If you’re a subcontractor on a construction job and have not been paid, there are ways to make sure you can strengthen your position so you can receive payment in full.
By filing a mechanic’s lien as well as a stop notice or claim on a payment bond, you have an interest not only in the contract but also the property itself. If successful, a judge could ultimately order the property to be sold to pay off the mechanic’s lien.
Private versus public works
Along with a lawsuit claiming breach of contract, there are three ways to get your money from a construction deal gone bad:
- A mechanic’s lien can collect money by foreclosing on the property
- A stop notice can recover money from the construction funds halted by the notice
- A claim on a payment bond can collect money from the surety that issued the bond
A mechanic’s lien and stop notice are usually used for private projects while a claim on payment bond and stop notice are used on public projects. In California, these are cumulative remedies that can be used along with a breach of contract lawsuit.
To enforce the lien, the first step is to file a preliminary 20-day notice. The next is to record the mechanic’s lien, serve the stop notice or make the claim on the payment bond. Then you file a lawsuit to foreclose on the lien, enforce the stop notice or enforce the claim against the surety.
Many general contractors will require a lien waiver from their subcontractors that ensures you won’t file a mechanic’s lien or stop notice. You, however, can demand that the lien waiver be conditional on the receipt of your payment.
The process is extremely picky. The timelines are strict and the information necessary is specific. If you are interested in more information about mechanic’s liens, stop notices or claims on payment bonds, contact an experienced, qualified attorney to get all the information you need.