Minimum Warranty Periods Flashcards
Difference between warranty period and Statute of Limitations?
Warranty period is a contractual obligation while the Statute of Limitations is CA law
Three main types of warranties and differences?
- implied - common law
- Expressed - writtin into contract
- Statutory (stature of limitations per CA Code of Civil Pordecure)
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?
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
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?
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)
- 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”
what CA code are SOL under?
What CA code are liens under?
- Code of Civil Procedure
- Civil Code
both different codes of CA 29 codes
Who are considered “design profesionals”? 4
- Architect
- Engineer
- landscape arch
- land surveyor
When can a design professional lien be filed?
after a permit of other government approval has been given (does entitlement count?) but before construction starts
Are design professional loans available for both public and private projects?
yes
What happens if a design professional lien is filed and during the process construction starts?
The lien is null and void. The design professional can now file a mechanics lien.
What kind of projects are design professional liens not available on?
single family owner occupied under $100,000 construction cost
can you file a design professional lien on a single family owner occupied project that has a design fee of $48,100?
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.
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?
yes….you can file a design professional lien on a single family only $100,000 construction cost if it is owner occupied.
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?
- verify gov approval has been given (permit)
- demand letter to owner state default and amount owed
- 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)
- extend the lien period
- lien expires if you do not do one of these two things.
does filing a design professionals lien waive the ability for the design professional to pursue other remedies?
no… not at all
What happens if owner sells a property right before you officially file a design professional lean
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
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?
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.
What if the property owner partially or fully pays off the design professional lien?
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.
If you are the property owner is there anything you can do to release property from a design professional lien?
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.
Can you use your own lean waiver form?
What are the CA statutory lien wavers?
No. California has statutory lean waiver forms that must be used. (only 12 states do this)
- Conditional Progress Lien Waivers
- Unconditional Progress Lien Waivers
- Conditional Final Lien Waivers
- Unconditional Final Lien Waivers
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?
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
Do CA lien waivers need to be notorized?
no
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
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
- can design professional liens be put on public projects?
- Can design professional liens be put on private projects?
- can mechanics liens be put on public projects?
- Can mechanics liens be put on private projects?
- Yes
- Yes
- No
- Yes
How can an owner protect themselves from liens from a GC’s subcontractors
- 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
- Required the GC to have a payment bond which will take care of any liens
