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The following notice must be provided to any person with whom he or she is contracting to perform work on residential property with four or fewer units. The disclosure and notice may be provided in a bid, estimate, or other document prior
to entering The following must be either in capital letters in 10-point roman boldface type or in contrasting red print in at least 8-point roman boldface type:
State law also requires that contractors provide the "Notice to Owner" regarding mechanics' liens. You may contact a CSLB district office to obtain a copy, or you may duplicate the form in this booklet. For additional information on liens, consult the "Managing a Business" section at the end of the "California Contractors License Law and Reference Book." Notice required by disciplined contractors A contractor who has had his or her license suspended or revoked due to disciplinary action two or more times within an eight-year period must provide a notice to consumers prior to entering into home improvement contracts for residential property with four or fewer units. This notice is required whether or not the suspension or revocation was stayed. The disclosure must be either in capital letters in 10-point roman boldface type or in contrasting red print in at least 8-point roman boldface type. The notice must include information on any citation, license suspension, or license revocation during the last four years resulting from any violation of any provisions of this chapter by the contractor, or any complaint or legal action relating to conduct regulated under this chapter that resulted in an unfavorable judgment against the contractor. Both parties to a contract must give their consent, which must be true and freely given. If one party's consent was obtained through fraud (deception or trickery), the contract can be canceled by the other party. A contract can also be canceled if it is signed under duress or undue influence. Examples of duress are threats of or actual physical harm. Undue influence occurs when a person does not freely exercise his or her own free will as a result of another person's influence. Business and Professions Code Section 7030, Civil Code Sections 1550, 1567 section 7018.5 of the Business and Professions Code requires that each contractor licensed under this chapter, prior to entering into a contract with an owner for work specified as home improvement or swimming pool construction pursuant to section 7159, give a copy of the following "Notice to "Owner" to the owner, the owner's agent, or the payer. The failure to provide this notice as required shall constitute grounds for disciplinary action. NOTICE TO OWNER Under the California Mechanics' Lien Law, any contractor, subcontractor, laborer, supplier, or other person or entity who helps to improve your property, but is not paid for his or her work or supplies, has a right to place a lien on your home, land, or property where the work was performed and to sue you in court to obtain payment. This means that after a court hearing, your home, land, and property could be sold by a court officer and the proceeds of the sale used to satisfy what you owe. This can happen even if you have paid your contractor in full if the contractor's subcontractors, laborers, or suppliers remain unpaid. To preserve their rights to file a claim or lien against your property, certain claimants such as subcontractors or material suppliers are each required to provide you with a document called a "Preliminary Notice." Contractors and laborers who contract with owners directly do not have to provide such notice since you are aware of their existence as an owner. A preliminary notice is not a lien against your property. Its purpose is to notify you of persons or entities that may have a right to file a lien against your property if they are not paid. In order to perfect their lien rights, a contractor, subcontractor, supplier, or laborer must file a mechanics' lien with the county recorder, which then becomes a recorded lien against your property. Generally, the maximum time allowed for filing a mechanics' lien against your property is 90 days after substantial completion of your project. TO INSURE EXTRA PROTECTION FOR YOURSELF AND YOUR PROPERTY, YOU
MAY WISH TO TAKE ONE OR MORE OF THE FOLLOWING STEPS: (1) Require that your contractor supply you with a payment and performance bond (not a license bond), which provides that the bonding company will either complete the project or pay damages up to the amount of the bond. This payment and performance bond as well as a copy of the construction contract should be filed with the county recorder for your further protection. The payment and performance bond will usually cost from 1 to 5 percent of the contract amount depending on the contractor's bonding ability. If a contractor cannot obtain such bonding, it may indicate his or her financial incapacity. (2) Require that payments be made directly to subcontractors and material suppliers through a joint control. Funding services may be available, for a fee, in your area which will establish voucher or other means of payment to your contractor. These services may also provide you with lien waivers and other forms of protection. Any joint control agreement should include the addendum approved by the registrar. (3) Issue joint checks for payment, made out to both your contractor and subcontractors or material suppliers involved in the project. The joint checks should be made payable to the persons or entities which send preliminary notices to you. Those persons or entities have indicated that they may have lien rights on your property, therefore you need to protect yourself. This will help to insure that all persons due payment are actually paid. (4) Upon making payment on any completed phase of the project, and before making any further payments, require your contractor to provide you with unconditional "Waiver and Release" forms signed by each material supplier, subcontractor, and laborer involved in that portion of the work for which payment was made. The statutory lien releases are set forth in exact language in section 3262 of the civil code. Most stationery stores will sell the "Waiver and Release" forms if your contractor does not have them. The material suppliers, subcontractors, and laborers that you obtain releases from are those persons or entities who have filed preliminary notices with you. If you are not certain of the material suppliers, subcontractors, and laborers working on your project, you may obtain a list from your contractor. On projects involving improvements to a single-family residence or a duplex owned by the individuals, the persons signing these releases lose the right to file a mechanics' lien claim against your property. In other types of construction, this protection may still be important, but may not be as complete. To protect yourself under this option, you must be certain that all material suppliers, subcontractors, and laborers have signed the "Waiver and Release" form. If a mechanics' lien has been filed against your property, it can only be voluntarily released by a recorded "Release of Mechanics' Lien" signed by the person or entity that filed the mechanics' lien against your property unless the lawsuit to enforce the lien was not timely filed. You should not make any final payments until any and all such liens are removed. You should consult an attorney if a lien is filed against your property. |
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State
law requires that all contractors give the following information on licensing and on
mechanics' liens BEFORE a contract is signed.
into a
contract.
