California Construction Remedies Timeline

Action

Contractor initiates a claim

Deadline

See contract or applicable statute of limitations

A “claim” is a demand by a contractor for:

1. A time extension for work or improvements;
2. Payment from the owner of contract amounts or damages not otherwise owed; or
3. Payment of an amount the owner disputes.

Contractor must send claim to owner: (1) by registered mail, or (2) by certified mail, return receipt requested.

Authority: Cal. Civ. Code (“CC”) § 8850(c)(1)

Action

Owner provides initial written response to any claim

Deadline

Within 30 days after owner’s receipt of claim

Owner must respond in writing identifying which parts of the claim are disputed and which are undisputed.

Authority: CC § 8850(d)(1)

Action

Owner pays undisputed amounts

Deadline

Within 60 days after owner’s written response

Owner must pay all undisputed amounts stated in owner’s response.

Authority: CC § 8850(d)(3)

Failure to pay timely will result in a prompt payment penalty of 2% per month.

Authority: CC § 8850(h)(1)

Action

Owner schedules informal conference*

Deadline

Within 30 days of owner’s receipt of contractor’s written request for conference

*Only if requested by contractor. Contractor may, after receiving owner’s response to contractor’s claims, or if owner fails to timely respond to the claim, request an informal conference, and owner must schedule informal conference.

Contractor must send demand for conference: (1) by registered mail, or (2) by certified mail, return receipt requested.

Authority: CC § 8850(e)(1)-(2)

Action

Owner issues written statement after informal conference

Deadline

Within 10 business days after informal conference

Owner must provide further written statement identifying disputed and undisputed issues after the informal conference.

Authority: CC § 8850(e)(3)

Action

Owner pays further undisputed amounts

Deadline

Within 60 days after owner issues written statement

Owner must pay any other amounts that are now undisputed following the informal conference.

Authority: CC § 8850(e)(4)

Action

The parties select a mediator

Deadline

Within 10 business days after owner identifies disputed amounts in writing

After informal conference, once owner identifies any remaining disputed amounts, the parties have 10 business days to agree to a mediator. The mediation is non-binding.

Authority: CC § 8850(f)(2)

If the parties cannot agree to a mediator within 10 business days, contractor may select the mediator.

Authority: CC § 8850(f)(3)

Action

Other dispute resolution

Deadline

After unsuccessful mediation

If the parties do not resolve the remaining disputed claims in mediation, the parties proceed to contractually required resolution procedure, if applicable (e.g., arbitration), or resolve claims according to applicable law (e.g., a lawsuit).

Authority: CC § 8850(f)(4)

If disputed amounts are later found to be owed to contractor, owner is subject to 2% per month penalty starting from date on which amounts originally owed to contractor.

Authority: CC § 8850(h)(1)-(2)

Action

Contractor may invoke procedures of CC § 8850(k)

Deadline

If owner does not respond to claims 30 days after notice of claims

If owner does not respond to claims, owner is subject to a 2% per month prompt payment penalty.

Authority: CC § 8850(h)(1)

Contractor may suspend work if it complies with CC § 8850(k).

Authority: CC § 8850(k)

Action

Contractor sends notice of overdue payment

Deadline

If owner responds to claims but refuses to mediate

Contractor must send a written notice to owner that payment is due pursuant to CC § 8850. Notice must be sent by registered mail or certified mail, return receipt requested.

No notice of overdue payment is required if owner never responds to a claim at all.

Authority: CC § 8850(k)(1)

Action

Contractor sends notice of intent to suspend work

Deadline

30 days after the notice of payment due was sent to owner

Contractor must send written 10-day notice of intent to stop work to owner. Notice must be sent by registered mail or certified mail, return receipt requested.

Authority: CC § 8850(k)(2)

Action

Contractor may suspend work until payment is received

Deadline

10 days after sending notice of intent to stop work

Contractor may suspend work without penalty until payment is received. Contractor may only suspend work if both of the notices are sent to owner as described.

Authority: CC § 8850(k)(1)-(2)

Action

Subcontractor requests that contractor bring claim to owner on subcontractor’s behalf

Deadline

See contract or applicable statute of limitations

If any subcontractor lacks legal standing to bring a claim directly against owner (e.g., no contract directly with owner), subcontractor may request contractor bring a claim against owner on subcontractor’s behalf. Contractor must bring the claim.

Authority: CC § 8850(j)

Subcontractor must provide required documentation to contractor to support claim and must participate in claim procedure. Contractor must act in good faith and may not accept settlement without authority from subcontractor.

Authority: CC § 8850(j)(3)(B)

Action

Contractor must present subcontractor’s claim to owner

Deadline

Within 30 days of subcontractor’s request to contractor

Contractor must notify subcontractor in writing within 30 days of subcontractor’s request as to whether contractor presented the claim to owner and, if the claim was not presented, explain why not.

Authority: CC § 8850(j)(4)