In the event that a property owner does not authorize work to be performed on his or her property, he or she must provide a contractor with a notice of nonresponsibility.
The purpose of such a notice is to make it clear that a contractor does not have the right to continue working on a property, and that his or her work will not result in payment. This protects property owners from unscrupulous contractors who attempt to perform unauthorized work with the intention of collecting money to which they are not entitled.
A notice of nonresponsibility includes:
Name of the property owner and/or party enforcing the notice
Name of contractor
Description of situation
Brief statement indicating that the property owner does not authorize the work being performed
A notice of nonresponsibility must be provided within 10 days of the property owner becoming aware of the activity.The property owner must post the notice in an easy to find location. The owner should also retain a copy in the event that the posting is removed.
When properly created, a notice of nonresponsibility voids a contractor’s right to place a mechanic’s lien on the property. However, failure to comply with the aforementioned regulations gives a contractor the legal right to place a mechanic’s lien on the property, even if the work was not authorized.
A common situation in which a property owner might utilize a notice of nonresponsibility is when a tenant commissions a contractor’s services without the owner’s authorization. Even if the work is in the tenant’s unit, the property owner is the titleholder and will ultimately be responsible for the work. The property owner should post the notice to alert the contractor that his or her work is not authorized. The ten day period for posting begins as soon as the owner is aware of the work.
If the court determines that a mechanic’s lien was wrongly placed on a property and removes the lien, the contractor who filed the lien may be subject to a $2,000 penalty for the cost of the court and attorney fees.
Case Review: Los Banos Gravel Company v. Freeman (1976)
The case of Los Banos Gravel Company v. Freeman (1976) 58 Cal.3d 785., involved a contractor who sued a property owner over responsibility of construction materials.
A contractor (Los Banos Gravel Company) was hired to construct a service station and restaurant on a leased piece of land. The property owner (Freeman) leased the land to the owner of the service station. Lease payments were based on the gross generated income of the service station and restaurant.
Construction materials delivered by Los Banos Gravel Company were nowhere to be found.
Los Banos Gravel Company alleged that Freeman was responsible for paying for the delivered construction items. Freeman claimed that because he was not the owner of the business, he was not responsible, and therefore, he refused to pay. Los Banos Gravel Company sued.
The Superior Court concluded that since Freeman earned a percentage of the service station’s gross generated income through lease payments, he could not claim nonresponsibility. The court also contended that Freeman could be held liable for a lien, even if he was not the sole owner of the service station and restaurant.