Construction Payment Dispute AttorneyGlendale & Los Angeles
We collect unpaid progress payments and retention through stop payment notices, bond claims, liens, and prompt payment claims for contractors and suppliers.
How long does a California owner have to pay a contractor?
On a private project, Civil Code § 8800 generally requires the owner to pay an undisputed progress payment within 30 days after the direct contractor gives notice demanding payment under the contract, unless the parties agreed otherwise in writing. Retention is generally due within 45 days after completion under Civil Code § 8812. A good faith dispute allows the owner to withhold up to 150 percent of the disputed amount.
At a glance
- Key deadline
- Stop payment notice before the lien recording deadline (Civ. Code § 8508)
- Lender bond
- Bonded notice to a construction lender: 125 percent of the claim
- Penalty
- 2 percent per month on payments wrongfully withheld, plus attorney fees
- We represent
- General contractors, subcontractors, suppliers, and owners on private and public work
A construction payment dispute arises when an owner or higher-tier contractor withholds a progress payment or retention that California's prompt payment statutes, including Civil Code § 8800, require it to pay. DiJulio Law Group helps Glendale and Los Angeles contractors, subcontractors, and owners identify which statute governs and what it allows.
Stop payment notices and prompt payment rules in California
California's construction payment statutes are unusually favorable to the party who moves on schedule and unforgiving to the party who does not. Mechanic's lien, stop payment notice, and bond claim deadlines run from defined events, such as completion, cessation, a recorded notice of completion, or the last day you provided work, and they are not extended because the parties were still negotiating.
California has no single prompt payment act. On private works, Civil Code § 8800 governs progress payments from owner to direct contractor, and Civil Code § 8810 and following govern retention withheld by an owner or by a direct contractor from a subcontractor. Business and Professions Code § 7108.5 requires a prime contractor or subcontractor to pay its subcontractors within seven days after receiving a progress payment, unless otherwise agreed in writing, on both private and public works. On public works, Public Contract Code § 7107 governs retention held by the public entity and passed down to subcontractors.
Most of these statutes follow the same pattern. Payment is due within a fixed period, a good faith dispute allows the payer to withhold no more than 150 percent of the disputed amount, money wrongfully withheld carries a penalty of 2 percent per month, and the prevailing party in a collection action recovers attorney fees. On many files, the penalty and fee exposure, not the invoice, is what moves the other side to settle.
Withholding is often justified by asserted backcharges, defective work, or delay, which is where a collection matter becomes a two-way case. The answer depends on whether the amount withheld is proportionate and documented, and whether the defect or delay claim is genuine or a negotiating position. Stop payment notices reach undisbursed construction funds, payment bond claims reach a surety, and recording a lien against private property is covered on our mechanic's lien deadlines page.
Stop payment notice timeline in California
Civil Code §§ 8500–8560
A private-works stop payment notice is valid only if any required preliminary notice was given and the stop payment notice is served before the lien recording deadline expires (Civil Code § 8508). Suit to enforce it may be filed 10 days after the notice is given and must be filed within 90 days after the notice period ends (§ 8550).
A bond given with a stop payment notice to a construction lender must equal 125 percent of the claim (§ 8532), and a bonded notice is the version a lender must honor. On public works, the notice goes to the public entity, a direct contractor cannot give one (§ 9100), and it is effective only if given within 30 days after a recorded notice of completion, acceptance, or cessation, or within 90 days after completion or cessation if none is recorded (§ 9356 (opens in a new tab)).
- Within 20 days of first work
Preliminary notice
Required of most claimants to preserve stop payment notice rights (§§ 8200, 8204).
- Before the lien deadline
Serve the notice
Signed and verified, for work provided through the date of the notice (§ 8502). Any lien claimant may serve a construction lender (§ 8530); the owner may be served by anyone but the direct contractor (§ 8520).
- On receipt
Funds withheld
The owner withholds enough to pay the claim unless a payment bond was recorded, in which case it gives notice of the bond within 30 days (§ 8522). A lender may decline to withhold on an unbonded notice (§ 8536 (opens in a new tab)).
- 10 days after the notice
Suit may be filed
The earliest enforcement date. Notice of the action goes to everyone served with the stop payment notice within 5 days of filing (§ 8550(e)).
- 90 days after the notice period ends
Last day to sue
If no action is filed by then, the notice stops being effective and the withheld funds are released (§ 8550(b), (d) (opens in a new tab)).
What Is the Difference Between a Mechanic's Lien, a Stop Payment Notice, and a Payment Bond Claim?
Payment Remedies
Each remedy reaches a different source of money. A mechanic's lien attaches to the improved private property. A stop payment notice reaches construction funds still held by the owner, a construction lender, or a public entity. A payment bond claim runs against the surety that issued the bond. Which remedies are available depends on the project and your tier.
A construction lender must generally withhold funds on a stop payment notice, but under Civil Code § 8536 (opens in a new tab) it may elect not to if the notice is unbonded, or if a claimant other than the direct contractor gives it after a payment bond was recorded. A bond given with the notice must equal 125 percent of the claim under § 8532. Lien recording and foreclosure are covered on our mechanic's lien deadlines page, and contested claims proceed through construction litigation.
| Question | Mechanic's lien | Stop payment notice | Payment bond claim |
|---|---|---|---|
| Reaches | Improved private property | Undisbursed construction funds | The bond surety |
| Private works | Persons who provide authorized work (Civ. Code § 8400) | Owner (§ 8520, not the direct contractor) or construction lender (§ 8530) | Where a bond exists, subject to the notice rules in § 8612 |
| Public works | Generally unavailable (Civ. Code §§ 8160, 9000) | Public entity; not the direct contractor (§ 9100) | Not the direct contractor (§ 9100) |
California prompt payment deadlines and penalties
Prompt payment
Most California construction payment statutes share one pattern: a fixed payment period, a cap of 150 percent of the disputed amount that may be withheld in a good faith dispute, a 2 percent monthly penalty on amounts wrongfully withheld, and attorney fees to the prevailing party. Local agencies are the exception and owe interest instead.
Two newer and narrower rules matter on private jobs. For contracts entered into on or after January 1, 2026, retention is capped at 5 percent of each payment and of the contract price, subject to listed exceptions (Civil Code § 8811 (opens in a new tab)). The private retention article does not apply to retention a lender withholds under a construction loan agreement (§ 8822). Any attempted waiver of the public works retention rules is void (Pub. Contract Code § 7107(h)). Read the construction contract payment clauses against these periods.
| Who pays whom | What is due | Deadline | May withhold in a dispute | If late | Statute |
|---|---|---|---|---|---|
| Owner to direct contractor, private | Undisputed progress payment | 30 days after notice demanding payment, unless agreed otherwise in writing | 150% of disputed amount | 2% per month plus fees | Civ. Code § 8800 (opens in a new tab) |
| Owner to direct contractor, private | Retention | 45 days after completion | 150% of disputed amount | 2% per month plus fees (§ 8818) | Civ. Code § 8812 |
| Direct contractor to subcontractor, private | Retention share | 10 days after receiving retention | 150% of estimated disputed amount | 2% per month plus fees (§ 8818) | Civ. Code § 8814 |
| Contractor to subcontractor, private and public | Progress payment share | 7 days after receipt, unless agreed otherwise in writing | 150% of disputed amount | 2% per month plus fees; license discipline | Bus. & Prof. Code § 7108.5 (opens in a new tab) |
| Public entity to original contractor | Retention | 60 days after completion | 150% of disputed amount | 2% per month plus fees | Pub. Contract Code § 7107 |
| Original contractor to subcontractor, public | Retention share | 7 days after receipt | 150% of estimated disputed amount | 2% per month plus fees | Pub. Contract Code § 7107 |
| Local agency to contractor | Undisputed, properly submitted progress payment | 30 days after receipt of the request | Improper requests returned within 7 days with reasons | Interest at the legal rate | Pub. Contract Code § 20104.50 |
Can an owner withhold payment for backcharges or defective work?
Backcharges
Yes, but within limits. California's prompt payment statutes let an owner or higher-tier contractor withhold during a good faith dispute, generally no more than 150 percent of the disputed amount (Civil Code §§ 8800, 8812, 8814; Bus. & Prof. Code § 7108.5). Withholding more than that, or without a genuine dispute, exposes the payer to the 2 percent monthly penalty.
- Ask for the backcharge in writing, itemized, with the contract provision it relies on and any notice the contract required before the work was charged back.
- Compare the amount withheld with the value of the disputed item; withholding the whole balance over a small punch list item rarely fits within the 150 percent limit.
- Keep performing the payment remedies on schedule. Backcharge negotiations do not extend lien, stop payment notice, or bond deadlines.
- Separate genuine defect or delay claims from leverage, and price each one with the field record.
Conditional vs. unconditional lien releases in California
Lien releases
California requires statutory release forms. A conditional release, used before payment clears, takes effect only on evidence of payment (Civil Code § 8124). An unconditional release, in which the claimant states it has been paid, is effective when signed (§§ 8134, 8138). Any other waiver is void unless the claimant has actually been paid in full (§ 8126).
A release in another form does not release the owner, construction lender, or bond surety (§ 8124), and a contract term that waives a claimant's rights without a statutory release is void (§ 8122 (opens in a new tab)).
| Form | When it is used | Statute |
|---|---|---|
| Conditional, progress payment | Exchanged for a progress payment that has not yet cleared | Civ. Code § 8132 |
| Unconditional, progress payment | After the progress payment has actually been received | Civ. Code § 8134 |
| Conditional, final payment | Exchanged for a final payment that has not yet cleared | Civ. Code § 8136 |
| Unconditional, final payment | After the final payment has actually been received | Civ. Code § 8138 |
Managing PartnerR. David DiJulioRead profile- Office
- 330 North Brand Boulevard, Suite 1280, Glendale, California 91203
- Direct line
- (818) 502-1700 · rdd@dijuliolaw.com
- Courts
- Los Angeles County Superior Court, including the Glendale and Stanley Mosk courthouses.
- Focus
- Construction contracts, payment and lien claims, defects, delays, and project litigation for owners and contractors.
Construction payment and stop payment notice matters we handle
For general contractors, subcontractors, suppliers, and owners on private and public work in Glendale and Los Angeles, as part of our broader construction law practice. Where the dispute is really about what the contract required rather than when payment was due, it is handled as a breach of contract claim, and supplier and vendor issues often overlap with our business law practice.
Unpaid Invoice Collection
Demand, negotiation, and suit on unpaid progress payments and final billings, including breach of contract, common count, and quantum meruit theories.
Progress Payment Claims
Claims under Civil Code § 8800 for progress payments not made within 30 days of a proper payment demand, including the 2 percent monthly penalty and attorney fees.
Retention Release
Private retention due within 45 days after completion (§ 8812) and passed down within 10 days (§ 8814); public retention due within 60 days (Pub. Contract Code § 7107).
Stop Payment Notices
Serving and enforcing stop payment notices on owners, construction lenders, and public entities, including bonded notices that a lender must honor.
Payment Bond Claims
Claims against private and public payment bonds, each on its own notice and suit deadlines.
Backcharge Defense
Challenging deductions for asserted defective work, cleanup, supervision, and delay where the backcharge is undocumented or disproportionate.
Construction payment disputes that reach our office
Composite examples of the matters this practice handles. They illustrate common fact patterns and are not descriptions of specific client cases or predictions of any result.
The Owner Who Ran Out of Draws
An owner tells a contractor the construction lender will not fund the final draw. A bonded stop payment notice served on the lender can reach undisbursed loan funds directly, which a lawsuit against the owner alone cannot.
The Progress Payment Not Passed Down
A Glendale general contractor receives a progress payment but holds the electrical subcontractor's share while it negotiates a separate change order. Whether that is allowed depends on whether the change order is a good faith dispute about that payment, and on the 150 percent limit in Business and Professions Code § 7108.5.
The Backcharge Arrives With the Lien Deadline
A subcontractor submits its final billing and receives, instead of payment, a list of backcharges nearly equal to the balance. The lien and stop payment notice deadlines keep running while the parties exchange spreadsheets.
First steps when a California owner or contractor stops paying
Fix the key dates
Every payment remedy runs from a defined date: your last day of work, completion, or a recorded notice. Pull the county record and your daily logs before deciding which remedies are still open.
Identify the project type and your tier
Private or public, and owner, direct contractor, or subcontractor, determine which statute applies and who can receive a stop payment notice.
Never sign an unconditional release early
California's statutory release forms are strictly applied. An unconditional release signed before funds clear can give up the very claim you are pursuing (Civil Code §§ 8134, 8138).
When a construction payment problem needs a lawyer
- An undisputed progress payment is more than 30 days past your written payment demand.
- Retention has not been released 45 days after completion on a private job, or 60 days on a public job.
- Your prime contractor has been paid but has not paid you within seven days.
- The owner or lender says construction funds have run out.
- Backcharges appeared for the first time when final payment came due.
- You have been asked to sign an unconditional release before funds have cleared.
California stop payment notice and prompt payment statutes
- California Civil Code § 8550: Enforcing a Stop Payment Notice (opens in a new tab)The 10-day earliest filing date and the 90-day deadline to sue on a private works stop payment notice.
- California Civil Code § 8800: Progress Payments on Private Works (opens in a new tab)The 30-day payment rule, the 150 percent withholding limit, and the 2 percent monthly penalty.
- California Business and Professions Code § 7108.5: Subcontractor Prompt Payment (opens in a new tab)The seven-day rule for passing progress payments down to subcontractors on private and public works.
- California Public Contract Code § 7107: Public Works Retention (opens in a new tab)The 60-day retention release rule for public entities, the seven-day pass-through, and the bar on waivers.
Stop payment notice and prompt payment questions California contractors ask
Questions contractors, subcontractors, and owners in Glendale and Los Angeles ask about California's prompt payment and payment security statutes.
What is a stop payment notice in California?
A stop payment notice is a signed and verified written notice that requires an owner, a construction lender, or a public entity holding construction funds to withhold enough money to pay the claimant's unpaid claim, which lets an unpaid subcontractor or supplier reach the project money directly instead of relying only on a lawsuit against the party that hired it. It is governed by Civil Code sections 8500 through 8560 on private works and sections 9350 and following on public works.
Who can give a stop payment notice on a private project?
On a private California project, any person with mechanic's lien rights other than the direct contractor may give a stop payment notice to the owner under Civil Code section 8520, while any lien claimant, including the direct contractor, may give one to the construction lender under section 8530. Under section 8508 the notice is valid only if any required preliminary notice was given and the stop payment notice was given before the lien recording deadline expired.
Does a construction lender have to honor a stop payment notice?
A construction lender that receives a stop payment notice must generally withhold enough loan funds to pay the claim, but under Civil Code section 8536 it may choose not to withhold if the notice is unbonded, or if a claimant other than the direct contractor gives it after a payment bond was recorded. That is why claimants serving a lender usually bond the notice. The bond must equal 125 percent of the claim (§ 8532).
When must I sue to enforce a stop payment notice?
Under Civil Code section 8550, a claimant may file suit to enforce a private works stop payment notice any time after 10 days from the date the notice was given, and must file no later than 90 days after the period for giving a stop payment notice expires, or the notice stops being effective and the withheld funds are released. Within five days after filing, the claimant must give notice of the action to everyone who received the stop payment notice.
What is the 2 percent per month penalty in California construction?
Several California statutes impose a penalty of 2 percent per month on construction payments wrongfully withheld, in place of interest: Civil Code section 8800 for late progress payments from an owner, section 8818 for late private retention, Public Contract Code section 7107 for late public retention, and Business and Professions Code section 7108.5 for late payments to subcontractors. Each also awards attorney fees to the prevailing party in a collection action.
How much can an owner withhold during a good faith dispute?
Generally no more than 150 percent of the disputed amount, a limit that appears in Civil Code section 8800 for progress payments, sections 8812 and 8814 for private retention, Public Contract Code section 7107 for public retention, and Business and Professions Code section 7108.5 for subcontractor progress payments. Withholding an entire balance over a small dispute usually exceeds that limit. Withholding beyond the limit, or without a good faith dispute, may trigger the 2 percent monthly penalty.
How fast must a general contractor pay its subcontractors?
Business and Professions Code section 7108.5 requires a prime contractor or subcontractor to pay each subcontractor its share within seven days after receiving a progress payment, unless otherwise agreed in writing, on both private and public works except where Public Contract Code section 10262 applies, and late payment carries a 2 percent monthly penalty. A violation is also cause for license discipline. In a good faith dispute, no more than 150 percent of the disputed amount may be withheld.
Can I use a stop payment notice on a public works project?
Yes, on California public works a subcontractor, supplier, or laborer who has not been paid can give a stop payment notice to the public entity, because mechanic's liens do not attach to public property, but the direct contractor cannot use this remedy under Civil Code section 9100. The notice is effective only if given within 30 days after a recorded notice of completion, acceptance, or cessation, or within 90 days after completion or cessation if none is recorded (§ 9356).
Construction payment help in Glendale and Los Angeles
Payment claims on Glendale and Los Angeles projects are litigated in the Los Angeles County Superior Court, and stop payment notices on public work go to the awarding agency.
Talk to a Construction Attorney
The right statute determines the deadline, the penalty, and who pays fees. Send the contract and pay applications and we will identify which rules apply. Payment disputes often travel with construction defect claims, delay and change order disputes, and construction contract drafting issues, and some resolve through mediation before construction litigation becomes necessary. Contact the firm to start.