On public works projects how is the date calculated for interest to start on a stop notice?

We are a subcontractor on a project in California and have been told that the general contractor is refusing to pay the balance owed on a public works project (College building in California). We plan to file a stop notice but need to know what date to put on the stop notice for the interest to start accumulating at 10%. Is there a way to figure out what date to use, or do we put the due date of the last invoice submitted to the general contractor?

Eureka, CA -

Attorney Answers (4)

George William Wolff

George William Wolff

Construction / Development Lawyer - San Francisco, CA
Answered

The interest can start on the date payment was due under your subcontract.

Thus, if the contract says you will be paid 15 days from invoice, interest can start on the 15th day from the invoice.

In some cases you may be entitled to statutory late payment penalties of 2% per month.

You also have a claim on the contractors payment bond.

Is the job completed? If so, when.

Did you serve a preliminary notice?

There are some Legal Articles on our website re stop notice and bond claims.

Please feel free to call if I did not answer your question, or if you have other questions.

George Wolff

This is NOT legal advice, just a general discussion of the law, as we are not familiar with the specific... more
Scott G Wolfe JR

Scott G Wolfe JR

Construction / Development Lawyer - New Orleans, LA
Answered

So...I don't think I completely understand your question, but here goes.

#1) The Stop Notice statute is not going to make any difference as to what interest you can charge on top of the invoice. You are not entitled to charge interest based on the terms of the stop notice statute. Your right to charge interest will come from your contract.

#2) Therefore, to figure out how much interest you are owed, you will need to go to the terms of the contract. Is this where the 10% figure comes from? If so, how does your contract read with respect to when the interests will begin to accrue?

#3) You may be OWED money for accrued interest, but the better question here is whether you can include it in the Stop Notice. Look to California Civil Code §9352(c) for guidance, which provides: "The amount claimed in the notice may include only the amount due the claimant for work performed through the date of the notice."

You may be owed the money, but there is some question as to whether you should include this in the stop notice itself.

My Mechanics Lien Filing Service at www.zlien.com. Our number is 866-720-5436. Avvo's terms and conditions apply,... more
Douglas Patrick Flaherty

Douglas Patrick Flaherty

Construction / Development Lawyer - San Diego, CA
Answered

The date for interest to accrue depends on when payment was due, which in turn depends on your contract. California's Prompt Payment statutes may entitle you to interest in excess of 10% per year, as well as allowing you to recover attorney's fees. However in addition to a Stop Payment Notice, you should obtain a copy of the general contractor's Payment Bond (aka Labor and Materials Bond). The college district may not owe the general contractor any additional funds (if there was a delay and liquidated damages, for example), and if so, the Stop Payment Notice will not attach to anything. The college district should give you a copy of the Payment Bond if you call and ask for it. If you did not provide a Preliminary Notice, you can preserve your bond rights by sending a written notice to the payment bond surety pursuant to Civil Code section 9560. If you are not able to resolve the problem and your business is a corporation, you will need to hire an attorney to represent you in Court. Contractors rights on public works project are very complex, and you should find a local construction attorney to advise you as soon as possible.

Construction projects and the legal rights and remedies that flow from them are legally technical and factually... more
Wahid Ezzat Guirguis

Wahid Ezzat Guirguis

Construction / Development Lawyer - Pasadena, CA
Answered

Agree that interest will be based on when payment was due. Make sure you find out the information for the payment bond on the project. That will be the better bet for you to get money. Also, a claim on the bond may give you a chance to reocover your attorneys' fees.

Lastly, remember that the stop notice only catches the funds due to the contractor from the owner. If no mobey is due to contractor, the stop notice catches nothing!!! Make sure you have the bond claim in. Good luck and feel free to email me with questions.

Lastly, prrmpt payment penalties only apply if contractor was paid by owner, and without justification, failed to pass on payment to you.

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