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1. A subcontractor begins work on a private project on March 1. To preserve lien rights, the preliminary notice must be served by:

On private works, preliminary notices must be served within 20 days of first furnishing labor, services, equipment, or materials. Serving late does not eliminate lien rights entirely but limits them to work performed within 20 days before service.

2. A preliminary notice on a private construction project must be served on:

Preliminary notices must be served on the owner, the prime contractor, and the construction lender (if any). Serving all three is necessary to fully protect lien and stop payment notice rights.

3. After completion of a private project, a claimant has how many days to record a mechanics' lien if no Notice of Completion is filed?

If no Notice of Completion or Cessation is recorded, a mechanics' lien must be recorded within 90 days of completion of the project. This is the maximum window for lien claimants.

4. If the owner records a Notice of Completion, subcontractors and suppliers must record their mechanics' lien within:

When an owner records a Notice of Completion, subcontractors and material suppliers (who are not the direct contractor) have only 30 days to record their mechanics' lien. The prime contractor has 60 days.

5. After recording a mechanics' lien, the claimant must file a lawsuit to enforce the lien within:

A recorded mechanics' lien expires unless the claimant files a lawsuit to enforce it within 90 days of recording. Failure to sue timely renders the lien void.

6. What is the purpose of a "stop payment notice" on a private construction project?

A stop payment notice (formerly "stop notice") requires the owner, lender, or public entity to withhold sufficient funds from the prime contractor to satisfy the claimant's unpaid claim.

7. An owner can release a recorded mechanics' lien by obtaining a lien release bond equal to:

To release a mechanics' lien from a property, the owner or contractor can record a lien release bond equal to 125% of the lien amount. This shifts the claimant's security from the property to the bond.

8. Which of the following is NOT required to be included in a mechanics' lien?

A valid mechanics' lien must include the claimant's name/address, employer/employee info, description of work/materials, amount of claim, description of the property, and owner's name. No SSN is required.

9. On a public works project, a claimant who did not serve a preliminary notice can still file a:

Mechanics' liens cannot be recorded against public property. However, on public works, unpaid claimants can serve a stop payment notice on the public entity to hold project funds.

10. A general contractor typically has how many days after a Notice of Completion is recorded to file a mechanics' lien?

The prime (direct) contractor has 60 days after the owner records a Notice of Completion to record a mechanics' lien. Subcontractors and suppliers have the shorter 30-day window.

11. The purpose of the preliminary notice requirement is to:

Preliminary notices protect owners by informing them early who is furnishing labor and materials. Owners can then ensure funds flow properly and avoid paying the general contractor if subs are unpaid.

12. A claimant recorded a mechanics' lien but was paid in full before filing a lawsuit. The claimant must:

Once paid, the claimant must release the lien. If the owner makes a written demand, the claimant has 30 days to record a release. Failure to release can result in damages and attorney's fees.

13. Which statement about a "joint check agreement" is correct?

A joint check agreement requires checks to be made payable jointly to the GC and subcontractor or supplier. This ensures the sub/supplier actually receives payment and reduces lien exposure.

14. California law requires that contractors give residential owners a "Notice to Owner" (preliminary notice). What additional notice must contractors give homeowners on home improvement projects?

Home improvement contractors must provide a "Notice to Owner" regarding the contractor's right to file a mechanics' lien AND a "Notice of Right to Cancel" informing homeowners of their three-day rescission right.

15. Workers' compensation insurance in California is required for:

California Labor Code §3700 requires every employer to secure workers' compensation coverage before employing even one employee. There is no minimum employee threshold.

16. A contractor operates without workers' compensation insurance. Cal/OSHA or the Labor Commissioner may issue:

Operating without WC insurance can result in a stop order immediately prohibiting the use of employee labor, as well as substantial fines of up to $100,000. The CSLB may also suspend the license.

17. Workers' compensation is described as a "no-fault" system. This means:

In a no-fault WC system, injured workers receive benefits regardless of whether they or the employer caused the injury. In exchange, workers' comp is generally the exclusive remedy against the employer.

18. When an employee reports a work injury, the employer must provide a claim form (DWC-1) within:

Upon notice of a work injury, the employer must provide the employee with a DWC-1 claim form within one working day. Failing to do so can result in penalties and expanded employer liability.

19. While a workers' compensation claim is being investigated, the employer must authorize up to how much in medical treatment?

California law requires employers to authorize up to $10,000 in medical treatment within one working day while a claim is being investigated (the "30-day presumption" period for treatment authorization).

20. Which of the following best describes "temporary total disability" (TTD) benefits in California WC?

TTD benefits replace approximately 2/3 of the injured worker's pre-injury average weekly earnings while they are temporarily unable to work, subject to state minimum and maximum weekly amounts.

21. A "permanent and stationary" (P&S) status in workers' compensation means:

When a treating physician declares an injured worker permanent and stationary (P&S) — also called maximum medical improvement — the acute phase of treatment has ended and permanent disability is evaluated.

22. A corporate officer of a corporation may be excluded from workers' compensation coverage if:

Corporate officers may elect to exclude themselves from workers' comp coverage by completing the required exclusion form. This election must be made in writing and kept on file.

23. What penalty may an employer face for not posting the required workers' compensation notice in the workplace?

Employers are required to post the DWC "Notice to Employees" poster in a conspicuous location. Failure to post can result in fines up to $7,000 and expanded employer liability for claims.

24. Under California workers' compensation, which body system injury typically qualifies for a vocational rehabilitation benefit?

Supplemental Job Displacement Benefits (SJDB) are available when an injured worker cannot return to their usual job due to permanent partial disability and the employer doesn't offer regular, modified, or alternative work.

25. The "exclusive remedy" doctrine in workers' compensation means:

Workers' comp is the exclusive remedy against the employer for work injuries. Employees generally cannot sue their employer in civil court, though exceptions exist for serious and willful employer misconduct.

26. A contractor must obtain workers' compensation coverage before:

WC coverage must be in place before the first day any employee begins work. There is no grace period — employing workers without coverage even for one day is a violation.

27. Return-to-work programs in workers' compensation are designed to:

Return-to-work programs benefit both employees (income continuation, faster recovery) and employers (reduced claims costs, retained experienced workers). Offering modified duty can significantly reduce WC costs.

28. A subcontractor works on a general contractor's job site without workers' compensation insurance. If the subcontractor's employee is injured, who may be liable?

When an uninsured subcontractor's employee is injured, the general contractor (as statutory employer) may be liable for workers' comp benefits. This is why GCs should verify WC certificates before allowing subs on site.

29. A contractor hires their very first employee, a part-time helper. When must the contractor carry workers' compensation insurance?

Labor Code §3700 requires every California employer to secure workers' compensation coverage, even for a single part-time employee. There is no minimum-hours or minimum-headcount exemption.

30. A contractor with employees knowingly operates without workers' compensation insurance. Under California law, this failure to insure is:

Labor Code §3700.5 makes it a misdemeanor for an employer to be unlawfully uninsured for workers' compensation. It is punishable by a fine, imprisonment in county jail, or both.

31. Cal/OSHA's Division of Labor Standards Enforcement discovers a contractor employing uninsured workers. What immediate action can it take at the job site?

Under Labor Code §3722, the state may issue a stop order halting use of employees until the employer secures workers' compensation coverage. Penalties for being uninsured can reach up to $100,000.

32. Workers' compensation in California is described as a "no-fault" system. What does this mean for an injured employee?

Labor Code §3600 establishes workers' compensation as a no-fault system: an employee injured in the course of employment receives benefits without having to prove the employer was at fault, and even if the employee was partly at fault.

33. An employee covered by workers' compensation is injured on the job. Generally, the employee's exclusive remedy against the employer is:

Labor Code §3602 makes workers' compensation the exclusive remedy for an employee against the employer for a work-related injury. In exchange for guaranteed benefits, the employee generally cannot sue the employer in civil court.

34. A roofing corporation has two shareholders who are also its only officers, and no other workers. Regarding workers' compensation coverage for themselves, they may:

Under Labor Code §3351, qualifying corporate officers and directors who own stock may elect, in writing, to be excluded from workers' compensation coverage. The exclusion is not automatic; it requires a signed waiver filed with the insurer.

35. After an employee reports a work injury, within what time must the employer provide a workers' compensation claim form (DWC-1)?

Labor Code §5401 requires the employer to provide the DWC-1 claim form to the injured employee within one working day after the employer knew or should have known of the injury.

36. While a workers' compensation claim is being investigated and has not yet been accepted or denied, the employer's insurer must authorize medical treatment up to:

Labor Code §5402 requires the insurer to authorize and pay for medical treatment up to $10,000 while the claim is being investigated, so the injured worker is not left without care during the decision period.

37. An employee is unable to work while recovering from a job injury. Temporary disability benefits generally replace approximately what portion of the worker's lost wages?

Temporary total disability benefits generally equal two-thirds of the worker's average weekly wages, subject to statutory minimums and maximums. They replace lost income while the worker recovers.

38. An injured worker's doctor finds the worker can no longer return to their old job, and the employer offers no alternative work. The worker may be entitled to a supplemental job displacement benefit, which is:

Labor Code §4658.7 provides a supplemental job displacement benefit in the form of a voucher that helps pay for retraining or skill enhancement when an injured worker does not return to work and is not offered suitable alternative employment.

39. Every California employer subject to workers' compensation must, in the workplace, do what regarding coverage?

Labor Code §3550 requires employers to post a notice, in a conspicuous location, informing employees that the employer carries workers' compensation insurance and explaining basic employee rights.

40. A general contractor hires an unlicensed "subcontractor" who brings their own crew to the job site. If one of that crew is injured, who is most likely treated as the employer for workers' compensation purposes?

Under Labor Code §2750.5, a person performing work requiring a contractor's license without one is presumed to be an employee, not an independent contractor. The general contractor can therefore be liable as the employer for the unlicensed sub and its workers.

41. A contractor's workers' compensation policy is cancelled and the contractor has not filed an exemption certificate. What is the consequence for the CSLB license?

Under Bus. & Prof. Code §7125, a contractor with employees must keep a valid workers' compensation certificate on file with the CSLB. If coverage lapses and no exemption is on file, the license is automatically suspended.

42. A property owner is injured when a wall built by the contractor's crew collapses on her. Which of the contractor's policies is designed to respond to this third-party bodily injury claim?

Commercial general liability (CGL) insurance covers third-party bodily injury and property damage caused by the contractor's operations. Workers' compensation covers the contractor's own employees, not third parties.

43. Which type of insurance is specifically designed to cover a structure and its materials against fire, theft, and weather damage WHILE it is still under construction?

Builder's risk insurance (also called course-of-construction insurance) protects the building project and its materials from physical loss such as fire, theft, vandalism, and certain weather events during construction.

44. Which statement best describes the key difference between an insurance policy and a surety bond?

Insurance is a two-party contract between the insurer and the insured that transfers risk of loss. A surety bond involves three parties (principal, obligee, surety) and guarantees the principal's performance or obligations; the surety can seek reimbursement from the principal for amounts it pays out.

45. A general contractor requires each subcontractor to provide proof that they currently carry liability and workers' compensation insurance. The document the subcontractor's insurer issues to verify this coverage is called a:

A certificate of insurance is a document issued by an insurer summarizing the existence, types, and limits of a policyholder's coverage. General contractors routinely require certificates from subcontractors before allowing them on the job.

46. A project owner asks to be named an "additional insured" on the general contractor's liability policy. What does this accomplish for the owner?

Naming a party as an additional insured extends the policyholder's liability coverage to that party for covered claims connected to the named insured's work. Owners commonly require this so they are protected if a third party sues over the contractor's operations.

47. A contractor's employee causes an accident while driving a company truck to a job site. Which policy is primarily intended to respond to the resulting third-party vehicle and injury claims?

Commercial auto insurance covers liability and damage arising from vehicles used in the contractor's business. Personal auto policies generally exclude vehicles used for business purposes.

48. A design-build contractor makes a professional design error that causes a client financial loss but no bodily injury or property damage. Which coverage is specifically intended for this kind of claim?

Errors and omissions (E&O), or professional liability, insurance covers financial losses to clients arising from negligent professional services such as design errors. A standard CGL policy typically excludes purely professional negligence.

49. Which of the following parties is generally NOT entitled to record a mechanics' lien on a private construction project?

Mechanics' lien rights belong to those who furnish labor, services, equipment, or materials that improve the property, such as contractors, subcontractors, laborers, suppliers, and equipment lessors. A lender that merely provided financing has no mechanics' lien right.

50. On a private project where NO Notice of Completion or Cessation is recorded, what deadline applies to ALL claimants for recording a mechanics' lien?

When no Notice of Completion or Cessation is recorded, every claimant, whether the prime contractor or a subcontractor, has 90 days after actual completion of the work of improvement to record a mechanics' lien. The shorter 30/60-day periods only apply once such a notice is recorded.

51. A subcontractor served a proper preliminary notice but the owner never paid. Before recording a mechanics' lien, the subcontractor should make sure the lien claim states an amount that is:

A mechanics' lien may only secure the reasonable value of the work, services, equipment, or materials actually furnished and not yet paid for. Willfully overstating the lien amount can render the entire lien unenforceable.

52. On a private project, an owner who wants to shorten the time claimants have to record liens should:

Recording a Notice of Completion shortens the lien-recording period: the direct contractor then has 60 days and subcontractors/suppliers have 30 days, instead of the 90-day period that applies when no such notice is recorded.

53. A contractor recorded a valid mechanics' lien but, 100 days later, has neither been paid nor filed a foreclosure lawsuit. What is the status of the lien?

Under Civil Code §8460, a recorded mechanics' lien must be enforced by filing a foreclosure lawsuit within 90 days of recording. Because more than 90 days passed with no lawsuit, the lien has expired and become unenforceable.

54. A subcontractor signs a lien waiver in exchange for a progress payment that has not yet actually cleared. Which type of waiver is appropriate so the waiver only takes effect once payment is received?

A conditional waiver and release becomes effective only when the claimant actually receives the payment. An unconditional waiver releases lien rights immediately and should not be signed until payment has truly cleared.

55. A subcontractor records a $40,000 mechanics' lien on a home that the owner is trying to sell. To clear title so the sale can close, the owner records a lien release bond. The bond amount must be:

Under Civil Code §8424, a lien release bond must be 125% of the claimed lien amount. For a $40,000 lien, that is $50,000. The bond substitutes as security so the claimant's recovery shifts from the property to the bond.

56. An owner of a private residential project withholds final payment because of disputed change-order work. Absent a genuine good-faith dispute, the owner must generally pay the direct contractor the final retention within how long after completion?

Under Civil Code §8800, on a private work the owner must pay the direct contractor any retention within 45 days after completion of the work of improvement, unless there is a good-faith dispute. Wrongful withholding can expose the owner to a penalty plus the amount withheld.

57. On a private work of improvement, a supplier serves a stop payment notice on the construction lender. To make the notice "bonded" so the lender is obligated to withhold funds, the supplier should provide a bond equal to:

Under Civil Code §8506, a stop payment notice served on a construction lender must be accompanied by a bond of 125% of the claim amount to obligate the lender to withhold funds. The bond protects the lender if the claim is later found invalid.

58. A contractor abandons a private project before it is finished and the owner records a Notice of Cessation after work stops for a continuous period. The Notice of Cessation primarily serves to:

When a project stalls, a recorded Notice of Cessation (after work has ceased for a continuous statutory period) triggers the same shortened lien-recording deadlines as a Notice of Completion, giving the owner certainty even though the work was never finished.

59. An employee is injured on the job while working for an employer who has unlawfully failed to obtain workers' compensation insurance. Under California Labor Code §3706, the injured employee may:

Labor Code §3706 strips an uninsured employer of the exclusive-remedy shield. The injured worker may sue the employer in civil court for damages (with several presumptions favoring the employee) on top of seeking benefits from the Uninsured Employers Benefit Trust Fund.

60. An employee injured while working for an uninsured employer cannot collect from the employer because the employer is insolvent. The worker may apply for benefits from:

Labor Code §3715 allows an injured worker of an uninsured employer to file a claim against the Uninsured Employers Benefit Trust Fund administered by the Department of Industrial Relations. The fund pays benefits and then pursues the uninsured employer for reimbursement.

61. Under California workers' compensation, medically necessary treatment by chiropractors, physical therapists, and occupational therapists for a single industrial injury is generally capped at:

Labor Code §4600 generally limits treatment to 24 visits each for chiropractors, physical therapists, and occupational therapists per industrial injury. Surgical and certain post-surgical exceptions apply, but the 24-visit cap is the rule for ordinary cases.

62. The amount a doctor or hospital may bill the workers' compensation insurer for treating an injured worker is governed primarily by:

Labor Code §139.6 directs the Administrative Director of the Division of Workers' Compensation to adopt and update an Official Medical Fee Schedule. Providers treating WC patients are generally limited to the OMFS rates, regardless of their usual cash or group-health pricing.

63. When temporary disability indemnity is owed, the first payment is generally due:

Labor Code §4650 requires the first temporary disability payment to be made within 14 days after the employer knows of both the injury and the disability. Late payments without genuine dispute carry an automatic self-imposed 10% increase under the same section.

64. On a builder's risk policy covering a new commercial building during construction, which of the following losses is MOST LIKELY excluded from coverage?

Builder's risk policies cover physical loss to the project (fire, theft, vandalism, wind, etc.), but standard forms exclude the cost of repairing or replacing components that fail due to the contractor's own faulty workmanship. Resulting damage to other property may still be covered, but the defective work itself is not.

65. A general contractor is the named insured on a builder's risk policy for a custom home. The property owner asks why their own homeowner's policy is not enough. Which statement is the BEST explanation?

Most standard homeowner's policies either exclude or sharply restrict coverage for new construction and renovation in progress. A builder's risk policy is purpose-built for the construction phase and covers materials, fixtures, and the structure itself against physical loss until the project is complete.

66. A subcontractor is added as a "named insured" rather than only as an "additional insured" on the prime contractor's builder's risk policy. Practically, the named insured status differs because the named insured:

A named insured is a primary party to the policy with direct rights (to file claims, receive notices, etc.) and obligations (such as premium payment and cooperation). An additional insured has narrower, derivative coverage tied to the named insured's work and policy terms.

67. An architect prepared plans for a project that the owner ultimately decided not to build, and the architect's fees went unpaid. Under California law, the architect may record a special lien against the property known as a:

Civil Code §8484 creates a design professional's lien for licensed architects, registered engineers, and licensed land surveyors who have prepared plans for a work of improvement that is never commenced. It is distinct from a mechanics' lien, which generally requires that improvements actually be made to the property.

68. On a California public works project, a second-tier supplier was not paid by the subcontractor. Because no mechanics' lien can attach to public property, the supplier's primary recovery vehicle is generally:

On California public works of $25,000 or more, the prime contractor must furnish a payment bond. Civil Code §9100 lists those entitled to make claims on that bond, including subcontractors, laborers, and suppliers down the chain. The bond, not a lien on the public property, is the principal source of recovery.

69. Which statement BEST captures the practical difference between a mechanics' lien and a stop payment notice on a private project?

A mechanics' lien creates an encumbrance on the real property that can be foreclosed. A stop payment notice does not attach to the property; instead, it directs the owner or lender to withhold construction funds otherwise payable to the contractor, giving the claimant a claim against those funds.

70. A subcontractor prepares a mechanics' lien claim. Which of the following items is REQUIRED on the face of the lien?

Civil Code §8410 specifies the required contents of a mechanics' lien, including the claimant's name and address, the amount unpaid, the owner's name (if known), a description of the work, and a description of the site sufficient for identification. The claim must be signed and verified by the claimant or their agent.

71. A subcontractor records a mechanics' lien but fails to serve a copy of the lien (with the required proof of service affidavit) on the owner. Under California's strict-compliance rule, the most likely consequence is that the lien:

Civil Code §8416 requires that a recorded mechanics' lien be served on the owner (or reputed owner) along with a proof of service affidavit. Failure to comply with this strict-compliance step renders the lien unenforceable, even if the lien is otherwise valid in form and timing.

72. On a private project where no Notice of Completion is recorded, a subcontractor who served a proper preliminary notice must generally serve a stop payment notice on the construction lender within:

Stop payment notices on private projects must be served within the same outer deadlines that apply to mechanics' liens: generally within 90 days after completion or cessation of the work of improvement if no Notice of Completion or Cessation is recorded. Recording such a notice shortens these deadlines.

73. A subcontractor on a private residential remodel wishes to preserve mechanics' lien rights. The preliminary 20-day notice under Civil Code §8200 must be served:

Civil Code §8200 requires every claimant (other than the direct contractor and laborers for wages) to serve a preliminary notice on the owner, the direct contractor, and the construction lender (if any) not later than 20 days after first furnishing labor, service, equipment, or materials. Late service is allowed but limits lien rights to labor/materials furnished in the 20 days before notice and thereafter (Civil Code §8204). Service only on the owner is insufficient. The 90-day window is the lien recording deadline (§8412/§8414), not the preliminary-notice deadline.

74. On a private work of improvement, a direct (prime) contractor must record a mechanics' lien within how many days after completion of the work, when no notice of completion or cessation has been recorded?

Under Civil Code §8412, a direct contractor must record its mechanics' lien within 90 days after completion of the work of improvement. If the owner records a notice of completion or cessation under §8182, the direct contractor's window is shortened to 60 days after that recording (§8412), and a subcontractor/claimant's window is shortened to 30 days. The 90-day fallback applies when no NOC is recorded. A 1-year window confuses lien recording with the §8460 deadline to foreclose on a recorded lien (90 days to file suit).

75. After recording a mechanics' lien on a private project, a claimant must file an action to enforce (foreclose) the lien within:

Civil Code §8460 requires a claimant to commence an action to enforce a recorded mechanics' lien within 90 days after the lien is recorded; otherwise the lien expires and is unenforceable. The claimant and owner may extend the deadline by written agreement under §8460(b), but only to up to one year from completion. The 180-day option does not exist. The 1-year-from-award and 4-year statute options confuse breach-of-written-contract limitations with the much shorter mechanics'-lien deadline. Missing this 90-day window is one of the most common ways subcontractors lose lien rights.

76. Under Labor Code §3700, a California contractor that has even one employee must:

Labor Code §3700 requires every California employer (including a contractor with even one employee, full- or part-time) to secure workers' compensation by either purchasing a policy from an admitted insurer or obtaining a Certificate of Consent to Self-Insure. Failure is a misdemeanor under §3700.5 and can result in stop-work orders, $1,500-per-employee penalties under §3722, and CSLB license suspension under Bus. & Prof. §7125. Liability insurance is required of LLCs but is a different rule. W-2 is a tax form. ACA health insurance has different thresholds (50+ FTEs) and is not the §3700 rule.

77. A licensed contractor with no employees has filed an Exemption from Workers' Compensation with the CSLB. The contractor then hires an employee. Under Bus. & Prof. Code §7125 and §7125.4, what must the contractor do?

Bus. & Prof. Code §7125 conditions a contractor's license on either having workers' comp coverage (if any employees) or a current exemption (if none). Under §7125.4, the exemption is void by operation of law the moment the contractor hires an employee, and the contractor must immediately obtain coverage and file the Certificate of Workers' Compensation Insurance with the CSLB. Waiting until renewal or operating uninsured for 90 days while shopping is a violation that triggers automatic license suspension. Cancellation/re-application is unnecessary — the license can be maintained by filing the certificate.

78. A material supplier delivers $40,000 of lumber to a private construction project on July 1. To fully preserve mechanics' lien, stop payment notice, AND payment bond claim rights, the supplier must serve a preliminary notice under Civil Code §8200 on the owner, direct contractor, and construction lender no later than:

Civil Code §8200 requires every claimant other than the direct contractor and wage-laborers to serve preliminary notice on the owner/reputed owner, direct contractor, and construction lender (if any) not later than 20 days after the claimant FIRST FURNISHES labor, service, equipment, or materials. Late service is permitted but limits lien and stop-payment-notice rights to work/materials furnished in the 20 days BEFORE service and thereafter (Civil Code §8204). The 20-day clock runs from first delivery, not from invoice date, deed recording, or notice of commencement. Service must be by registered/certified/first-class mail with proof of service affidavit under §8108–§8118.

79. On a PUBLIC works project, a subcontractor with unpaid invoices serves a 'stop payment notice' on the public entity under Civil Code §9358 (formerly known as a 'stop notice'). The effect is to:

Civil Code §9350 et seq. (which replaced former §3179 et seq.) governs stop payment notices on public works. A proper stop notice served on the public entity requires it to withhold from remaining unpaid contract funds an amount sufficient to answer the claim plus reasonable costs of suit (typically 125% of the claim) until the dispute is resolved or the time to enforce expires. Mechanics' liens are NOT available on public property (sovereign immunity); the awarding body need not terminate the contract; and direct garnishment of bank accounts requires a separate judgment. The stop payment notice and the §9550 payment bond claim are the two primary remedies for unpaid subs on public works.

80. An owner wants to remove a $60,000 mechanics' lien recorded against the property so the property can be sold or refinanced. Under Civil Code §8424, the owner may obtain a release of the lien by recording a lien release bond in the amount of:

Civil Code §8424 allows an owner (or other interested party) to record a lien release bond in the amount of 125% of the claim of lien, issued by an admitted surety insurer. Upon recording, the bond replaces the real property as the security for the lien, and the lien is released. The claimant then must pursue the bond (and surety) within the §8460 90-day enforcement window — but the surety also has standard defenses. The 100%, all-cash, and 50% options misstate the rule. The 25% buffer covers attorneys' fees and interest. Lien release bonds are routinely used during real-estate closings to clear title without paying disputed amounts.

81. A homeowner has a $40,000 judgment against a licensed contractor for incomplete work on the family residence. The contractor's $25,000 license bond is also being pursued by an unpaid framer ($8,000 wage claim) and by a non-residential commercial owner ($30,000 damages). Under the §7071.11 priority scheme, the homeowner can expect approximately:

Bus. & Prof. Code §7071.11 priority order: (1) wage/benefit/trust-fund claims by employees, (2) damages to a RESIDENTIAL property owner under a home improvement contract, (3) damages to a non-residential property owner, (4) other claims. Each higher priority is paid in full before any lower priority receives anything; pro-rating applies only WITHIN a tier when funds are insufficient. Here: framer ($8,000 wages) is paid first as priority 1, leaving $17,000. The residential homeowner is paid next as priority 2 and gets the entire remaining $17,000 ($40,000 claim partially satisfied). The commercial owner (priority 3) gets nothing from the bond and must pursue the contractor personally.

82. A subcontractor's commercial general liability (CGL) policy provides 'additional insured' status to the prime contractor for the sub's negligent work. If a third party is injured and sues both the sub and prime, under California law:

Civil Code §2782.05 (effective 1/1/2013, with limited residential exceptions in §2782 and §2782.02) voids or limits indemnity provisions and additional-insured obligations that require a subcontractor (or its insurer) to indemnify or insure a prime/owner for the prime/owner's own active negligence. The sub remains responsible for its proportionate share of fault and must provide a defense as to claims arising out of the sub's scope. The endorsement is not categorically void, nor does it cover the prime for the prime's own active negligence. Insurance Code §11580.04 limits 'sole negligence' indemnity in any event.