Running the Business · Part 3
Case: the job that went unpaid. Where the contractor lost lien rights and how to have kept them
A plumbing subcontractor does $38,000 of clean work on a restaurant buildout, is paid $21,000, and never sees the rest. The general contractor ran out of money, the owner had paid the GC in full, and there was a construction lender. Six decisions, each of them ordinary, took away every remedy the law had given this plumber: the preliminary notice never sent, the unconditional release signed for a check that never came, the notice of completion nobody watched for, the lien recorded late and served on nobody, and the entity that capped the small claims case at $6,250. This case walks each decision to the rule it broke and shows the version of the job where the plumber is paid.
What the full lesson covers
- No preliminary notice within 20 days of the first day on site meant no lien, no stop notice, and no bond claim against anyone but the GC (Civil Code 8200).
- An unconditional progress release signed to "get the check released" was enforceable even though the check never came (Civil Code 8134).
- A notice of completion recorded by the owner cut the lien window to 30 days; the lien recorded on day 52 was void, and it was never served on the owner anyway (Civil Code 8414, 8416).
- The construction lender's undisbursed funds could have been reached by a stop payment notice; without the preliminary notice, they could not.
- The corporation's small claims case was capped at $6,250 against a GC that had no assets; the lien and the stop notice were the only tools that reached money, and both were gone.
Unlock the full lesson
This is the public summary. The full lesson has the method, the worked cases, the checklists and the templates:
- All in-depth lessons, exam prep and After the License
- 1,000+ practice questions
- AI tutor (100 messages included)
- 14+ hours of audio lessons
- Full-length practice exams
- Pass guarantee
Already have an account? Sign in
More lessons in Contracts and Getting Paid
- 1The home improvement contract (B&P 7159): every required element, the exact notices, and the three-day right to cancel
- 2The deposit cap: $1,000 or 10 percent, whichever is less, and progress payments that cannot exceed the work. CSLB's most common citation
- 3Service and repair contracts (B&P 7159.10): when the short form applies, what it must say, and how a service call falls out of it
- 4Subcontracts with GCs: the twelve clauses to read, what to strike, and what to negotiate
- 5Change orders: written, signed, before the work. Every time. Why verbal ones end in CSLB complaints
- 6Mechanics liens I: the 20-day preliminary notice. Miss it, lose your rights
- 7Mechanics liens II: recording deadlines, the 90-day foreclosure clock, the four statutory release forms, stop payment notices, and payment bonds on public work
- 8Collections: demand letter, lien, small claims, attorney. When each is worth it, and the one thing that makes all of them impossible
- 9Taking payment: cards, ACH, checks, cash, financing partners, and getting every dollar into the right account
- 10Case: the job that went unpaid. Where the contractor lost lien rights and how to have kept themYou are here
- 11Case: the deposit that became a citation
- 12Case: the change order that was never written
- 13Template: the home improvement contract, with every B&P 7159 notice verbatim
- 14Template: the service and repair contract (B&P 7159.10), one page, with the notices verbatim
- 15Template: the change order, one page, signed before the work
- 16Template: the 20-day preliminary notice, with the proof-of-notice declaration
- 17Template: the four statutory lien waiver and release forms (Civil Code 8132 to 8138), verbatim
- 18Template: the demand letter, homeowner version and general contractor version
- 19Template: the subcontract review checklist. Twelve clauses, three boxes each