Monthly Archives: May 2014

Mechanics Liens: Part 5

by Lauren LaPorte

Some problems

1. Time.   Suppose S, a concrete sub, completes the concrete work on a residence on June 1.  Ninety days later, the entire residence is finished and the owner moves in.  10 days after that, 100 days after finishing its part of the work, the concrete contractor then records a mechanic’s lien.  Is it timely?  Yes.  The 90 days runs from completion of the entire work of improvement. Time is computed from the completion of the work of improvement as a whole.

The theory is that a potential lien claimant can always find out when the 90 day period starts to run by going to the job site and observing whether there is Continue reading →

Mechanics Liens: Part 4

by Lauren LaPorte

Recovery on the payment bond

Suppose O hires K to build a residence for $100,000.  K builds the residence, O pays the $100,000 and K becomes bankrupt then unpaid subs and materials suppliers record mechanic’s liens against O’s property.  O finds that, in order to preserve is property it has to pay an additional $30,000 worth of mechanic’s liens claims.  How is O protected from paying the additional $30,000 and how are subs and material suppliers protected so that they are paid their $30,000?

  1. The owner may require the contractor and sometimes the subs to produce a payment bond guaranteeing payment for work and materials.  If there are mechanic’s lien claims, the owner looks to the bonding company to Continue reading →

Mechanics Liens: Part 3

by Lauren LaPorte

Stop payment notice

  1. This form freezes undisbursed funds held by the construction lender or owner so that the claimant can be paid-also from escrow or fund control this remedy is in additionto the mechanic’s lien and the payment bond remedy.
  2. Assume that O paid a builder $200,000 down for a lot and obtained a $500,000 construction loan secured by a first deed of trust and the seller took back a second purchase money deed of trust. The building was partly completed and owner took some of the funds and purchased another property. O abandoned the project and moved to Costa Rica. At the time this occurred the lender had already disbursed $250,000 leaving only $250,000 from the construction loan account. The present construction is worth Continue reading →

Mechanics Liens: Part 2

by Lauren LaPorte

Recording and Serving a Mechanics Lien                           Continued from Mechanics Leans: Part 1

  1. You need to prepare and serve a preliminary notice before you can record and serve a mechanic’s lien.
  2. A mechanic’s lien is a secured lien on real property-like a deed of trust -it gives the groups that are covered by the legislation and California constitutional code a secured interest in the property of the owner-it applies to contractors, subcontractors, architects, engineers and material suppliers and a variety of contractors related to performing works of improvement on real property.
  3. A mechanic’s lien is obtained for labor, services, equipment or material provided to a work of improvement. A work of improvement is Continue reading →

Mechanics Liens: Part 1

by Lauren LaPorte

Requirements for Preliminary Notice

  1. Every job that a subcontractor works on over $400 a preliminary notice is required by the contractor’s license law to give a preliminary notice.
    1. The preliminary notice must be properly prepared and served in order to record a mechanic’s lien and obtain a secured position in the property that you working on
    2. The preliminary notice must be properly prepared and served in order to claim the dollars that are being held by the owner and lender or escrow or joint check control pursuant to a stop payment notice.
    3. The preliminary notice must be properly prepared and served in order to Continue reading →

Court Rules Construction Loan Proceeds for Contractors

by Jason LaPorte

Loan SignBy Ron Pierce, RB Pierce, a Professional Law Corp.

“I do not like money; money is the reason we fight.”—Karl Man

“Money won is twice as sweet as money earned.”—Paul Newman

Despising money is easy for someone who holds someone else’s money. Some­times, one must fight to gain what one has earned.

Historically, on California private works projects, lenders hold the money for construction work. Yet lenders have used such money to make disbursements to themselves, paying interest, loan fees, and their other non-construction expens­es over contractors’ stop payment notice claims. In doing so, lenders have Continue reading →

Technica LLC v Carolina Casualty Insurance Co et al (2014) DJDAR 5353

by Lauren LaPorte

SUBCONTRACTOR ON FEDERAL CONSTRUCTION PROJECT IN CALIFORNIA MAY SUE PRIME GOVERNMENT CONTRACTOR FOR PAYMENT UNDER MILLER ACT, ALTHOUGH IT LACKED A CALIFORNIA LICENSE

IN THE CASE OF Technica LLC v Carolina Casualty Insurance Co et al (2014) DJDAR 5353

Technica was a subcontractor on a Federal construction in California.  The prime contractor was Candelaria–The district court would not  allowed Technica to recover under a Miller Act claim for payments due under its subcontract–although Technica was not licensed in California. The 9th Circuit Court of Appeal reversed Continue reading →

The McAffrey Group Inc (Petitioner) v The Superior Court of California, County of Fresno

by Lauren LaPorte

HOMEOWNERS MUST COMPLY WITH BUILDER’S PRE-LITIGATION PROCEDURES IN PURCHASE AGREEMENT BEFORE SUING FOR ALLEGED CONSTRUCTION DEFECTS UNDER RIGHT TO REPAIR ACT

THE MCAFFREY GROUP INC (PETITIONER) V THE SUPERIOR COURT OF CALIFORNIA COUNTY OF FRESNO(RESPONDENT–JESUS CITAL ET. AL REAL PARTIES IN INTEREST 2014 DJDAR 3712(2014

This case is a petition for a writ of mandate brought by McAffrey Group which is a builder and developer of single family homes in Fresno.  Real parties in interest own 24 homes within the development–19 of those homes are owned by 32 individuals who purchased their homes directly from McCaffrey. Continue reading →

Joke of the day

by Lauren LaPorte

When the lawyer died and went to Heaven, he confronted St Peter at the Pearly Gates. “Your Honor, there must be some mistake!”  he protested vehemently.  “I’m still a healthy young man, much too young to die!  Why, I’m only forty-seven years old!”

“HMMM,” murmured St Peter, consulting his files.  Looking up, he shook his finger at the lawyer reprovingly.  “According to your time sheets you’re ninety-six.”

Granite Construction Company v. Bond Safeguard Ins. Co.

by Lauren LaPorte

gavel-2Unpublished Third Appellate District (Sacramento County)

Labor and material bond not exonerated by contractor’s and principal’s conditional settlement agreement and release.

The principal to a labor and material bond failed to pay a contractor for installation of public improvements for a subdivision.  The contractor sued the principal, and they subsequently entered into a conditional settlement agreement and release, and stayed the lawsuit.  The release and dismissal were contingent upon full payment by the principal within 6 months. The settlement agreement also required the Continue reading →