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If you are financing your project, the bank or lending institution may require that the contractor, subcontractors and suppliers verify that they have been paid before releasing funds for subsequent phases of the project. Shortly after your job commences, you will probably receive preliminary lien notices from subcontractors and material suppliers. Don't panic! This does not mean that a lien has been filed against your property. The law requires you to be furnished with these notices to alert you that those persons have worked on or have supplied materials for your job and may have lien rights. The law provides that anyone who furnishes labor or materials to your home can record a "Claim of Lien" or "Mechanics' Lien" against your home if they are not paid. Even if you have paid your general contractor in accordance with the contract, if he or she fails to pay any subcontractor or materials supplier who performed work or supplied materials in connection with your project, you still run the risk of having a Mechanic's Lien filed against your home. You could be required to pay a bill twice to keep from losing your home in a foreclosure proceeding. This risk is greatly reduced by protecting yourself with a contract bond and/or use of a joint control company, but it is never entirely eliminated, see
Two publications - "Voluntary Arbitration Program Guide" and "Mandatory Arbitration Program Guide" are available from the CSLB for those wishing more information. (See page 37 or ordering) You might have legal rights and remedies beyond those referred to in this booklet. If your remodeling job involves a substantial sum of money or a legal problem arises, you may want to contact an attorney for advice.
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For a large
remodeling job that involves many subcontractors and a substantial financial commitment,
you should protect yourself from liens against your home in the event the contractor does
not pay subcontractors or suppliers. Depending on local laws, you may be able to add a
release-of-lien clause to your contract, requiring the contractor or subcontractors and
suppliers to furnish a certificate of a waiver of lien. Another solution is to place your
payments in an escrow account until the work has been completed and subcontractors and
suppliers verify that they have been paid. 
