Insurance & LiensQuestion 1556 of 1632

On a public works project, subcontractors generally CANNOT record a mechanics lien against the public property. Their principal payment security instead is the:

a.Notice of non-responsibility recorded by the public entity's agent
b.Builder's risk policy the public entity carries on the improvement
c.Payment bond, plus a stop payment notice against public funds
d.Performance bond posted by the direct contractor at award

Explanation

Public property cannot be sold to satisfy a private claim, so the legislature substituted two remedies: the direct contractor's payment bond and a stop payment notice served on the public entity against funds still unpaid. (d) is the sharpest distractor, because both bonds are posted on the same job — but the performance bond answers to the public entity for completion, and a sub is not its beneficiary. (a) concerns work ordered by someone other than the owner. (b) is first-party property insurance on the work itself and pays no one for unpaid labour or materials.

Law Reference: Civil Code §9100 et seq. / §9350 et seq.

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