Construction Payment Disputes Attorney — Glendale & Los Angeles
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.
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.
Which California Payment Statute Applies to Your Project
California has no single prompt payment act. It has several statutes that apply depending on who owes the money, who is owed, and whether the project is private or public. Our construction payment disputes and collections page covers the collection process as a whole. This page focuses on the statutes themselves: which one governs your payment, what deadline it sets, and what penalty it attaches.
On private works, Civil Code § 8800 governs progress payments from owner to direct contractor, and Civil Code § 8810 et seq. governs 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. The penalty and fee provisions often matter as much as the principal, so identifying the right statute early changes the leverage on both sides.
Statutory security remedies run alongside the prompt payment rules. Stop payment notices under Civil Code § 8500 et seq. reach undisbursed construction funds, and payment bond claims under Civil Code § 8600 et seq. and § 9550 et seq. reach a surety. Recording a lien against private property is covered separately on our mechanic's lien deadlines and enforcement page.
How Long Does an Owner Have to Pay a Contractor in California?
On a private project, Civil Code § 8800 generally requires the owner to pay an undisputed progress payment within 30 days after the direct contractor's notice demanding payment, unless otherwise agreed in writing. Retention is generally due within 45 days after completion under § 8812. Public agencies, and contractors paying subcontractors, follow different statutes with different periods.
The local agency rule differs in kind. Under Public Contract Code § 20104.50 (opens in a new tab), a city, county, or other local agency that misses the 30-day period owes interest at the legal rate, not the 2 percent monthly penalty in the private works statutes. It must return an improper request within seven days with written reasons, and each extra day shortens its 30-day period. Read the construction contract payment clauses against these periods; collection strategy is covered on our payment disputes and collections page.
| Who pays whom | What is due | Period | Statute |
|---|---|---|---|
| Owner to direct contractor, private | Undisputed progress payment | 30 days after notice demanding payment, unless agreed otherwise in writing | Civ. Code § 8800 |
| Owner to direct contractor, private | Retention | 45 days after completion | Civ. Code § 8812 |
| Direct contractor to subcontractor, private | Retention share | 10 days after receiving retention | Civ. Code § 8814 |
| Local agency to contractor, public | Undisputed, properly submitted progress payment | Interest if unpaid after 30 days | Pub. Contract Code § 20104.50 |
| Public entity to contractor, public | Retention | 60 days after completion; 7 days to pass it down | Pub. Contract Code § 7107 |
| Contractor to subcontractor, private and public | Progress payment share | 7 days after receipt, unless agreed otherwise in writing | Bus. & Prof. Code § 7108.5 |
What Is the Difference Between a Mechanic's Lien, a Stop Payment Notice, and a Payment Bond Claim?
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) |
330 North Brand Boulevard, Suite 1280
Glendale, California 91203
Los Angeles County Superior Court, including the Glendale and Stanley Mosk courthouses.
Construction contracts, payment and lien claims, defects, delays, and project litigation for owners and contractors.
Payment Statute 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.
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.
Private Works Retention
Retention due within 45 days after completion under Civil Code § 8812, and the direct contractor's duty under § 8814 to pass retention to subcontractors within 10 days of receiving it.
Public Works Retention
Retention release under Public Contract Code § 7107, which requires release within 60 days after completion and payment to subcontractors within seven days, and voids any attempted waiver.
Subcontractor Prompt Payment
Claims under Business and Professions Code § 7108.5 for progress payments not passed down within seven days, which also constitute cause for discipline against the license.
Stop Payment Notices and Bond Claims
Stop payment notices to owners, construction lenders, and public entities, and claims against private and public payment bonds, each on its own notice and suit deadlines.
Unlicensed Contractor Issues
Business and Professions Code § 7031, which bars an unlicensed contractor from suing for compensation and allows the hiring party to seek recovery of amounts already paid.
Payment Statute Disputes That Reach Our Office
Composite examples drawn from the kinds of matters this practice handles. They illustrate common fact patterns and are not descriptions of specific client cases or predictions of any result.
Retention Held on a School Project
A subcontractor on a Los Angeles County public school renovation is told retention will be released when the district closes out the project. Under Public Contract Code § 7107, release is measured from completion as the statute defines it, and funds passed to the prime contractor must reach the subcontractor within seven days.
The Progress Payment Not Passed Down
A Glendale general contractor receives a progress payment from the owner but holds the electrical subcontractor's share while it negotiates a separate change order. Whether the withholding is within the 150 percent limit of Business and Professions Code § 7108.5 depends on whether the change order is a good faith dispute about that payment.
The Unlicensed Trade
An owner learns that a trade contractor who is suing for its final payment did not hold the required license for part of the job. Business and Professions Code § 7031 may bar the claim entirely and, in some cases, support a claim to recover amounts already paid.
When a 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.
- You are on a public project and need to give a stop payment notice or bond claim.
- The other side has raised a licensing issue under Business and Professions Code § 7031.
What to Do First
Identify the project type and your tier
Private or public, and owner, direct contractor, or subcontractor, determine which statute applies. Confirm both before sending a demand that cites a statute.
Document the demand and completion dates
The 30-day, 45-day, 60-day, and seven-day periods each run from a specific event. Keep the payment demand, pay applications, and any recorded notice of completion.
Verify licensing
Check the license record with the Contractors State License Board for the entire period of work. Licensing affects both claims and defenses. Review how related matters are analyzed in our California case studies.
Construction Payment Statutes — Questions California Clients Ask
Questions contractors, subcontractors, and owners in Glendale and Los Angeles ask about California's prompt payment and payment security statutes.
What is the 2 percent per month penalty in California construction?
Several California statutes impose a penalty of 2 percent per month on payments wrongfully withheld. Civil Code § 8800 applies it to late progress payments from an owner, Civil Code § 8818 to late private retention, Public Contract Code § 7107 to late public retention, and Business and Professions Code § 7108.5 to late payments to subcontractors. Each statute also provides for attorney fees 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. That limit appears in Civil Code § 8800 for progress payments, Civil Code §§ 8812 and 8814 for private retention, Public Contract Code § 7107 for public retention, and Business and Professions Code § 7108.5 for subcontractor progress payments. Withholding beyond that limit, or without a good faith dispute, may trigger the statutory penalty.
When must retention be released on a California public works project?
Under Public Contract Code § 7107, the public entity must release retention within 60 days after completion of the work, and the original contractor must pay each subcontractor its share within seven days after receiving it. Completion includes acceptance by the agency, beneficial use with cessation of labor, and certain periods of cessation. Any attempted waiver of § 7107 is void.
How fast must a general contractor pay its subcontractors?
Business and Professions Code § 7108.5 requires a prime contractor or subcontractor to pay its subcontractors within seven days after receiving each progress payment, unless otherwise agreed in writing. The rule applies to private and public works, except where Public Contract Code § 10262 applies. A violation carries a 2 percent monthly penalty and is also cause for discipline by the licensing board.
Who can give a stop payment notice on a private project?
Under Civil Code § 8520, a person with lien rights other than the direct contractor may give the owner a stop payment notice. Under Civil Code § 8508, the notice is valid only if required preliminary notice was given and the stop payment notice was given before the lien recording deadline expired. Suit to enforce it must follow the timing in Civil Code § 8550.
Is a payment bond required on California public works?
Under Civil Code § 9550, a direct contractor awarded a public works contract over $25,000 must give a payment bond before starting work, with an exception for state entities as defined in the Public Contract Code. Under Civil Code § 9558, a claimant may sue on the bond after it stops providing work, but no later than six months after the stop payment notice period ends.
Can an unlicensed contractor sue for payment in California?
Generally no. Business and Professions Code § 7031(a) bars a person acting as a contractor from suing to collect compensation for work requiring a license unless it was duly licensed at all times during performance. Under § 7031(b), the person who hired an unlicensed contractor may sue to recover compensation paid. Substantial compliance is available only in narrow circumstances under § 7031(e).
Can a contractor waive California prompt payment rights?
It depends on the statute. Civil Code § 8800 and Business and Professions Code § 7108.5 allow the parties to agree otherwise in writing about payment timing. Public Contract Code § 7107, by contrast, states that any attempted waiver of its retention provisions is void as against public policy. Contract language should be read against the specific statute before relying on it.
Local Representation
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.