Q: Do we have any recourse?
We are an S-Corp Contractor in California. We are a 3rd tier sub and we filed a mechanics lien because our customer has not paid us the full amount due. This is a private job, but we discovered during filing the lien that the property is owned by a County and leased to who we were told was the property owner. Everyone is in a panic over the lien, but we have still not received full payment and our 90 days is running out to take action. We are hesitant to spend money on taking legal action if we do not have any recourse when dealing with a County as the property owner. Are there any actions we can take?
A:
Under California law, you may have some recourse even though the property is owned by the county. Here are a few potential options:
1. Stop Payment Notice: In California, if you are not paid on a construction project, you can serve a stop payment notice on the owner, even if the owner is a public entity. This notice requires the owner to withhold funds from the general contractor sufficient to pay your claim.
2. Payment Bond: If the project was a public works project, the general contractor may have been required to post a payment bond. You might be able to make a claim against this bond for your unpaid work.
3. Prompt Payment Laws: California has prompt payment laws that require the higher-tiered contractors to pay their subcontractors within a certain timeframe after receiving payment from the owner. You may be able to use these laws to pressure the higher-tiered contractor to pay you.
4. Breach of Contract: Regardless of the lien, you likely have a breach of contract claim against the party who hired you (presumably the 2nd tier subcontractor). You could file a lawsuit for this breach.
5. Unjust Enrichment: You may also have an unjust enrichment claim against the county if they have benefited from your work without paying for it.
However, mechanics liens on public property are generally not effective in California. The government has sovereign immunity which usually prevents such liens.
I recommend consulting with a California construction law attorney to discuss your specific situation and determine the best course of action. They can advise you on the strength of your potential claims and the costs and benefits of pursuing them.
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