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Question DetailsAsked on 2/7/2018

In california can a non contractor put a lien on my home if all we have is a verbal agreement

Verbal agreement between acquainted adults about repairs that need to be done. The non contractor offers to do the work, pay for necessary supplies, hire help, and comete necessary repairs.THE agreement for the non contractor is as follows. once my loan is funded he wlill get paid for his completed work and necessary materials purchases by the non contractor. The work and time to complete is below expectation....way below
. Im worried can a non contractor place,a,lien??

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You need an attorney experienced in residential construction contracts and liens, and even with an attorney, given conflicts between sections of Califonia law and the UCC (which California has adopted), you are likely to get a mixed answer - one reason I moved away from that crazy place. Based on my experience (note this is NOT legal advice) and things I have read in trade news articles and such:

Yes he can physically file a lien - just a matter of filing some paperwork, and I have never heard of a court or county clerk or recorder's office (depending on state) checking for licensing by people filing liens, because they can be filed by materials providers, appliance vendors, etc - not just contractors. Though technically he is required to prefile a notice of intent first and would probably be in violation of some law if he did it. But the credit report/rating damage would be long since done by the time it got straightened out, including possible cancellation/immediate calls for payment in full on any other loans of potentially ANY type you have, including mortgage, car, boat, student loan, revolving credit, credit card, etc, under mutual default terms (google that term). And a, as I recall, 7 year serious default ding on your credit report.

But without a contractor's license of the right type - presumably a Class B General Building Contractor, once it got to court any contractor lien from HIM should be thrown out. BUT - supplier and any legally licensed subcontractor liens for materials or work they supplied but were not paid for by the GC (or non-GC in your case) would likely still be enforceable against you and your home !

No he cannot generally (assuming over $500 total work cost) enforce the contract or the lien or legally receive any payment for the work if there was not a written contract - but you would have to go to court to get that judgement/determination against him.

For working as an unlicensed contractor, he is likely guilty of a misdemeanor crime per the link below, and subject to criminal and administrative penalties as well. Possible felony for flagrant or repeat violations.

For arranging for work with an unlicensed contractor, you also are potentially liable especially if you knew he was unlicensed up front - though I have never read of a homeowner being criminally convicted for this, but evidently there have been fines levied. Plus, you are potentially personally liable to any employees or suppliers for unpaid materials debts or wages and benefits, and well as liable to fines for not providing worker's compensation and state disability/unemployment insruance and such if the contractor did not cover those, because if he was not properly licensed and bonded and insured then YOU as the property and project owner are held liable for those things, acting as your own general contractor and presumptively being the employer of the people working on the job !

Here is a link to a state CSLB page on the contract requirement (and required contents) FYI, and a blog by a law firm summarizing the penalties issue:

The hard part in any case like this is that, without written proof, getting to the bottom of what each party thought or claims the terms and timing and compensation terms were - and that is just assuming both are truthful in what they say, rather than self-defending.

The contract was actually probably voidable in the first place because saying he will be paid when you get your loan is generally not an acceptable contract term because it makes it possible for you to not pay him by just making sure the loan falls through or is not signed - because it does not provide a definite time for payment, which is a normally necessary element of a contract. If it said when you got your loan OR within X days, whichever comes first, then OK.

On the failure to complete to your satisfaction or schedule expectations - lacking a written scope of work, performance timetable and payment schedule, etc you are way out on a limb on them - plus if he is not a legal contractor, then he cannot legally make it right for you either, so another contractor is going to have to pick up where he left off and finish up. First talk to attorney about when you can do that, because of need to preserve evidence of poor work and state of completion and such for any claims. But without Bonding (which even if he has it - unlikely in this case - is likely not in effect if he was running without a license, your chances of recovery here are pretty darn slim, I would say.

I won't ask how you got your loan - but if this was a home improvement loan someone really screwed up at the lender by not confirming (by copies ofthe documentation in the file) that the contractor was legally licensed (both contractor and business licenses) and properly bonded and insured.

One other concern - I would bet the necessary permits and inspections were not done, so you are likely in a case of having to retroactively file (with new contractor on board) for building permit (commonly a 100% penalty on that) and possibly some opening up of walls if needed for inspection - plus any rework of failing items. And in California particularly, because of all the liabilities put on engineers and contractors, it can be tough to even find an Architect/Engineer to evaluate the work to determine what needs to be corrected (commonly a requirement on after-the-fact permits), not to mention finding a new contractor at a reasonable price to pick up mid-job and finish it.

Here are some other previous similar and related questions about verbal agreements, contractor liens, and unfinished/inadequate work, which might be of interest, FYI:

Answered 2 years ago by LCD

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