Contracts & Disputes
Most contractor-client disputes are resolved without a lawsuit, and most of the damage is done in the first two weeks. Decisions made while a contractor is angry — walking off the site, sending a long explanatory email, agreeing to keep talking while a deadline runs — are harder to undo than the underlying disagreement. This guide, reviewed by Jayson R. Elliott, covers what protects a contractor’s position early and what quietly damages it.
Contracts & Disputes
This is the point most contractors do not know, and it is the reason a dispute should not be allowed to drift.
A mechanics lien must be recorded within 90 days after completion of the work of improvement, and if the owner records a valid notice of completion or cessation the deadline becomes the earlier of those 90 days and the notice window — 60 days after the notice for a direct contractor under Civil Code section 8412, and 30 days for everyone else under section 8414. Because it is the earlier of the two, a late-recorded notice does not extend anything. A stop payment notice runs on the same timing under Civil Code section 8508. And once a lien is recorded, Civil Code section 8460 requires an action to enforce it within 90 days, failing which the lien expires.
None of those clocks pause because the parties are talking. The most common way a contractor loses a good claim is not losing an argument — it is negotiating in good faith past a date that does not reopen while the client says the cheque is coming.
The practical rule is to calendar the deadlines on day one, before the first conversation, and to treat preserving the remedy as separate from deciding whether to use it. A recorded lien can be released. An expired one cannot be revived.
When a client stops paying, stopping work feels like the obvious response. It carries a risk contractors rarely weigh.
Business and Professions Code section 7107 makes abandonment of a construction project or operation, without legal excuse, a cause for disciplinary action. The provision does not make leaving a job actionable in itself — it makes leaving without a legally sufficient reason actionable. Non-payment may well be a legal excuse on particular facts. Whether it is depends on the contract, what was owed, what notice was given, and the circumstances, and it is decided later on the record that existed at the time.
So the answer is not “never stop.” It is that a stoppage should be a considered, documented decision with a stated reason and, where the contract provides one, whatever notice or cure period it requires — not a truck pulling off the site on a Thursday afternoon.
Disputes are decided by documents that already exist. Before responding substantively, gather them:
That last item is the one contractors skip, and it drives the deadline question above.
A large share of contractor-client disputes are about work nobody wrote down. The statute addresses this more helpfully than most contractors expect.
Business and Professions Code section 7159.6(a) provides that an extra work or change order is not enforceable against a buyer unless it sets forth the scope of work encompassed by the order, the amount to be added or subtracted from the contract, and the effect the order will make in the progress payments or the completion date. So a handshake change does not enforce as a contract term.
But section 7159.6(c) provides that failure to comply with the section does not preclude the recovery of compensation for work performed based upon legal or equitable remedies designed to prevent unjust enrichment. Unpapered extra work is not automatically unpaid work — it is work whose recovery runs on a different route, with different requirements and a different measure.
And section 7159.6(b) provides that the buyer may not require a contractor to perform extra or change-order work without providing written authorization. Where a client directed extra work verbally and now disputes it, that provision is worth having in front of you.
Whether any of this helps on particular facts is a question for counsel with the file. What it establishes is that the conversation is not over because the paperwork is missing.
Everything written during a dispute is read later by someone looking for admissions. That is not a reason to stop communicating; it is a reason to communicate deliberately.
Keep messages short and factual. State what was agreed, what was done, and what is owed. Avoid characterising the client’s conduct or motives, and avoid explaining at length why a problem occurred — explanations written to be persuasive read later as concessions.
Do not apologise for workmanship as a de-escalation tactic. Courtesy costs nothing; an admission does. And do not send anything drafted in the first hour after a bad phone call.
Direct negotiation resolves most disputes and costs least. It works best with the file assembled and the deadlines calendared, because a contractor who knows their position negotiates differently from one who is guessing.
Mediation is a structured conversation with a neutral. Many construction contracts require it before anyone can file, and on some contracts skipping a required mediation step can cost a party the right to recover attorney fees even after winning — which is a reason to read the clause rather than assume mediation is optional.
A demand letter formalises the position. It is covered on its own guide beneath this page.
Arbitration or litigation is decided largely by what the contract says. That comparison has its own guide.
Small claims is where many residential disputes actually land, because the amounts fall within the limit and clients often file without a lawyer. It has its own guide too, and its own rules — including limits on legal representation at the hearing.
Once a client is represented, direct contact changes character. Communications are being reviewed and preserved, and an unrepresented contractor negotiating against counsel is at a structural disadvantage that has nothing to do with the merits.
That is the point at which most contractors should have their own counsel — not because litigation is inevitable, but because the cost of a badly handled early exchange usually exceeds the cost of advice on it.
Before you ask
It depends, and it should be a documented decision rather than an impulse. Business and Professions Code section 7107 makes abandonment of a construction project without legal excuse a cause for disciplinary action. Non-payment may be a legal excuse on particular facts, but whether it is depends on the contract, what was owed, what notice was given, and the circumstances — decided later on the record that existed at the time.
Possibly. Business and Professions Code section 7159.6(a) makes an unpapered change order unenforceable against the buyer as a contract term, but section 7159.6(c) provides that failure to comply does not preclude recovery of compensation for work performed based upon legal or equitable remedies designed to prevent unjust enrichment. Section 7159.6(b) separately provides that a buyer may not require extra or change-order work without providing written authorization.
No, and this is the most expensive misunderstanding in a construction dispute. A mechanics lien must be recorded within 90 days after completion, or, where a valid notice of completion or cessation is recorded, the earlier of that and 60 days after the notice for a direct contractor or 30 days for other claimants, and Civil Code section 8460 then requires an enforcement action within 90 days of recording. Those clocks do not pause because the parties are talking.
Be careful. Anything written during a dispute is read later by someone looking for admissions. Keep communications short and factual — what was agreed, what was done, what is owed — and avoid extended explanations, characterisations of the client’s conduct, or apologies for workmanship offered as de-escalation.
Only for what is properly claimable. Civil Code sections 8430 through 8434 address the amount that may properly be claimed, and overstating a lien can render it invalid. Separately, a claimant who willfully gives a false stop payment notice, or willfully demands withholding for work not provided, forfeits both the right to share in the withheld funds and the right to a mechanics lien.
Earlier than most do, and certainly once the client is represented. An unrepresented contractor negotiating against counsel is at a structural disadvantage unrelated to the merits, and the cost of a badly handled early exchange usually exceeds the cost of advice on it. Where a lien or notice deadline is close, that timing question answers itself.
Keep reading
Breadcrumb + pillar parent
“its own guide beneath this page”
Small claims route
Arbitration vs litigation comparison
§7159.6 and unpapered extra work
Stop payment notice timing and forfeiture
§7107 abandonment
Licensure and the right to collect
End of FAQ block (NOT YET BUILT)
Inline first mention: abandonment, legal excuse, notice of completion, unjust enrichment, cure period
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