Source: https://ecasocal.org/notice-claim-lawsuit-deadlines-on-private-works/
Timestamp: 2019-05-25 12:18:40
Document Index: 152316165

Matched Legal Cases: ['§ 8036', '§ 8180', '§ 8180', '§ 8034', '§ 8046', '§ 8028', '§ 8014', '§ 8004', '§ 8200', '§ 8106', '§ 8200', '§ 8204', '§8204', '§ 8206', '§ 8106', '§ 8612', '§ 8612', '§ 8700', '§8830', '§ 8416', '§ 8302', '§ 8306', '§ 8319', '§ 8310', '§ 8128', '§ 8414', '§ 8550', '§ 8550']

Notice, Claim & Lawsuit Deadlines on Private Works | Engineering Contractors' Association
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Here are the critical time deadlines on private works projects, in the laws governing mechanics liens, stop payment notices, bond claims, sub-bidder promissory estoppel and supplier bid confirmations, work suspensions for lack of security, and stop work notices for nonpayment of undisputed amounts.
Definitions of Key Terms on Private Works
Private Work: A work of improvement contracted for by an owner who is not a public entity (Civ. Code §§ 8036, 8160 & 9000). Beware of private corporations that look like public agencies, e.g., various utilities.
Completion of a Private Work: Completion of a private work is usually the date when the first of these events occurs (Civ. Code § 8180(a)):
(1) The work of improvement is actually completed;
(2) The work of improvement is occupied and used by the owner and there is a cessation of labor;
(3) There has been a cessation of labor for 60 continuous days; or
(4) A notice of cessation of labor is recorded, but only if there had been a cessation of labor for 30 continuous days before it was recorded.
Completion is a fact question, neither substantial completion nor receipt of a certificate of occupancy qualifies, and, depending upon the nature of a multi-unit project, it can be by unit or for the entire project (Picerne Construction Corp. v. Castellino Villas (2016) 244 CA4th 1201, 199 CR3d 257). If the private work must be “accepted” by a public entity (e.g., a storm drain in a new subdivision that is being installed by the developer, but which must be “accepted” by the public agency that will take over its operation), then the work is not complete until the acceptance by the public agency (Civ. Code § 8180(b)). These definitions of completion impact deadlines for private works mechanics liens, stop payment notices and bond claims.
Private Work Preliminary Notice
Private Work Preliminary Notice (Civ. Code § 8034(a)): All subcontractors (Civ. Code § 8046), material suppliers (Civ. Code § 8028), design professionals (Civ. Code §§ 8014 and 8300), and providers of services or equipment (Civ. Code §§ 8004, 8022, 8048, 8400, 8520), but not laborers (Civ. Code § 8200(e)(1)), must deliver a preliminary notice, or send it by certified mail, express mail, or overnight delivery by an express service carrier (Civ. Code §§ 8106 and 8110, but see Hub Construction Specialties, Inc. v. Esperanza Charities, Inc. (2016) 244 CA4th 855, 198 CR3d 335), to the reputed direct (prime) contractor, the reputed owner and the reputed construction lender. All direct contractors must give a preliminary notice to the reputed construction lender, but not to the owner, to preserve their mechanics lien and bond claim rights (Civ. Code §§ 8200(c),(d) and (e)(2) 8410 and 8612(a)).
Except for design professionals, the notice is to be given within 20 days after the first labor, services, equipment or materials are furnished to the jobsite. If the notice is late, it only covers labor, services, equipment or materials furnished during the 20 days before the notice was given and any furnished after it was given (Civ. Code § 8204(a)). Design professionals must give the notice within 20 days after commencement of work (Civ. Code §8204(b)). A notice that contains an accurate general description of the labor, services, equipment and materials provided through the date of the notice will cover everything provided after the notice, even if that general description fails to describe everything subsequently provided (Civ. Code § 8206(b)).
Private Work Payment Bond Claim Notice
Private Work: If a timely Preliminary Notice is given, no other notice is required. If a Preliminary Notice is not given, then the subcontractor or supplier must deliver a payment bond claim notice, or send it by certified mail, express mail, or overnight delivery by an express service carrier (Civ. Code §§ 8106, 8110 and 8614, but see Hub Construction Specialties, Inc. v. Esperanza Charities, Inc. (2016) 244 CA4th 855, 198 CR3d 335), to the payment bond surety and principal (usually the prime contractor, but can be the owner) within 15 days after a Notice of Completion was recorded, and if none was recorded, then within 75 days after completion of the project (Civ. Code § 8612(b)). An attempt has been made to prevent a subcontractor or supplier to a subcontractor (i.e., 2d tier subcontractor or supplier) from using the payment bond claim notice to preserve its payment bond claim when the 1st tier subcontractor received all of the progress payments to which it was entitled (Civ. Code. § 8612(c) and (d)). The language in the statute is hopelessly ambiguous and confusing. However, 2d tier subcontractors and suppliers should give preliminary notices to avoid losing their right to pursue a payment bond claim.
Work Suspension For Failure To Provide Payment Security
Upon demand of the direct contractor, the owner (except certain publicly traded companies and qualified private companies) of a fee interest in private property who enters into a contract greater than $5,000,000, or of less than a fee interest who enters into a contract greater than $1,000,000, for a work of improvement on the property (other than a single-family residence or certain housing developments) shall provide and maintain security for the owner’s payment obligations under the contract, e.g., a bond, irrevocable letter of credit or escrow account. If the owner fails to provide or maintain the security within 10 days after notice demanding it, the direct contractor may suspend the work until the security is provided. (Civ. Code §§ 8700 et seq.)
Stop Work Notice (for Nonpayment of Amount Due)
If there is no dispute about performance, a direct contractor who is not paid an amount due under a written private work contract, within 35 days of the payment due date, may post a notice of intent to give a stop work notice, with copies to all 1st tier subcontractors, and 5 days later can give the owner a stop work notice, and cease work until the payment issue is resolved, without any liability for delay in completion of the project (Civ. Code §8830 et seq.).
Notice and Proof of Service: No lien is enforceable unless it includes (1) the statutory “Notice of Mechanics Lien” and (2) a “proof of service affidavit” showing that both the lien and the notice were served on the reputed owner by certified mail, or first-class mail (evidenced by a certificate of mailing), postage prepaid, addressed to the reputed owner of the property at his/her residence, place of business, address on the building permit or address on the recorded construction trust deed (Civ. Code § 8416).
Design Professional: The special design professional lien right exists between the time the building permit or other governmental approval is obtained and the time that construction work commences (Civ. Code §§ 8302 and 8304). The lien expires when either (1) construction starts or (2) 90 days after the lien was recorded (Civ. Code § 8306); however, it can be converted into a mechanics lien under certain circumstances (Civ. Code § 8319). Once construction commences, the design professional has the same rights to a mechanics lien as anyone else who provided services to the project (Civ. Code §§ 8310, 8314 and 8400).
Stop Payment Notice on Private Work
Deadlines exist for service of stop payment notices and bonded stop payment notices; they do not have to be served in a window of time as with mechanics liens.
A reduction or release of a stop payment notice “does not preclude the claimant from giving a subsequent stop payment notice that is timely and proper” (Civ. Code § 8128(c)(3)) However, a stop payment notice is only effective against money still in the possession of the owner at the time the stop payment notice is served.
Private Work Stop Payment Notice – By a Subcontractor/Supplier: File lawsuit within 90 days after expiration of either (1) 30 days after the Notice of Completion or Notice of Cessation is recorded or (2) 90 days after Completion of the Private Work (Civ. Code §§ 8414, 8508 an 8550). If the lawsuit is not timely filed, “the notice ceases to be effective and the person withholding funds . . . shall release them” (Civ. Code § 8550). Within 5 days after the action is filed, deliver, or send by certified mail, express mail, or overnight delivery by an express service carrier, notice of commencement of the action to the persons to whom the stop payment notice was given (Civ. Code § 8550).
By Committee|2019-05-09T21:31:32-07:00April 19th, 2019|Blog|0 Comments