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Is it legal for a contractor to require lien releases after a cutoff date?

Is it legal for a contractor to require lien releases after a cutoff date?

Full question:

We are a subcontractor to a contractor doing State of California Road work. The cutoff for pay estimates for Contractor is the 20th of each month. Our suppliers pre liened the job, but they modify their statement periods for us due to the 20th cutoff for Contractor's estimate period. The contractor is requiring us to provide lien releases from our suppliers using the 30th as a cutoff date. They are writing joint checks to our suppliers paying them through the 30th, but only paying us through the 20th. Is this legal?

Category: Contractors
Subcategory: Construction Liens
Date: 04/07/2025
State: California

Answer:

A joint check agreement allows a contractor to pay a subcontractor and a supplier together. This is common in construction, ensuring that suppliers are paid for their materials or services. In your case, the contractor's requirement for lien releases from suppliers using the 30th as a cutoff, while only paying you through the 20th, raises legal questions.

The legality of this situation depends on the terms of your contracts with the contractor and suppliers. Typically, the contractor is not obligated to pay you if they believe you have not fulfilled your contractual duties. If the contractor is issuing joint checks to suppliers for work done through the 30th, but only paying you for work completed by the 20th, it could create a conflict regarding payment obligations.

To resolve this issue, review your contracts carefully to understand your rights and obligations. If you believe the contractor's actions are unjust, consider legal action based on breach of contract principles. You may also want to consult a legal professional for specific guidance regarding your situation.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

Can a subcontractor file a lien in California?

Yes, a subcontractor can file a lien in California if they have not been paid for work performed or materials supplied. This is done through a mechanic's lien, which protects the subcontractor's right to payment. To file a lien, the subcontractor must follow specific procedures, including serving a preliminary notice to the property owner and filing the lien within 90 days of the last work performed. It's essential to comply with these requirements to ensure the lien is enforceable.

Are pre-liens required in California?

Pre-liens, or preliminary notices, are not always required in California, but they are highly recommended. They inform property owners and general contractors of a subcontractor's involvement in a project and protect the right to file a mechanic's lien later. Subcontractors and suppliers must serve this notice within 20 days of starting work or providing materials to preserve their lien rights.

What are the pre lien requirements in California?

In California, to file a preliminary notice (pre-lien), the notice must include specific information such as the project address, the name of the property owner, and the nature of the work or materials provided. The notice must be served to the property owner, general contractor, and any other relevant parties within 20 days of commencing work or supplying materials. This step is crucial for preserving the right to file a mechanic's lien later.

What is a pre lien?

A pre-lien, or preliminary notice, is a document that informs property owners and general contractors that a subcontractor or supplier is involved in a construction project. It serves to protect the right to file a mechanic's lien if payment is not received. In California, serving a preliminary notice is a key step for subcontractors and suppliers to ensure they can enforce their payment rights later.

What are the lien laws in California?

California lien laws allow contractors, subcontractors, and suppliers to file a mechanic's lien against a property if they are not paid for their work or materials. The lien must be filed within 90 days of the last work performed. Additionally, a preliminary notice must be provided to the property owner and general contractor within 20 days of starting work to preserve lien rights. Compliance with these laws is essential for enforcing payment rights.