It the lien has been filed, it will be very difficult to remove it without a payment.
Believe me, I know – has been dealing with such con artists a few times. By the law, only a licensed contractor has a right to file it, only if a written contract exists and only if a preliminary notice of lien has been mailed to you ( unless you directly contracted him). In practice, any ( I repeat ANY) person could file a lien on your house without ANY reason. Such a lien (as the one you probably have) will be invalid from the beginning, but it is close to impossible to remove it without $$$$ in attorney costs or actually paying it to the blackmailer.
Unless you plan to sell or refinance your house that invalid lien will have absolutely zero effect on you.
But when time comes to sell or refinance you have to remove it by either paying to the contractor or hiring a lawyer to expunge it by the court decree.
The catch is – contractor can remove the lien a day before the court hearing and place a new one day after it. And you’ll have to pay to your lawyer again to expunge the next one. And up to infinity.
And good luck bringing DA to charge them with a perjury.
The only known way to stop that insane process in to file a mechanic lien by yourself on the contractors home. It is illegal, but works.
And if a contractor has no real estate , the last resort is to file a injunction to prevent him from placing illegal liens on your house. And it will cost you $$$$ in attorneys fees.
Much higher than $550. I would rather just settle with him for lets say $200 or so.
Good luck.