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Can I protect myself from mechanics liens with lien waivers?

CaliforniaConstruction ContractLien WaiversMechanics LienPay ApplicationsRetainage

We are installing an elevator for $38,000. The contractor has asked for a payment schedule of $17,000 up front, $14,000 when elevator is delivered, $2000 at completion of site of install, and $5,000 at completion. This seems in violation of California’s 10% down. However, the contractor has excellent BBB rating, good reviews, and has a valid California license. What lien waivers should I obtain and at what point?

6 replies

Dec 7, 2020

If this is a commercial project, there is no rule on the amount of a deposit; the 10% or $1,000 maximum is for home improvement contracts only. But, a contractor on a home improvement project can ask for a deposit on material upfront. In any event, you will want to have the contractor execute lien releases with each payment. For the interim payments, you will want the contractor to sign an "unconditional waiver and release upon progress payment" and, for the final payment, an "unconditional waiver and release on final payment." You should be able to find samples of both on the web; just run a google search of the titles.   

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Dec 8, 2020

This information was just what I needed. Thank you so much for the help.

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Dec 8, 2020
You are likely entitled to prevailing wage if this work is part of a construction project.
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Apr 6, 2021
What does a contract say to make arbitration binding? If the contract just says that arbitration is to be used to resolve any conflicts are unresolved issues is it also binding?
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Apr 13, 2021
Michael: per your statement: If this is a commercial project, there is no rule on the amount of a deposit; the 10% or $1,000 maximum is for home improvement contracts only. "But, a contractor on a home improvement project can ask for a deposit on material upfront. " --- which WOULD BE THE 10% or $1,000 maximum for a home improvement contract (unless one of the 2 dozen contractors who have filed a blanket P&P Bond) - Correct? Your remarks (that I've put in quotes) seem to imply differently. The CSLB website clearly states under "Illegally Large Down Payments: A dishonest contractor takes more for a down payment than is allowed by law, claiming to need instant cash for supplies or to pay workers. By law, a down payment cannot exceed 10% of the project price or $1,000 whichever is less." Please clarify if you are implying there are other exceptions. Thanks.
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Jun 29, 2022

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