Hi Piggs, wanted to provide an update in the hope that someone else may benefit from the information..
First of all, thanks to all the helpful advice you all provided and thanks BG for the attorney referral. Very helpful- I did speak with the attorney.
Contractor is paying #2 supplier-$3500.
I placed claim with Insurance company today against conractor’s bond which is $12,500. Like UCgal said- it is first come first serve.This claim was for supplier #2 that was owed $13,500.
I am told this bond amount is typical so keep that in mind if undertaking larger job. Insurance company tells me they will contact me within fifteen days and resolve within 45 days. You can file a claim without having to go to arbitration or court.
I will still be owed about $1000 and if contractor does not pay either go to arbitration or small claims court.
Things I learned….
1) As was mentioned by others, get suppliers to sign off on Unconditional Release/waiver and call them when you get prelim notice to confirm they have been paid before you give the contractor money. Or pay suppliers directly….
2) Suppliers/subs are only legally required to send you the prelim notice. After that, hey can file a lien on your home without telling you or giving you advance notice of lien. some do but they are not required to…
3)Most contracts don’t have attorney’s fees in the language so you are on the hook for all your attorney’s fees if you litigate and if you go to arbitration the costs are split so either way it will cost you some money.
4) Paying off the supplier (which i did in my case because i didn’t want to screw up the refi) does not give up any of your rights in any way.
5) I talked to both suppliers and both said that the last couple of years has seen a significant increase in contractors not paying suppliers and homewoners are now calling suppliers when they get prelim notices which did not happen before…
6) I asked both suppliers if they would actually initiate foreclosure proceedings on these type of liens. Basically, they said it depends on the situation. First they file the lien and then after a period of time go after the contractor’s bond.
If the bill exceeds the claim amount (either due to the bond maximum or because others also filed claims) then the supplier has to evaluate whether it is worth it to go after the homeowner.
7) I have not filed a complain against contractor’s license with CSLB.Focused on recovering the money owed right now. Attorney’s view was to create as much pain for contractor (he used slightly different words) to get them to pay.
I will wait to see what happens with the bond payoff first and then decide.
