In this series of blog posts I will explain, or at least TRY to, the California Mechanics Lien Process in a way that us mere contractors can understand. I will explain the specific forms that are required like the California 20 Day Notice Form, the California Mechanics Lien Form, and the California Release of Mechanics Lien Form. With the right CA contractors forms and the right guidance, it should be a DIY project for any California Contractor to protect their lien rights and to perform many of the steps necessary in the CA mechanics lien process. Often, just filing the mechanics lien itself is all it takes to get a stubborn customer that won't pay, "negotiating", and bringing the situation to an end. However, should it go that far, filing the lawsuit and bringing the lawsuit before the court is, without question, the job for a construction attorney.
Here are the topics of the blogs in this series about the California Mechanics Lien Process:
- Part 1 Definitions needed to understand CA Mechanics Lien Law!
- Part 2 What is required to file a mechanics lien in California? Deadlines are important!
- Part 3 The California Preliminary Notice, 20 Day Notice or Pre-Lien
- Part 4 Mechanics Lien Strategy for Dummies
- Part 5 The Mechanics Lien Form, Filling and Filing
- Part 6 The Lawsuit and The Lis Pendens not DIY
- Part 7 The Release of Mechanics Lien Form, Filling and Filing
California Mechanics lien laws are full of confusing terms. What is a "general, prime, sub or original" contractor for instance. Before we start, some definitions are necessary:
PRIME CONTRACTOR: The contractor who has a contract directly with the project owner to do and be responsible for that entire contract is sometimes called a Prime Contractor. ANY contractor can be a PRIME CONTRACTOR if they have a "direct contractual relationship" with the property owner. Bear in mind that even small projects can be broken down into smaller parts. An owner of a commercial warehouse, for example, could contract directly with a general contractor to do most of the remodeling project while also contracting directly with a painting contractor to be responsible for the painting. Since both the general contractor AND the painting contractor have a contract directly with the property owner or have a "direct contractual relationship" with the property owner, both the general contractor and the painting contractor are PRIME CONTRACTORS! Being a Prime Contractor is not necessarily exclusive since there can be many Prime Contractors on any project. This is an important concept for California Mechanics Lien Laws. A general contractor, or any other contractor, is a prime contractor if they have a contract directly with the property owner. A general contractor is not automatically a prime contractor. If a general contractor has a contract with another contractor to do the framing and carpentry work on a project, for example, then this general contractor is not a prime contractor. Why? Because this general contractor does not have a contract directly with the property owner and because of this, there is no direct contractual relationship between the property owner and this general contractor!
ORIGINAL CONTRACTOR: Another name for a Prime Contractor.
DIRECT CONTRACTOR: This is a New TERM DEFINED in the new laws that went into effect July 1, 2012. Direct Contractor is also another name for a Prime or Original Contractor.
GENERAL CONTRACTOR: A California Licensed Construction Contractor holding a CSLB classification (B1) License, whose primary contracting business is in connection with any structure built, being built, or to be built requiring at least two unrelated building trades to complete the project. The general contractor is usually hired by the project owner to oversee the entire job, to coordinate and direct the activities of all other contractors, and to assume full responsibility for the delivery of the finished project within the time frame agreed upon. The general contractor might also be responsible for only part of the overall project. In California, a (B1) license only allows the general contractor to specifically do framing and carpentry work. To complete a project which involves other trades such as plumbers, electricians, HVAC etc, the general contractor must hire a licensed specialty contractor, in that trade, to do that portion of the project. Just because the general contractor has a contract for the "entire job" does not give the general the right to do any part of the project other than framing and carpentry work, unless the general contractor holds additional license classifications covering the other work on the project.
SPECIALTY CONTRACTOR: A California Licensed Construction Contractor holding one or more CSLB specialty classification license(s) (C) or limited specialty classification license(s) (D), whose primary contracting business is in connection with any structure built, being built, or to be built requiring a specific building trade, or "specialty", to complete the project. The specialty contractor is a PRIME OR ORIGINAL CONTRACTOR only if hired directly by the property owner to do specific projects involving the work the specialty contractor is licensed for.
SUBCONTRACTOR: The term "subcontractor" is often misused. Any contractor can be a PRIME or ORIGINAL Contractor and any contractor can be a SUBCONTRACTOR. I have heard specialty contractors referring to themselves as "subcontractors" when they really should say that on this particular project, I am a subcontractor. Simply put, any contractor who signs a contract with another contractor to do part of or all of the other contractors work on a particular contract for a job the other contractor has, is a subcontractor on that project. In California, a subcontractor can be ANY licensed California contractor that signs a contract with another licensed contractor. Construction Subcontractors are usually specialty contractors hired by the General or Prime Contractor to perform certain tasks required to complete the entire project and may include, for example, trades such as plumbing (C36) , electrical (C10), roofing (C39), cement work (C8), and drywall (C9). A subcontractor can be hired by a Prime or Original Contractor, by a general contractor, or by ANY OTHER Contractor on the project including another subcontractor.
SUBCONTRACT TIERS: Subcontractors may, in turn, hire their own subcontractors to do part of the work they have contracted to perform. The "level" any subcontractor has in the Prime or Original contract is called their "tier." To illustrate this, take Joe, a masonry contractor (C29), who signs a contract with a homeowner to re-do the outside walls of a house. Joe is the Prime Contractor on the job because he has a contract directly with the property owner. The front and the bottom of the house is to receive brick veneer over the existing stucco while the remainder of the house will receive paint. To prepare the surface, the old paint needs to be removed from the existing stucco. Joe, who is the prime contractor on the job, hires Phil, who holds a Painting Contractor (C33) license, to do the sandblasting and painting. Phil is a subcontractor on this job because Phil has a contract with another contractor and not with the property owner. Phil does not have a "direct contractual relationship" with the property owner. Phil, after sandblasting and seeing the condition of the stucco surface, gets a change order to re-float and texture the stucco, which must be done before paint can be applied. Phil, in order to execute the change order, in turn hires Eddie, who is a Plastering Contractor (C35), to re-float and texture the walls for painting. Eddie does not have a direct contractual relationship with the property owner and instead, has a contract directly with a subcontractor on the job who, in this case, is Phil. That makes Eddie a subcontractor or more accurately, a sub-subcontractor, on this project. So the contract tier goes like this: The first tier, the highest tier, belongs to the prime contractor on the project... Joe. The next, lower tier belongs to Phil who has a subcontract with Joe to do the sandblasting and painting. The next lower tier, the lowest on this particular job, belongs to Eddie who has a sub-subcontract with Phil to do the stucco work necessary to prepare the stucco walls for painting. Both Phil and Eddie are subcontractors on the job and you would say that Phil is a subcontractor on a higher "tier" than Eddie. Now you can see that on more complicated projects, there can be subcontractors, sub-subcontractors, sub-sub-subcontractors and so on... and that each of these are on a different tier, higher or lower, than the other!
Whew! Glad that part is over aren't you. In the next post I'll discuss what you absolutely MUST have to be able to file a mechanics lien in California and the critical timeline you must follow! I'll also give you a link to download a California timeline reference card to help keep you out of trouble in your quest to get paid through the California Mechanics Lien Process!
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