Mechanics' Lien Deadlines on a Private Tenant Improvement
Volta Electric furnished and installed a $312,000 lighting and power package on a tenant improvement in a privately owned shopping center. Volta contracted directly with the general contractor, Marlow BuildCo, not with the owner. Volta never served a preliminary notice on the owner or on the construction lender, whose deed of trust was recorded before construction began. Volta's crew started February 3 and left the site June 14. Marlow has paid $228,000 and stopped, saying the owner has not funded the last draw. The owner recorded a Notice of Completion on July 8. Marlow furnished the owner a payment bond naming the owner as obligee. Today is July 25.
1. What statutory deadlines is Volta facing, and what is the practical effect of never having served a preliminary notice?
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Step 1, preliminary notice. Under Civil Code section 8200 et seq., a subcontractor must give the owner and the construction lender a preliminary notice within 20 days after first furnishing work. A claimant that never gives one may enforce a lien only for work performed in the 20 days before the notice is given. Volta's last day on site was June 14. Serving a notice today (July 25) captures nothing, because no work was performed in the 20 days before service. Volta has effectively forfeited its lien and stop payment notice remedies. Do not spend money recording a lien that will be attacked.
Step 2, the lien deadline if the notice had been perfect. A subcontractor's lien must be recorded by the earlier of 90 days after completion (September 12) or 30 days after the Notice of Completion is recorded (August 7). August 7 controls. A foreclosure suit would then be due within 90 days of recording.
Step 3, stop payment notice. A stop payment notice to the construction lender rides on the same preliminary notice and has a short enforcement fuse. It is unavailable here.
Bottom line: the lien theory is dead as served. Pivot immediately to the contract and bond theories, which do not depend on the 20-day notice.
2. Rank Volta's remaining remedies (contract claim, payment bond, mechanics lien, claim against the owner) and explain what must be done in the next two weeks.
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Because Volta contracted directly with Marlow, the principal under the payment bond, it is a direct claimant and is not required to give the preliminary notice that lien and stop payment claims demand. Read the bond itself, since the bond controls the claim procedure, and give written notice to both Marlow and the surety now, attaching the contract, invoices, and proof of the June 14 last-work date. Calendar the bond suit limitations period (months, not years) the day the notice goes out.
- Contract claim against Marlow. Fastest and cheapest, unaffected by the notice failure. Serve a demand and be ready to sue.
- Payment bond claim against the surety. Real value, but only if the bond's notice and suit deadlines are met.
- Mechanics lien. Practically worthless: even a valid lien would be junior to the lender's deed of trust recorded before commencement, and the preliminary notice failure defeats it anyway.
- Claim against the owner. No contract exists; the lien was the only direct route, and it is gone.
File the bond notice and the contract demand in the same week, and preserve the lender's undisbursed funds issue for the bond claimant's benefit.
3. Marlow offers to release $150,000 if Volta signs the document emailed by Marlow's accounts payable department, which is captioned as an unconditional waiver and release on progress payment. What should Volta do?
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Refuse to sign that form. Under Civil Code section 8132 et seq., an unconditional waiver and release on progress payment is effective on signature whether or not the check clears. If the $150,000 check bounces, Volta has given away its lien, stop payment, and bond rights for nothing.
Instead:
- Send a conditional waiver and release upon progress payment, limited to $150,000 and limited to work through the date stated on the face of the form. It becomes effective only when funds are actually received.
- Strike any language extending the release beyond the payment received. Never sign a release covering work through a date later than the payment covers.
- Expressly reserve the $78,000 balance plus any approved change orders.
- If Marlow insists on the unconditional form, treat that as a signal about collection risk, not a routine accounts payable step.
A conditional release that matches the check is normal and should be offered immediately; the objection is to the unconditional form, not to the payment.