Protecting Your Claim on a California Public Works Project

Contractors and suppliers involved in payment disputes on California public works projects can protect their claims with stop notices and payment bonds.

2012-08-08

August 08, 2012 (Press-News.org) Contractors, subcontractors, laborers and material suppliers may file mechanic's liens against private property when the owners fail to pay them for the work they do. However, in California, mechanic's liens are not available to people involved in payment disputes over public works projects. Instead, unpaid subcontractors, laborers and material providers who have not been paid for their work on State or local government projects in California have access to two other legal remedies to help protect their claims: Stop Notices and Payment Bonds.

Stop Notices

Similar to mechanic's liens, which are liens against property, stop notices are liens against construction funds. A stop notice notifies the owner of a project when a worker has not been paid and causes funds to be withheld from the general contractor to ensure payment.

The process of using a stop notice is similar but not identical to a mechanic's lien. In order to preserve the right to enforce a stop notice against the owner of a public works project, subcontractors and suppliers must file a preliminary lien notice within 20 days of beginning work on the project. The preliminary notice must contain the following information:
-The name of the party providing labor, services, equipment or materials
-The name of the party receiving labor, services, equipment or materials
-A brief description of the labor, services, equipment or materials provided

To enforce a stop notice against a public works project in California, the notice must be served on the agency that awarded the contract. This must be done within 90 days of completing or ceasing work on the project, or within 30 days after recording a notice of completion, notice of acceptance, or notice of cessation.

Payment Bonds

California law requires general contractors to file a payment bond on all State public works projects over $5,000 and on all other public works projects over $25,000. The government agency awarding the contract must approve the payment bond before work on the project begins, and the agency is not permitted to pay the general contractor until the bond has been posted.

Contractors on public works projects in California can make claims against a payment bond regardless of whether they also file a stop notice. However, it is important to take action quickly to preserve the right to make a claim; a claimant must give notice within 75 days after completion of the work, or within 15 days after a notice of completion is recorded.

To learn more about the legal options available to contractors involved in payment disputes on public works contracts, speak with an experienced construction law attorney.

Article provided by Weule & Ballard, APC
Visit us at http://www.wbconstructionlaw.com/

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