Minimum Warranty Periods

Question 1

Difference between warranty period and Statute of Limitations?

Answer 1

Warranty period is a contractual obligation while the Statute of Limitations is CA law

Question 2

Three main types of warranties and differences?

Answer 2

1. implied - common law
2. Expressed - writtin into contract
3. Statutory (stature of limitations per CA Code of Civil Pordecure)

Question 3

Satute of limitations in CA for prof liability of bld defects?

Who does this apply to?

When does the clock start?

What CA code is this under

What state bill created this

Statue of limitation for contractual liability in CA and when the clock starts?

Answer 3

SOL, Professional Liability and construction defects: patent 4yrs, latent 10yrs after substantial completion.

• contractor, arhitect, developer
• Clock starts after substantial completion
• Code of Civil Procedure
• SB800
• 4 years from date of default

Question 4

What is the “one-year warranty”?

What kind of warranty is this?

Where is this found?

How does it relate and how is it different than the SOL?

Answer 4

Contractor will fix non compliant items within 1 year of substantial completions (or 1year after finished if work was preformed after substantial completion)

• Expressed warranty
• A201
• A201 goes out of its way to make it clear that this warrant does not waive and has nothing to do with the SOL. This warranty typically says
• were gonna build with new good stuff
• if it breaks or does not comply within 1yr (for any reason other than abuse) we will come fix it.

The SOL goes for 4 years (patent) and 10 years (latent) and has two main differences from this warranty
1. it does not say they will do the repairs…they just might have to pay for them (although CA “right to repair act give them the chance)

2. You have to prove the problem came out of something they did wrong were under the warranty they kind of are saying “as long as you didn’t abuse it we will come fix it within 1yr regardless of what happened”

Question 5

what CA code are SOL under?

What CA code are liens under?

Answer 5

• Code of Civil Procedure
• Civil Code

both different codes of CA 29 codes

Question 6

Who are considered “design profesionals”? 4

Answer 6

1. Architect
2. Engineer
3. landscape arch
4. land surveyor

Question 7

When can a design professional lien be filed?

Answer 7

after a permit of other government approval has been given (does entitlement count?) but before construction starts

Question 8

Are design professional loans available for both public and private projects?

Answer 8

yes

Question 9

What happens if a design professional lien is filed and during the process construction starts?

Answer 9

The lien is null and void. The design professional can now file a mechanics lien.

Question 10

What kind of projects are design professional liens not available on?

Answer 10

single family owner occupied under $100,000 construction cost

Question 11

can you file a design professional lien on a single family owner occupied project that has a design fee of $48,100?

Answer 11

probably….but we really dont know. we need to know what the construction cost is. if the construction cost is under $100,000 you can not file a lien in this case.

Question 12

can you file a design professional lien on a single family home with construction cost of $43,000 when the owner does not occupy the house?

Answer 12

yes….you can file a design professional lien on a single family only $100,000 construction cost if it is owner occupied.

Question 13

Steps to file a design professional lien?

If you still don’t get paid after filing a lien? 2

What happens if you don’t do one of these two things?

Answer 13

1. verify gov approval has been given (permit)
2. demand letter to owner state default and amount owed
3. file lien at county recorders office. 10 days after letter is sent to owner, but NO MORE than 90 days after belief that work will not commence.

Still not getting paid..what now?
1. file a lawsuit to force the property into foreclosure. This lawsuit must be filed withing 90 days after recording the lien. (but could take much longer to go through the process)

2. extend the lien period
   - lien expires if you do not do one of these two things.

Question 14

does filing a design professionals lien waive the ability for the design professional to pursue other remedies?

Answer 14

no… not at all

Question 15

What happens if owner sells a property right before you officially file a design professional lean

Answer 15

you can not file the lein…. you must have a written contract with the owner of the property…in this case you can try to sue the previous owner for breach of contract

Question 16

What happens if construction commences either before a design professional lien is recorded, or after a design professional lien is recorded but before a lawsuit to foreclose on the design professional lien is filed?

Answer 16

once construction has commenced a design professional may not record a design professional lien and any design professional lien previously recorded but not foreclosed on by filing a lawsuit becomes null and void. If that occurs, a design professional has two options depending on the circumstances.

Option 1: If construction commences before a design professional has recorded a design professional lien, the design professional can record a mechanics lien instead.
Option 2: If construction commences after a design professional has recorded a design professional lien but before the design professional has filed a lawsuit to foreclose on the design professional lien, the design professional can convert the design professional lien into a mechanics lien as follows:
(1) Within 30 days after commencement of the work of improvement, the design professional records a mechanics lien for the unpaid amount of the design professional lien.

(2) The mechanics lien states that it is a converted design professional lien.’

Note: You cannot resurrect a “stale” design professional lien if construction commences after the 90-day deadline to file a lawsuit to foreclose on a design professional lien. For example, if you recorded a design professional lien on January 1, 2015, you would have 90 days or through April 1, 2015 to file a lawsuit to foreclose on the mechanics lien. If, by April 2, 2015, you had not filed a lawsuit to foreclose on the design professional lien your design professional lien would be considered “stale” and unenforceable. If, thereafter, construction commences on the project, you would not be able to resurrect your now “stale” design professional lien and record a mechanics lien instead.

Question 17

What if the property owner partially or fully pays off the design professional lien?

Answer 17

If a property owner partially or fully pays off a design professional lien the design professional must sign and record a document evidencing partial or full satisfaction and release of the design professional lien.

Question 18

If you are the property owner is there anything you can do to release property from a design professional lien?

Answer 18

Yes, several things. First, if a lawsuit is not filed to foreclose on a design professional lien within 90 days after the design professional lien is recorded, 90 days after the expiration of a notice of credit, or 1 year after the project is completed, the design professional lien is considered “stale,” and you can file a petition with the court to have the design professional lien expunged. You can recover all reasonable attorneys fees incurred in expunging a “stale” design professional lien.

Second, if a design professional lien is not “stale,” you can obtain a design professional lien release bond. A design professional release bond releases the design professional lien, and the design professional then has to make a claim against the release bond. A design professional lien release bond must be in an amount equal to 125% of the amount claimed in the design professional lien and premiums are typically 2-3% of the total bond amount.

Third, you can negotiate a settlement with the design professional in exchange for the design professional recording a release of its design professional lien.

Question 19

Can you use your own lean waiver form?

What are the CA statutory lien wavers?

Answer 19

No. California has statutory lean waiver forms that must be used. (only 12 states do this)

1. Conditional Progress Lien Waivers
2. Unconditional Progress Lien Waivers
3. Conditional Final Lien Waivers
4. Unconditional Final Lien Waivers

Question 20

Can a contractor waive lien rights before works begins?

Can a contractor waive their lien rights after work has stated but before payment is made?

Answer 20

no…not in CA….even if the contract says so CA law does not allow this and it will not hold up.

Yes, but the contractor gives up lien rights even if they have not been paid if the use an unconditional waiver….a conditional waiver should be used

Question 21

Do CA lien waivers need to be notorized?

Answer 21

no

Question 22

What type of lien waiver should the contractor and subs provide with pay apps (not req’d but is a good idea to demand)

What type of lien waiver should the contractor and subs provide with the final pay apps

Answer 22

conditional progress lien waver

conditional on payment going through, progress waiver to make it clear the this is a progress payment and more payments are coming

Conditional final lien waver

Question 23

1. can design professional liens be put on public projects?
2. Can design professional liens be put on private projects?
3. can mechanics liens be put on public projects?
4. Can mechanics liens be put on private projects?

Answer 23

1. Yes
2. Yes
3. No
4. Yes

Question 24

How can an owner protect themselves from liens from a GC’s subcontractors

Answer 24

1. AIA A201 has a clause that requires the GC to defend and indemnity the owner from sub liens assuming the owner made full payment to the GC
2. Required the GC to have a payment bond which will take care of any liens

Question 25

who needs to send Preliminary 20 Day notice to keep future mechanical lien rights? who do they send to? Who does not need to send this?

Can a preliminary 20 days notice lien rights form be sent early?

When must it be sent by?

Answer 25

sub contractors send to owner (kind of gives the owner fair warning that so and so will be providing labor or materials). GC and Architect to not need to send this because they have a direct relationship with the owner.

yes..you can send the 20 days preliminary lien rights notice before you get the job

within 20 days of providing labor or materials

Question 26

are mechanics liens available for private projects?

Answer 26

yes

Question 27

are mechanics liens available for public projects?

Answer 27

no

Question 28

who can file a mechanics lien?

Answer 28

architect
supply labor (GC, Subs, etc)
supply material (Mfg, supplier, etc)

Question 29

Where is a lien recorded?

What county should the lien be recorded in?

Answer 29

county recorders office

county the PROJECT is in

Question 30

Steps to file a mechanics lien?

What is the timing on enforcing the mechanics lien?

Answer 30

1. Send Preliminary notice to preserve lien right within 20days of proving labor or material (for everyone except GC and Architect)
2. Send owner notice of Mechanics lien (certified mail)
3. Record mechanics lien County Recorders office in county of PROJECT (can come immediately after owner notice)
4. Enforce mechanics lien file filing a lawsuit to force foreclosure.

FORECLOSURE CORDING timing:
before owner files “notice of cessation”: 90 days

After owner files “notice of cessation”

• 60 days for Prime contracts (and Architect I assume)
• 30 days for subcontractors

LAWSUIT ENFORCEMENT 90 days after filing but can be mutually extended to no more than 1 year

Question 31

What is an advantage of an owner filing a “Notice of Cessation”

Answer 31

it limits the window that people have to file a mechanics lien from 90 days down to

• 60 days for prime contracts
• 30 days for subcontracts

Question 32

Do you need a contract with the owner to file a design professions lien?

Do you need a contract with the owner to file a mechanics lien?

Answer 32

• yes

- no, not in CA. That is kind of what the 20 days preliminary notice is probably for.

Question 33

What is a “Notice of Non-Responsibility”

Answer 33

protect a building owner from liens against there property when a tenant is doing a TI.

must be physically posted at the construction stie.

Question 34

Advantages of a stop-notice over a mechanics lien

disadvantages

Answer 34

• can be faster
• can be used on public projects while mechanics liens cant
• piss people off less
• easy for owner/lender to ignore
• it can only apply to available funds…so if lots of money has already been paid out a stop notice might only succeed at tieing up a small amount of money and not help at all.

Question 35

steps to file a stop notice

when must the stop notice be filed?

When must the stop notice be enforced?

Can this be used on both public and private projects?

Answer 35

1. preserve lien rights by giving preliminary notice of lien rights 20 days max after providing service or materials (or before—before is fine also…just not after)….this is the same preliminary notice used for mechanics lien—dont need another one.
2. deliver stop notice to whoever holds the contract and is giving the funds (sub-contractor gives to owner, GC gives to lender, etc)…it is not filed..it is just deliverd
3. file law suite to enforce the stop notice (within 90 days of delivering I believe)

must be filed with same timming as mechics lien
if no "notice of cessasion" = 90 days
if owner gives a "notice of cessation" 
-60 days for prime contracts
-30 days for subcontractors

enforced max
no "notice of cessasion" = 180 after "completion"
if owner gives a "notice of cessasion"
-150 days for prime
-120 days for sub

Yes-this can be used on both public and private projects

Question 36

Does a Stop Notice stick to the title or keep the property from being sold?

Answer 36

no. it only freezed funds and can only freeze available funds.

Question 37

on a stop notice how much funds must a funding source withhold

Answer 37

amount owned plus 25%…so 125% is frozen.

Question 38

What is a bonded stop notice

Answer 38

someone that has not gotten paid can serve a stop notice to the lender or whoever is paying.

on public project a bonded stop notice is not needed. the funds must be frozen until the matter is solved

on private project the lender/payer does not have to freeze funds if the stop notice request did not come with a bond of 125% the amount owed. If a bond for 125% come with the stop notice (the claimant bought a bond) then the lender is required to freeze that amount from construction funds.

Question 39

What if a stop notice is files and enforced but there is not enough money?

Answer 39

If the money withheld pursuant to all the properly filed Stop Notices is insufficient to pay all the valid claims stated in the Stop Notices, the money will be distributed pro rata among all the claimants. There is no priority established between the claimants based on when their Stop Notices were filed. Payment is made based on the ratio that the respective claims bear to the total amount of all valid Stop Notice claims. (Civil Code 3190).

Question 40

protect owner from liens

Answer 40

1. reuquire preformance and payment bonds
2. get GC and Sub lien releases at each pay app
3. keep retainage
4. file not of completion / notice of cesseassion.
5. get affidavit from GC that release from all liens

Question 41

Where is notice of completion filed?

Who files this/does not file this?

What is advantage of filling?

Answer 41

County recorders office (that project is in)

Owner files…not architect

limits lien window
90 days after end without filing (and date could be argued)

60 days afer filing for GC
30 days after filing for subs

Question 42

important point in time for SOL?

important point in time on Lien and Stop Notice?

important point in time for breach of contract lawsuits

Answer 42

• substantial completion is when the SOL clock start ticking 4—10
• notice of cessation or “work stoping” for scope is when when clock starts for liens and stop notice filing 90—-60/30

4 years from breach

Question 43

when must Notice of Completion be filed

Where is it filed

Answer 43

within 15 days of project completion

in the county recorders office where project is located

Question 44

what conditions make a project to be considered “complete” for the sake of filing “project completion”

What conditions make a project to be considered “complete” for the sake filing “project cessasion?

Which usually comes 1st? why?

Are these required?

Answer 44

1. actual completion
2. use by owner + labor has ceased
3. labor ceased for 60 continuous days

Cessasion:
1. labor stops for 30 continious days

Cessasion often comes first because it is faster to get

These are not usually req’d but a good idea to limit liability