Contractor threatening mechanics lien unless his extortion is paid

[Erick Garske]

Originally I hired a contractor in March 2015 for a job that he claimed would take no more than ten days. Three months later in March, he completed 80% of the work and had been paid 90% of balance. He claimed to be on-site five days week from 7 am to 7 pm. In reality he made cameo appearances and outsourced the work. Moreover, he demanded regular payments during the job in order to pay his crew. In actuality, he asked me to pay one of his subcontractors out of the monies owed to him ahead of schedule to cover the subcontractors cost. I did so, but this subcontractor had to travel from San Diego to Orange County to get paid. This contractor left his tools and paint sprayer outside of my property unattended for weeks on end after these tools were no longer needed. Regrettably, the tools are missing. 

Due to the describe issues with the contract, I wrote the contractor outlining the fact that the remaining work to be completed exceeded the balance owed, and that we would rather end the contract now and move forward with another contractor.

He had tentatively agreed to this, but when he discovered that his tools were missing he threatened to place a lien on the property for $3900 this week. If he does this, as he pointed out, it would foil the sale of the property. As an out he is willing to accept $1200 in payment in order not to file the lien. 

This lien claim is wholly unwarranted and this offer, in my humble opinion, is borderline extortion. 

What should I do?

[Rob K.]

In California, you can obtain a bond to allow you to close escrow. (known as "bonding around"). For such a small amount, your title company may also allow you to close escrow with the amount in dispute plus a buffer withheld until the lien is removed and you agreeing to defend and indemnify the title company for its losses if the claimant actually attempts to perfect the lien. I have been successful with this approach before.

In California, the claimant has to file suit to foreclose on the mechanics lien within 90 days of it being recorded in order to perfect the lien. If the claimant doesn't, then the owner has the right to petition the court to get the stale lien removed if he refuses to do so and per statute,  can recover a judgment for attorneys fees and costs incurred in getting it removed, regardless of the merits of the underlying claim. Most California real estate attorneys are familiar with this procedure. Cal. Civ. Code §§ 8480-8488