Don’t forget also that “the mechanics lien and the accompanying Proof of Service Affidavit must be served on an owner or reputed owner by registered mail, certified mail, or first-class mail, evidenced by a certificate of mailing, postage prepaid, addressed to the owner or reputed owner at the owner’s or reputed owner’s residence or place of business address or at the address shown by the building permit”.

The statute does not allow for service on an agent for service of process per se unless that address happens to be one of those described (residence, business or building permit addresses) which are often different that the address of the agent).

You can anticipate that failure to strictly comply with the section, as amended, will be asserted as a shield and an affirmative defense to enforcement of a mechanics’ lien recorded with a defective or incomplete Affidavit.

The emphasized portions and comments have been added by me by me.

Please contact me if you have any questions.

Robert

Please contact me if you have any questions about this or any other construction issue.

Robert

Since your customer is asking you to be the bank, be the bank.  Tell your customer that you are willing to consider their request for a long term payment plan but like the bank you’ll need them to complete a loan application first.  Either have the forms on hand (you can obtain them from your nearest Bank of America, Chase, Wells Fargo or comparable bank) or tell your customer to get a loan application form, complete the form and submit it to you.  Ask them also, what security or collateral they can offer you during that long term payment period and who else (in addition to the customer, who is likely a small, struggling corporation or other small business) will be signing the personal guaranty and ask for a loan application from that person as well.  If this is a regular ongoing issue for your company make sure to have the loan application forms on hand and ready to give to your customer(s).  And don’t forget to ask for 2 years personal and 2 years business tax returns and a year to date statement from the business.

When you are armed with all of the foregoing, you can make a decision as to rate of interest, terms, amount of payment, collateral/security and requiring one or more guarantors, just like the bank.  Even if you agree to the long term payment program (sometimes, in my experience, just asking for the above, substantially decreases the repayment period) you’ll be armed with a considerable amount of valuable information about your customer (and guarantor) and hopefully with either some security or collateral for  the debt and/or a guarantor.

If your customer balks or refuses to provide any of the above, view it as a rather large red flag and a reflection of what might be the customer’s true intention of not paying you and to just buy more “free” time.

So be that Bank!

Let me know if you have any questions.

Robert

Several other notable cases include a case solidifying the breath of the duty to defend under an indemnity clause (UDC-Universal Development v. CH2M)

2010 Construction Law Cases

LAUSD v. Great American Insurance Company; Hayward Construction Company (2010) 49 Cal.4th 739, 112 CR3d 230

A public entity may be required to provide extra compensation if it knew, but failed to disclose, material facts that would affect the contractor’s bid or performance.  The Court found that a public entity may be found liable if the entity knew or had reason to know that a responsible contractor acting diligently would be unlikely to discover a condition that materially increases the cost of performance and allowed the contractor to recover additional compensation.

UDC-Universal Development, L.P. v. CH2M Hill (2010) 181 CA 4th 10

The Court found that a design professional had a duty to defend a developer against a homeowner’s association’s construction defect action, despite the jury finding that the design professional was not negligent.  In school construction disputes this means that under the typical indemnity clause an architect could be required to pay for the cost of defense for a school district client, even if the architect ultimately is found not to be negligent.  The Court noted that the duty to defend was much broader and arose at the time of tender of the claim, regardless of the lack of any specific allegations (let alone proof) of negligent acts or omissions.

Alatriste v. Cesar’s Exterior Designs, Inc. (2010) 183 CA4th 656, 108 CR3d 227

A homeowner was allowed to sue to recover all monies paid to a contractor who began performance unlicensed even though the contractor obtained its license during the performance or the work.  The Court of Appeal held that the hiring party, the homeowner, is entitled to enforce the remedies under Business and Professions Code §7031 through both a defensive “shield” or an affirmative “sword”.

Hinerfeld-Ward, Inc. v. Lipian et. al. (2010) 188 CA4th 86, 115 CR3d 237

An oral contract between a contractor and homeowners in violation of Business and Professions Code §7159 is voidable, not void, depending upon “… the factual context and public policies involved…”.   The homeowners sought to invalidate the claim on the basis of §7159, the Home Improvement Law.  The contractor argued that §7159 was inapplicable as the homeowners did not necessarily need to be sophisticated relative to construction just sophisticated in general.  The Court of Appeal agreed and held that the homeowners had significant involvement with their architect, who presumptively was sophisticated in construction.

Ted Jacob Engineering Group, Inc. v. The Ratcliff Architects (2010) 187 CA4th 945, 114 CR3d 644

A subcontractor was allowed to recover for extra work that the contractor directed it to perform even though the subcontractor did not obtain written authorization to perform, a requirement which the Court concluded, was waived and that the subcontractor could continue to perform (and was not required to walk off the job) when negotiations as to the amount of payment were unsuccessful.

Yassin v. Solis (2010) 184 CA4th 524, 108 CR3d 854

In an action to recover final payment under an installment contract, the Court concluded that a final payment is not an installment payment and the interest and attorneys’ fee penalties imposed under Civil Code §3260.1  for the wrongful withholding of a progress payment did not apply.

The Court notably also held that “there is no requirement that a party plead that it is seeking attorney fees, and there is no requirement that the ground for a fee award be specified in the pleadings.”

Martin Brothers Construction., Inc v. Thompson Pacific Construction, Inc. (2010) 179 CA4th 1401, 102 CR3d 419

The Court allowed the waiver by contract of the statutory right to prompt payment pursuant to Public Contract Code §7107 and Business and Professions Code §7108.5.

Force Framing, Inc. v. Chinatrust Bank (U.S.A.) (2010) 187 CA4th 1368, 114 CR3d 855

The court held that a subcontractor’s reasonable reliance upon an owner/general contractors’ representation regarding the identity of a construction lender as set forth in a “preliminary information” sheet when serving its preliminary notice was a question of material fact.  The Court reversed a Summary Judgment in favor of a lender not named in the contractor’s preliminary notice and citing Brown Co. v. Appellate Department (1983) 148 CA3d 891, held that the contractor did not have to check the county records for the recorded construction deed of trust and could rely upon the fact that the lender was the “reputed construction lender” assuming the contractor had a good faith belief that the reputed lender was the actual lender.

In re Sabban (9^th Cir. 2010) 600 F.3d. 1219

An unlicensed contractor’s obligation under a judgment including Business and Professions Code §7031(b) disgorgement in favor of a homeowner was found to be dischargeable in bankruptcy.

Mepco Services, Inc. v. Saddleback Valley Unified School District (2010) 189 Cal.App.4th 1027

A contractor may recover attorneys’ fees incurred in a suit against a public entity owner under a provision in a performance bond where contractor’s affirmative claim was intertwined with its defense to the public entity owner’s claim against the performance bond.  The Court reasoned that the attorneys’ fee provision was reciprocal and under Civil Code §1717 the contractor could recover all of its attorneys fees, not just that portion incurred in defending itself, as the central dispute was which party breached the contract.

The mechanics’ lien law is an umbrella term which includes construction law, contract law, sometimes the laws relating to open accounts and common counts, and, most importantly, the law relating to Preliminary Notices, Mechanics’ Liens, Stop Notices, Payment Bonds as well as the myriad of releases, both statutory and non-statutory, which modify and waive those rights. The right to record a mechanics’ lien originates in the California Constitution2 and is codified in the California Civil Code3.

Preliminary Notices

The engine which drives the mechanics’ lien law train is the Preliminary Notice, sometimes also referred to as a “20 Day Notice”, a “20 Day Preliminary Notice” or a “Prelim”. Much like “attorney” and “lawyer”, they are all the same. Let’s start by examining the Preliminary Notice. A Preliminary Notice is a notice served on the property owner, construction lender and general contractor informing them that the sender will be providing labor, services, materials or equipment to the project. It is not a lien. It is required to be served in all projects exceeding $4004.

Who Must Serve a Preliminary Notice?

All claimants, that is any person who intends to improve or enhance the property of others and be protected by the mechanics’ lien law, except one working under a direct contract with a property owner who is paying for the construction or a person performing actual labor for wages, must give a Preliminary Notice or forfeit its mechanics’ lien, Stop Notice and payment bond rights. In other words, a claimant providing services5 on a privately owned project, working under contract directly to a property owner, who is paying for the construction, does not need to serve a Preliminary Notice. If a claimant contracts with a tenant or a property manager, the claimant must serve a Preliminary Notice. If a project is being financed by a third party (someone other than the property owner), a claimant must serve a Preliminary Notice in order to have the right to serve a Stop Notice.

A claimant providing services to a public project does not need to serve a Preliminary Notice if the claimant is contracting directly with the prime general contractor. Laborers for wages are not required to serve a Preliminary Notice. This group includes employees of the general contractor or any of its subcontractors. Employees of a `supplier are not included in this group, as neither the supplier nor they provide actual labor to the project. Even though the claimant may not be required to serve a Preliminary Notice, the claimant should still serve a Preliminary Notice. The claimant should adopt a procedure of serving a Preliminary Notice on every project, whether or not the claimant is required to do so. By adopting this policy, the claimant will not have to worry if it did not serve a Preliminary Notice when it was required to do so. Also, when it’s time to write the checks, it’s nice to be on this list!

The bottom line with Preliminary Notices is that there is no penalty for serving one or a second or subsequent one (this is not necessary unless something changes, e.g., the scope of work or the party for who the labor, services, equipment or materials are being provided). While there is no penalty for serving a Preliminary Notice even if the claimant never provides anything to the project, there is a severe downside for not serving one when it is required — a complete loss of all mechanics’ lien law rights!

When Must a Preliminary Notice be Served?

Under Civil Code §3097, a Preliminary Notice must be served not later than twenty days after the claimant has first furnished labor, equipment or materials6 to the jobsite. The Preliminary Notice can be given before the claimant commences work or delivers materials and must contain certain statutorily required information7. If a Preliminary Notice is not given within the first twenty days after the claimant initially furnishes services, the claimant will be limited to recovery for those services furnished within twenty days prior to the service of the Preliminary Notice and all services furnished thereafter. For example, if the claimant begins work at the jobsite on May 1, 2009, a Preliminary Notice must be served no later than May 20, 2009. If the Preliminary Notice is not served until May 30, 2008, it will only cover those services provided after May 10, 2009. Any services provided from May 1, 2009 to May 10, 2009 would not be covered by the Preliminary Notice.

This is important for several reasons. A claimant should still serve a Preliminary Notice even when it failed to do so timely because it will be effective from the 20th day prior to the date it is served and reach forward thereafter and because most payment disputes and problems don’t arise until the later stages of a project.

Mechanics’ Liens

Mechanics’ lien is a lien against a work of improvement on real property or a structure8 on the real property which makes the property responsible for the value of the unpaid services and allows the claimant to foreclose on that lien and cause the sale of the property to satisfy the lien.

When Must a Mechanics’ Lien be Recorded?

The supplier and subcontractor must record a mechanics’ lien in the county in which the property is located within thirty calendar days after the date of recordation of a Notice of Completion or Notice of Cessation. If no Notice of Completion is recorded, a mechanics’ lien must be recorded within ninety calendar days after completion of the entire project. “Completion” is a bit of a moving target but is generally determined by occupancy of the building along with a complete cessation of labor other than punch lists, pick-up or warranty work or acceptance of the project by the property owner. The general contractor, who contracts directly with the property owner, must record a mechanics’ lien no later than sixty calendar days after recordation of a Notice of Completion or Notice of Cessation, or ninety calendar days after completion of the entire project. In privately owned projects, if there is a complete cessation of labor for sixty consecutive days, then the time for recording a mechanics’ lien begins to run and the claimant has ninety days thereafter to record a mechanics’ lien. This is a total of 150 days from the last work at the jobsite. A delivery of materials or an invoice after a complete cessation of labor to the jobsite does not extend the time period. During the last day for recording a mechanics’ lien falls on a holiday which is defined as a Saturday, Sunday or other day that the county recorder’s office is not open for business, then the mechanics’ lien may be recorded on the next day the county recorder’s office is open for business.

When Must the Claimant Commence its Lawsuit to Enforce its Mechanics’ Lien?

An action to foreclose a mechanics’ lien must be commenced within 90 days of the date of recording of the lien. If the claimant fails to enforce its mechanics’ lien within this time period, the mechanics’ lien will become null and void. The mechanics’ lien may also be subject to a Petition to Release the Mechanics’ Lien under Civil Code §3154 which carries a$2,000 plus costs maximum statutory penalty assess able against the mechanics’ lien claimant, even if the claimant has not been paid! The lawsuit to enforce the mechanics’ lien must be filed within ninety days in the proper judicial district. The proper judicial district is the judicial district in the county in which the property is located.

Stop Notices

Stop Notice is a notice served to the lender, which includes any party paying for the cost of construction, to “hold the money.” If the Stop Notice is being served to an institution all end err including a bank, savings and loan, thrift and loan and even an insurance company, then the Stop Notice must be served accompanied by a bond. This is called a “Bonded Stop Notice.” When a bond is required and the Stop Notice is served without a bond, the lender may, and will, ignore the Stop Notice.

When Must a Stop Notice be served?

Supplier or subcontractor must serve a Stop Notice within thirty calendar days after the date of recordation of a Notice of Completion or Notice of Cessation. If no Notice of Completion is recorded, a Stop Notice must be recorded within ninety calendar days after completion of the entire project or sixty days after cessation of all labor. General contractor must serve a Stop Notice no later than sixty calendar days after recordation of a Notice of Completion or Notice of Cessation, or ninety calendar days after completion of the entire project. If there is a cessation of labor for sixty consecutive days on a private works project or thirty days on a public works project, the time for serving a Stop Notice begins to run and the claimant has an additional ninety days thereafter to serve a Stop Notice. This is a total of 150 days from the last work at the jobsite. A delivery of materials after a complete cessation of labor to the jobsite does not extend the time period. If the last day for serving a Stop Notice falls on a holiday which is defined as a Saturday, Sunday or other day that the courts are not open for business, then the Stop Notice may be served on the next day the courts are open for business.

How Does a Claimant Enforce its Stop Notice?

A complaint to enforce a Stop Notice must be filed in a proper court no sooner than ten days after service of the Stop Notice and no later than ninety days from the expiration of the mechanics’ lien recording period.

Payment Bonds

Payment bonds are the piggy banks of the mechanics’ lien law, particularly now with the onslaught of falling property values and foreclosures. Payment bonds are required on almost all public works projects and on such projects are the claimant’s primary and best remedy. Payment bonds are infrequently, but occasionally, found on private works projects. A payment bond is essentially a guaranty by the surety giving the bond to pay the same class of persons or claimants having a right to record a mechanics’ lien or serve a Stop Notice.

When Must the Claimant file a Lawsuit under a Payment Bond?

If the surety does not voluntarily pay, the claimant must file a lawsuit to recover under the payment bond. A lawsuit must be filed not later than six months plus thirty days if a Notice of Completion was recorded or six months plus ninety days after completion of the project if no Notice of Completion was recorded. The lawsuit may, but need not, include many causes of action including (providing the statute of limitations has not run), foreclosure of a mechanics’ lien, enforcement of a Stop Notice or breach of contract, or a single cause of action for recovery on the payment bond. Mechanics’ lien law rights are cumulative and may each be pursued separately.

The Right to Recover Attorneys’ Fees

Attorneys’ fees may not be included in a mechanics’ lien, but may be recovered from the contracting party if there is an attorneys’ fee provision. Attorneys’ fees are also not included in a Stop Notice but can be recovered from the lender if the Stop Notice is bonded or from the contracting party. Most importantly, attorneys’ fees can be recovered in an action to enforce payment under a public works payment bond from the surety and the principal on the bond and from the contracting party.

Last summer, the Second District Court of Appeal decided the case of Advantec Group, Inc. v. Edwin’s Plumbing Co., Inc., 153 Cal. App. 4th 621 (2007), 2007 Cal. App. LEXIS 1205. Although there was really nothing earthshattering in either the facts or the applicable law, the trial court’s rulings may have forever changed trials in which validly licensed contractors seek compensation.

Advantec, the developer of a multi-unit apartment building, hired Edwin’s pursuant to a written subcontract to provide plumbing services. Prior to the completion of the work Advantec terminated Edwin’s from the project. Advantec sued Edwin’s and its license bond surety, Surety Company of the Pacific, for breach of contract. The license bond cause of action was eventually dismissed. Edwin’s filed a cross-complaint for breach of contract and related causes of action. Edwin’s alleged it was a licensed contractor. Advantec filed a general denial in which it denied “each and every allegation” of the cross-complaint pursuant to Code of Civil Procedure §431.20 but did not, specifically challenge Edwin’s license status by way of an affirmative defense challenging Edwin’s license status.

When the pricipal of Edwin’s began testifying, he was asked if he was a licensed contractor, Advant objected, pursuant to Business and Professions §7031, that Edwin’s licensure had to be proved by way of a verified certificate. The court tenatively sustained the objection but allowed the testimony to continue. The Court stated it planned to preclude Edwin’s from introducing evidence regrading its licensure other than that which is required by §7031, a verified certificate of licensure from the Contractors’ State License Board.

Edwin’s attorney requested a continuance to permit her to obtain a verified certificate. Advantec’s attorney represented to the Court that to obtain the certificate would take at least two weeks. The Court refused to continue the case but agreed to hear further argument the following day.

The record is unclear as to whether Edwin’s attempted to obtain the certificate, represent to the Court that it had submitted a request for one or advise the Court how long it would take to obtain it. The writer is presuming that none of these were attempted.

Edwin’s attorney argued that the issue of its licensure constituted “new matter” relating to Edwin’s capacity to sue under Code of Civil Procedure §431.20 and as such, was required to be pled as a separate affirmative defense in Advantec’s Answer. Edwin’s attorney argued that because of Advantec’s failure to do so, the defense was waived. After Edwin’s rested its case the Court granted Advantec’s motion for nonsuit on the cross-complaint based upon the failure of Edwin’s to produce proof of licensure.

There were two issues on appeal. The first being whether of not a General Denial Answer without a separate affirmative defense as to licensure was sufficient to put Edwin’s license status at issue requiring Edwin’s to obtain and offer a verified certificate of licensure from the Contractors’ State License Board (“CSLB”). The second issue on appear was whether the trial court erred by refusing to grant Edwin’s a continuance to procure the verified certificate.

On the first issue, the Court of Appeal ruled that a General Denial was sufficient to put Edwin’s licensure at issue. The Court of Appeal first discussed §7031(a) and its requirement that to maintain any action for compensation a contractor must allege “…that he or she was a duly licensed contractor at all times during the performance of the act of contract…”. The Court went on to §7031(d) which states “If licensure or proper licensure is controverted, then proof of licensure pursuant to this section shall be made by production of a verified certificate of licensure from the Contractors’ State License Board which establishes that the person or entity fringing the action was duly licensed in the proper classification of contractors at all times during the performance of any act or contract covered by the action… When licensure or proper licensure is controverted, the burden of proof to establish licensure or proper licensure shall be on the licensee.”

After noting that read together, the subdivisions required the a contractor to produce a certificate of licensure, the Court went on to examine the nature of a General Denial Answer concluding that it puts in issue all material allegations of the Complaint and that the allegation of licensure was a material allegation which was therefor controverted by a General Denial. The Court, after a lengthy discussion of other cases involving nonlicensure issues, concluded that although the issue of licensure could have been raised by a separate affirmative defense it need not be.

In its opinion, the Court noted, “Although we announce for the first time in this case the rule that a general denial sufficiently controverts an allegation of licensure, when read together the statues at issue §§ 7031 and 431.30) plainly dictate this result.”

The Court went on to discuss the issue of whether Edwin’s should have been given a continuance to permit it to obtain the required verified certificate from the CSLB and based its upholding the denial on four bases: (1) the discretion of the trial court; (2) the importance of deterring unlicensed persons from engaging in the contracting business which outweighs any harshness between the parties relying on Hydrotech Systems, Ltd. v. Oasis Waterpark (1991) 52 Cal 3d.988, 277 Cal Rptr., 517, probably the seminal case in nonlicesure which applied nonlicensure as a bar to recovery of compensation “regardless of the equities” (supra at 997) and Lewis & Queen v N.M. Ball & Sons (1957) 48 Cal 2d. 141, 152, 308 P.2d. 713; (3) that by the time the continuance was requested that the [jury] trial had already consumed four days which may have resulted in a mistrial; and (4) the burden was on Edwin’s to obtain the certificate prior to trial.

Let’s examine, a little more closely, what happened here.

Prior to Advantec Group most construction attorneys, including the writer, when the issue of licensure was not raised as a separate affirmative defense, felt it was sufficient, as did most Judges, to provide proof of licensure by way of a copy of the current contractor’s license and a print out of the current license status from the CSLB website. As no case prior to Advantec held that a General Denial Answer put licensure in issue, it was generally believed that a verified certificate was not required. The Advantec Court’s interpretation of general denials in conjunction with contractor claims, changed “the rules” by:

(1) allowing a General Denial Answer to put licensure in issue, meaning that in virtually every case where a contractor sues for compensation, licensure is now in issue. In addition, this places the burden now squarely on litigants (theoretically, even small claims court), their attorneys and the CSLB to process and produce the verified certificates;

(2) refusing to “do equity” by allowing Edwin’s time to procure the verified certificate. Although §7031(d) places the burden on the Contractor to establish proper licensure, it certainly does direct the trial court harshly refuse time to procure a certificate, particularly in a situation like Edwin’s where the contractor was actually licensed and due to “first impression” interpretation of the law relating to general denials, was not prepared to produce the certificate. It appears that Edwin’s was properly licensed, in direct contrast to the previous §7031 cases including Hydrotech and many others where the contractor simply wasn’t licensed or wasn’t licensed in California. Next, the Advantec Court used it’s own method of weighing the equities and concluded that it was more important to complete the jury trial then do equity ; and

(3) the Court’s refusal to grant a continuance to give Edwin’s time to obtain a verified certificate from the CSLB may not have been an abuse of discretion but from the facts of the case, as reported, appears to have been a poor and unnecessarily harsh decision. While there is no way to know from the facts stated in the opinion whether or not Edwin’s would have prevailed on its Cross-Complaint, it should, in this writer’s opinion, have been given the chance.

§7031(a) requires contractors to be properly licensed at all times during the performance of the act or contract and §7031(d) requires a verified certificate if this is controverted, but prior to the Advantec case how was Edwin’s or any other contractor seeking recovery or their attorneys to know this?

The writer’s own experience with this issue and the Advantec case could have come to a similarly unfair result. In August, 2007, just after the Advantec opinion was published by before I was aware of it, I was in trial. Soon after beginning the trial, when I asked my client about being a licensed contractor, the same objection was raised and Motion for Nonsuit asserted under the Advantec case.

Unlike Edwin’s, my client was fortunate. Between the time the Court recessed for lunch and reconvened at 1:30 p.m. we were able to contact the CSLB, obtain a verified certificate, have it faxed to a fax machine in the snack shop with a copy to the Judge’s chambers thereby overcoming the objection and the Motion. Fortunately, my client, who had been licensed for approximately 50 years, went on a substantial win in its case. But what if it hadn’t have been able to obtain the verified certificate? Another great inequity would have occurred.

Is this the kind of result our legislature intended? I don’t believe so. The legislature and our Courts have been consistently busy interpreting, revising and rewriting §7031 since it was enacted. The Courts, for years, carved out exceptions to being properly licensed for “substantial compliance”, which was later restricted by the legislature statutorily in several iterations. The trend in changes to §7031 over many years has been to severely limit the doctrine of substantial compliance.

In it’s present iteration, “substantial compliance only applies if all three requirements of subdivision (e) are met. (See Construction Financial v. Perlite Plastering Co. (1997) 53 Cal.App.4th 170, 176-177at pp. 180, [reviewing legislative history of section 7031]; see also Pacific Custom Pools, Inc. v. Turner Construction Co. (2000) 79 Cal.App.4th 1254, 1261-1262 [trend of legislative changes has been to narrow available exceptions to §7031’s bar on actions by unlicensed contractors].)

While the statutory policy embodied in the Contractors License Law is acceptably intended to discourage persons who have failed to comply with the licensing law from offering or providing their unlicensed services for pay.” (Hydrotech, supra, 52 Cal.3d at p. 995.) Because of the strength and clarity of this policy” the Supreme Court has observed also acceptably to the writer that “§7031 applies despite injustice to the unlicensed contractor.” §7031 represents a legislative determination that the importance of deterring unlicensed persons from engaging in the contracting business outweighs any harshness between the parties, and that such deterrence can best be realized by denying violators the right to maintain any action for compensation in the courts of this state. See Great West Contractors, Inc. v. WSS Industrial Construction, Inc. – filed March 28, 2008, publication ordered April 28, 2008, Second District, Div. Eight Cite as 2008 SOS 2494.

But here is where this writer disagrees. Even the present version, in §7031(e) and (f) is only intended to apply to those, unlike Edwin’s who have “…never been a licensed contractor in this state.” Edwin’s was licensed and there is nothing in the record to indicate it was anything but properly licensed. This writer does not believe that either the legislature or the Courts intended the harsh policy of §7031, appropriately intended to prevent unlicensed individuals from acting as contractors and/or recovering compensation for work illegally performed, to extend its harshness to prevent a properly licensed contractor, who had been licensed for over 15 years, to have a chance to recover for work legally performed.

Decisions such as Advantec do not happen in a vacuum. They have serious, sometimes enormous life changing results for all involved. While it appears that the Court ruled harshly, particularly in a situation like Advantec, where Edwin’s only offense was not to obtain a verified certificate confirming it was licensed, the fact that the case was being tried before a jury coupled with the “bad” timing for Edwin’s by being a Cross-Complainant were obviously the overriding factors is not giving Advantec time. Unfortunately, Advantec still sets a harsh precedent particularly when prior to the Advantec opinion on appeal, it was not thought that a General Denial Answer was sufficient to controvert the allegation of being properly licensed and raise the issue of licensure. Hopefully, when this issue next arises, if it does in the context of a bench trial, or at least at the beginning of a jury trial and the trial Judge will, for example, continue the case and give the contractor time to obtain the verified certificate or finish trying the case and take the case under submission giving the contractor a specific amount of time to obtain the verified certificate, serve it on opposing counsel and hold a subsequent hearing on that issue, if needed.

Whether the Advantec was or was not a good decision, it is certainly a wake up call to allattorneys who represent contractors. Caveat contractor!

CONTRACTS, MECHANICS’ LIENS & RELEASES
Written by Robert A. Weissman (construction attorney)

This book, unlike most books in this area, is written for construction industry personnel in language anyone can follow. You will learn how to complete each form blank by blank, how to serve each document and the law relating to when you can use it and the time frames involved. The book is divided into three parts, with ten chapters of information, forms and advice. We believe you will find this an invaluable tool which you will use over and over again.

This book includes forms that can be used right out of the book. Just remove the form from the three ring binder, copy and complete. Each form includes a blank version, a numbered version and a completed version along with step by step instructions for completion for the following chapters….

Preliminary Notices
Mechanics’ Liens
Stop Notices
Public and Private Contracts/Credit Applications *
Payment Bonds
Miller Act
Mechanics’ Lien & Stop Notice Release Bonds
Contractor’s License Bond Claims
Waiver and Release Forms
Mechanics’ Lien and Stop Notice Releases

* The book does not contain complete contracts or complete credit applications- only sample clauses and suggestions for clauses.

This new seminar taught by Robert A. Weissman will focus on some important issues facing general contractors, subcontractors and suppliers everyday during the course of a project.

Release Bonds (Mechanicsâ Lien/Stop Notice) – A discussion on “bonding around” from both obtaining a bond and seeking recovery on the bonds. This topic also includes a discussion on the notice procedures and an alternative to a bond for a disputed Stop Notice – the summary procedure.

Releasing a Stop Notice – This discussion focuses on the disadvantages of releasing a Stop Notice before payment, including a discussion of common problems such as, “Release the Stop Notice so I can get paid and pay you.” and “Your materials never went into this project.”

Disputes- This discussion focuses on effectively handling disputes, from documenting the dispute, responses to notices/letters to obtaining an expert and statements from others. Also included for the supplier is a discussion on proving materials were consumed in the project and a discussion on dealing with defective materials.

Change Orders- A discussion on the effect change orders have on the construction process, including the giving of releases, Mechanicsâ Lien rights, enforceability of unsigned change orders. A topic of importance, whether you are issuing them or resisting them.

Leaving the Project/Continuing to Supply Materials- Whether you are a supplier or a contractor the question of continuing to supply materials and/or labor to the project will arise if you are not getting paid. This discussion focuses on your remedies, including continuing on and the consequences of refusing to continue.

Joint Check Agreements – A complete discussion on the purpose, advantages and disadvantages and their effect on your Mechanicâ Lien remedies.

Knowing Your Customer – This discussion focuses on the importance of knowing who your customer. Included in this discussion is information you need to know if you provide materials or services to a limited liability company (LLC) and importance of contracting with contractors who hold a valid contractors license.

Mechanicsâ Lien Law Remedies – This seminar will include a brief discussion of the Mechanicsâ Lien law is included in this seminar explaining the remedies to both the contractor and supplier such as, Mechanicsâ Liens, Stop Notices and Payment Bond Claims. Preliminary Notices and their importance is also discussed.

This seminar begins with provisions and contract phrases that contractors and suppliers should include in their contracts and credit applications. Also included in this discussion is some advice on how to deal with problem contracts and phrases. The discussion ends with a discussion on what needs to be included in a home improvement contract.

The second part of the seminar focuses on recognizing collection problems and how to deal with them. The seminar will discuss “collection red flags”, license bond claims and making a claim in Small Claims Court. Also included is a section of collecting judgments, including information on abstracts of judgments, bank levies and keepers.

Included with this seminar is a handout with sample contract provisions and phrases, information relating to home improvement contracts, a list of “collection red flags” and information of collecting judgments, including forms. Participation and questions are encouraged.