meeting notice and timing requirements are essential to maintaining lien rights.  A recent decision by the Nevada Supreme Court highlighted the necessity of complying with notice requirements under NRS 108.  In Reed v. Soligent Distrib., LLC, the Court found that Soligent’s lien, that had been otherwise validly recorded, should be released because Soligent had failed to serve a Notice of Right to Lien on the property […]

Sophisticated contractors and material suppliers (and their counsel) understand the benefits of serving a stop payment notice upon an owner, lender, or other construction fund holder on both private and public works of improvement.  In essence, the stop payment notice places a lien on the undisbursed construction funds and is often considered a complementary remedy to a mechanics lien on private projects, and to a payment bond on public works of improvement.   It is generally understood that stop payment notices for public projects and owner-financed private projects are straightforward.  Often times, claimants simply complete a one-page stop payment notice […]

In Carmel Development Co., Inc. v. Anderson, 48 Cal.App.5th 492 (2020), Carmel Development Company, Inc. (“Carmel”) agreed under an oral contract with Monterra LLC to provided design and construction work to create a luxury subdivision called Monterra over 10+ years.  Monterra LLC was unable to pay so Carmel recorded two liens to collect the unpaid obligations.  The water lien burdened only the 85 unsold lots, but the work benefited all 170 lots.  The site improvement lien burdened only lots in Phases 7 and 9, because they were the only lots benefited by that work.             Carmel sued several of Monterra […]

Contractors, suppliers, and others providing labor, materials, and equipment to California private works of improvement must navigate a minefield of conditions precedent to ensure they have a valid lien claim against the property they improved. From the timely and proper service of a preliminary notice to the timely service and recording of the lien itself, claimants must be vigilant to preserve their claim. Make one mistake and the lien claim may be declared invalid. Rarely does a single case address even a portion of the multitude of potential issues facing a subcontractor or supplier seeking to enforce its lien claim. However, in Palomar Grading & […]

A new and significant California Court of Appeal decision that will have substantial financial impacts on direct contractors, their sureties, and subcontractors was published on April 17, 2020, called Crosno Construction, Inc. v. Travelers Casualty and Surety Company of America.  This case, which focuses on “pay-when-paid” language in a public works subcontract, substantially impacts the timing of a payment bond surety’s obligation to the subcontractor, and has the potential to be applied to the timing for payment by a general (direct) contractor to a subcontractor.  In essence, this case holds that a “pay-when-paid” provision in a subcontract is void and unenforceable […]