Before we get to the mechanic’s lien, we have to talk about a preliminary 20-day lien notice. Except for a contractor that has contracted directly with the property owner, this notice must be sent to the property owner to notify him of a subcontractor’s or supplier’s contribution to the property. The notice should be sent within 20 days from the time work began by that contractor to secure all the work performed. If it is filed later, it will only reach back 20 days from the date of the notice. If the document has not been sent (whether or not received), no mechanic’s lien can be enforced.

The mechanic’s lien is a document recorded with the County Recorder and mailed to the property owner. It advises the property owner that a contractor, sub-contractor, or material supplier is asserting a claim against the property because there is an unpaid bill for work performed on the property. This starts the process to create a lien against the property. If properly enforced, the property can be foreclosed upon to pay for the outstanding unpaid balance.

The mechanic’s lien must be recorded within certain time periods, either 30, 60, or 90 days. However, the recording is simply not enough. Within 90 days of recording a mechanic’s lien, a lawsuit must be filed to foreclose the lien. The time limits are critical to protect the lien. If you miss a deadline, even by one day, could result in the loss of a claim worth thousands of dollars.

If You Are the Property Owner

For the property owner, don’t ignore a preliminary 20-day notice. You are being told that someone needs to get paid. Make sure your contractor has paid the subcontractors and suppliers by getting copies of unconditional releases at the time of payment, or issue joint checks to avoid huge financial surprises. If a mechanic’s lien has been recorded against your property or a lawsuit is filed, immediately consult an attorney knowledgeable in mechanic’s lien law such as David H. Ricks & Associates.

Because you could lose your property if you ignore these documents, it is important that you take action immediately.

California’s Civil Code, section 1549 provides: “A contract is an agreement to do or not to do a certain thing.” Courts have defined the term as follows: “A contract is a voluntary and lawful agreement, by competent parties, for good consideration, to do or not to do a specified thing.” (Robinson v. Magee [1858] 9 Cal. 81, 83.)

A breach of contract is when one or more parties fail to perform the agreement entered into prior to the performance of the specified thing.

Breach of contract claims take on many forms. Some examples include a simple failure to pay for a product of service provided; a product that fails to perform as promised; a failure to perform a service promised for a specific price; or performing an act that was prohibited under contract. Most often claims for breach of contract arise because the person or entity accused of breaching a contract caused monetary damages to another party to the contract.

A Lawsuit May Not Be Needed

Many breach of contract claims are resolved without the need for lawyers and litigation because the parties to the contract realize that they can rearrange their contract by some alternative level of performance that is acceptable. For example, Business A sells 100 widgets to Business B, which agrees to pay $3,000 in 30 days following delivery. The widgets are delivered but after 30 days, payment has not been made. Business B has breached its contract by failing to pay under the terms of the agreement. Business B informs Business A that it can not pay within 30 days but will have payment within 60 days. Payment is made in 60 days and Business A agrees to accept this performance.

While there was a breach, there was an accord and satisfaction of that breach. The two businesses avoided a lawsuit because they worked out their differences. Thousands of businesses each day in California make contracts, breach contracts, modify the terms, and then resolve their differences.

However, there are many that cannot resolve their differences and must seek an attorney to help them collect damages under a breach of contract theory. California law states that a breach of contract claim is proven if the evidence supports the following findings:

1. That the plaintiff (this is the person suing) and the defendant (the person being sued) entered into a contract;
2. That plaintiff did all, or substantially all, of the significant things that the contract required him to do or that he was excused from doing those things;
3. That all conditions required by the contract for defendant’s performance had occurred;
4. That the defendant failed to do something that the contract required her to do; and
5. That plaintiff was harmed by that failure.

If you have a claim against another individual or company that you believe meets all these evidentiary elements, you may wish to consult an attorney to review your case and see if you have a legal claim to recover damages from a breach of contract. David H. Ricks & Associates handles many types of breach of contract cases in California’s Inland Empire. These cases can range from collection matters, trade secret violations, employment contract disputes, construction disputes, and performance issues to complicated and technical breaches of agreements.

Call 909-481-5856 now to discuss your breach of contract case with an attorney from David H. Ricks & Associates, or submit a description of your case through this website. David H. Ricks & Associates handles California breach of contract cases in all of the Inland Empire.

This problem was prevalent in the time period when the property values were skyrocketing. In fact, there was a lot of litigation between buyers and sellers because we were seeing property values rise weekly and sellers were trying to capture the highest price regardless of the consequences to the buyer and his or her family. Right now, we do not see this problem as much because the property values are either sliding or are stable.

So if you find a home you really want and you have entered into a sales contract for the purchase of the property and the seller tries to back out of the sale, the purchaser may specifically enforce the sale of the property. This method of enforcement is through what is called “specific performance.” This is a cause of action that allows a court to equitably enforce your rights against the wrongful seller. In other words, the court can require the sale to take place upon the terms in the sales agreement and escrow instructions.

Specific Enforcement in Real Estate Agreements

Not every breach of contract can be specifically enforced because monetary damages can compensate the injured party for the breach. However, with real estate, there is a presumption that real estate is unique. The California Civil Code, section 3387, states: “It is to be presumed that the breach of an agreement to transfer real property cannot be adequately relieved by pecuniary compensation. In the case of a single-family dwelling which the party seeking performance intends to occupy, this presumption is conclusive. In all other cases, this presumption is a presumption affecting the burden of proof.” A conclusive presumption means it cannot be disputed.

If a seller tries to break the contract, the buyer must take immediate action to prevent the seller from selling the property to another purchaser. If the buyer does not act, the property may be sold, leaving the buyer with only monetary damages. Promptness is key.

These same rights of specific performance may not be enforceable by the seller. The seller’s rights may only be for damages. Seek immediate legal advice to enforce your rights if your contract was breached.

Contact David H. Ricks & Associates at 909-481-5856 to learn your legal rights under your real estate sales contract.

This is probably one of the most often asked questions of me when I start my review of a breach of contract case.

Whether a case proceeds to litigation often depends on the ability to recover the cost of attorney’s fees from the opposing party. I often see businesses or individuals that are owed $20,000 or less from someone who did not pay for the services or did not pay on a loan. Securing the recovery of this money may be critically important to the financial success of the business or individual. In these situations, adding the cost of legal fees to the monthly expenses is burdensome and difficult to cover while a collection lawsuit is ongoing. So what they want to know is whether that extra expense for legal fees going to be paid by the defendant when collection of the judgment is secured.

In California, what is known as the American Rule is applied to all lawsuits unless otherwise modified by contract or statute. The American Rule states in essence that each party to a lawsuit must pay his own attorney fees regardless of who wins the lawsuit [Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 504]. In the very early days of the State of California, the legislature determined that the American Rule would apply. The Code of Civil Procedure section 1021 states: “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties…” This code has always allowed contracting parties to negotiate the recovery of attorney fees to the prevailing party. Also, since the enactment of the American Rule, several laws have been enacted that have provided the recovery of legal fees to the prevailing party in a lawsuit.

So the answer to the question to the question depends on whether the contract provides for the recovery of legal fees, or whether some law states that a prevailing party will recover attorney fees. So looking to the contract first, and to the law second will answer the question for your specific circumstances. Consulting with a good contract litigation attorney, such as David H. Ricks & Associates, can help you find out the answer to your breach of contract question.

In California, what is known as the American Rule is applied to all lawsuits unless otherwise modified by contract or statute. The American Rule states in essence that each party to a lawsuit must pay his own attorney fees regardless of who wins the lawsuit.

Except for certain circumstances—which will be explained later—a contractor, subcontractor, or materials supplier must precede legal action by issuing a document called a preliminary 20-day notice. This document must be sent before recording a mechanic’s lien, filing a stop notice, or asserting a claim against a payment bond. Unless exempted from having to serve a preliminary notice, failure to serve this document prevents the contractor, subcontractor, or materials supplier from exercising certain rights against a property, retained construction funds, or payment bond.

Exceptions

There are certain types of people or companies that do not have to serve a preliminary 20-day notice on the owner of the property. These include a contractor or material supplier that is contracted directly with the owner. This is because the notice is designed to advise an owner of your presence on the project to help make sure you get paid. But if you are contracted directly with the property owner, the owner knows you and knows you need to get paid. Be aware, that the preliminary notice may still required and sent to the construction lender if the project is being funded by a construction lender.

Another exception to the general rule is that laborers for wages or “or a person or entity to whom a portion of a laborer’s compensation is paid.” This most often applies to a union or employee trust.

What Is Contained in a Preliminary 20-Day Notice?

A preliminary 20-day notice must contain the following information:

1. A general description of the labor, service, equipment, or materials furnished—or to be furnished—and an estimate of the total price.
2. The name and address of the person furnishing that labor, service, equipment, or materials.
3. The name of the person who contracted for purchase of that labor, service, equipment, or materials.
4. A description of the job site sufficient for identification.
5. The following statement in boldface type:

NOTICE TO PROPERTY OWNER
If bills are not paid in full for the labor, services, equipment, or materials furnished or to be furnished, a mechanic’s lien leading to the loss, through court foreclosure proceedings, of all or part of your property being so improved may be placed against the property even though you have paid your contractor in full. You may wish to protect yourself against this consequence by (1) requiring your contractor to furnish a signed release by the person or firm giving you this notice before making payment to your contractor, or (2) any other method or device that is appropriate under the circumstances.

Other than residential homeowners of dwellings containing fewer than five units, private project owners must notify the original contractor and any lien claimant who has provided the owner with a preliminary 20-day lien notice in accordance with Section 3097 of the Civil Code that a notice of completion or notice of cessation has been recorded within 10 days of its recordation. Notice shall be by registered mail, certified mail, or first-class mail, evidenced by a certificate of mailing. Failure to notify will extend the deadlines to record a lien.

If the notice is given by a subcontractor who has failed to pay all compensation due to his or her laborers on the job, the notice shall also contain the identity and address of any laborer and any express trust fund to whom employer payments are due. If an invoice for materials or certified payroll contains the information required by this section, a copy of the invoice, transmitted in the manner prescribed by this section shall be sufficient notice.

As stated earlier, the preliminary notice is to be given no later than 20 days after work has first been performed by the person or entity making the claim. This allows the claimant to make a claim for all the work or materials provided. However, if the preliminary notice is sent later, it will revert back twenty days and thereafter forward for any other work provided.

The Purpose of the Preliminary 20-Day Notice

Besides the right to lien the property, make a claim against a bond, or to file a stop notice, the other advantage is that a preliminary notice requires the owner to provide the claimant with any Notice of Completion filed with the county recorder. Failure to do so extends the time to record a mechanic’s lien, make a bond claim, or submit a stop notice.

Finally, the preliminary 20-day notice can be delivered personally, by leaving the note at the owners address of residence or place of business with some person in charge; or by first-class registered or certified mail, postage prepaid, addressed to the person to whom notice is to be given at his or her residence or place of business address, or at the address shown by the building permit on file with the authority issuing a building permit for the work.

The complete legal requirements for a preliminary 20 day notice can be found at Civil Code section 3097. Or you can contact David H. Ricks & Associates and meet with an attorney and get your questions regarding California construction law by a California construction attorney.