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SUBCONTRACTOR STOP NOTICE CLAIMS IN CALIFORNIA PUBLIC WORKS PROJECTS

It happens all too often in public works projects. A subcontractor who has done a significant amount of work, is not getting paid. For a small to mid-size subcontractor, failure to pay or delays in getting paid can have a disastrous effect on the subcontractor’s business.

In this situation, in California, the subcontractor’s greatest ally and tool to get paid is the Stop Notice. The Stop Notice causes the public agency “owner” to withhold the amount set forth in the Stop Notice by the subcontractor. The greater this amount, the greater the impact it has on the prime contractor. Once done properly, the Stop Notice can be a very effective tool to resolve any payment dispute between the contractor and the subcontractor. Further, by withholding the funds the subcontractor claims is owed to them, it assures the subcontractor that if their claim is valid, that they will ultimately get paid regardless of whether or not the contractor has the ability to pay.

Because the Stop Notice is such an important tool for a subcontractor in a public works project, it is essential that the subcontractor follows the statutory rules to perfect their stop notice rights, such as properly serving a Preliminary Notice.

If the filing of a Stop Notice is ineffective in getting the subcontractor paid, then the subcontractor’s next step is to initiate a lawsuit to enforce the Stop Notice, and assert other remedies, such as asserting a claim against the payment bond. Once at this juncture in the process, it is very important that the subcontractor, if they have not done so already, retain a real estate attorney that is familiar with the stop notice procedures and related remedies.

I regularly represent clients in the East Bay, California in Oakland, California, in Walnut Creek, California, and throughout the Bay Area, in stop notice and related disputes. If you have questions, or need representation by a California real estate attorney involving a stop notice or public works contract dispute, please feel free to contact me to discuss your case or to arrange for a consultation. I can be reached at (510) 465-0025 or (925) 708-3306.

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