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When a stop payment notice can come into play in California

California law has all sorts of remedies and causes of action that could be applicable to people involved in the construction industry. But most hard-working construction business owners would rather spend their hours getting the job done right than worrying about the legal side of things in case something does, in fact, go wrong.

But most experienced construction operators and businessmen have probably been in a situation where they were concerned that they might not get paid for the work they have performed, or were scheduled to perform. This may be due to the actions or communications from the owner, or any other information which would give the construction company concern that the owner is either unwilling or unable to pay.

So what do construction operators do at this point? Should they walk away from the jobs? Probably not, since this could open them up to breach of contract claims for failure to perform. Should they finish the work and hope and pray that they ultimately get paid? Perhaps, but they may also want to gather some assurances from the owners that they are, in fact, able and willing to pay for the work to be performed.

One way to get this assurance is by filing a mechanic’s lien, which is essentially a claim against the owner’s assets for the value of the work, materials and services to be performed by the construction outfit. Another remedy is a stop payment notice, which operates very similar to a mechanic’s lien. If the contractor has completed some or all of the work and has not been paid, the stop payment notice can be filed and served on the owner or lender. The owners or lenders would then be required to release these funds to the contractors, at which point they are released from further liability. For more information about contractor’s remedies for failure to pay or other construction law issues, an experienced California construction law attorney may be able to provide more specific and detailed information.

Source: California Civil Code “Section 8500-8510” accessed June 8, 2015