Common causes include disagreements over the value of completed work, disputed change orders, delays in payment by owners or general contractors, alleged defective work used as a basis for withholding payment, back-charges, and disputes over the proper calculation of retainage.

Retainage (or retention) is a percentage — typically 5% to 10% — of each payment that the owner or general contractor withholds from the subcontractor or contractor until project completion. If retainage is wrongfully withheld after substantial completion or in bad faith, the contractor may seek prompt payment through demand, mediation, or litigation.

California's Prompt Payment Act requires owners, general contractors, and subcontractors to pay within specified deadlines after receiving proper invoices or reaching payment milestones. Violation of the Act can result in the withholding party owing 2% per month interest on late amounts and potentially attorney's fees.

A stop payment notice is a legal tool available to subcontractors and suppliers in California that directs a construction lender or public agency to withhold funds from the owner until the claimant's payment dispute is resolved. On public projects, it is often more effective than a mechanic's lien, which cannot attach to public property.

A payment dispute is a contractual or legal disagreement about money owed for construction work. A mechanic's lien is a specific legal remedy — a security interest recorded against the property — that provides contractors, subcontractors, and suppliers with a means to enforce payment. Filing a lien is often a first step before pursuing litigation.

Owners have the right to withhold payment for defective work, but the withholding must be in good faith and proportionate to the actual value of the alleged deficiency. Improperly withholding payment can expose an owner to claims under the Prompt Payment Act, including interest, penalties, and attorney's fees.

Back-charging occurs when a general contractor or owner deducts from a contractor's or subcontractor's payment for costs the paying party claims were incurred to correct the other party's deficient work or failures. Disputed back-charges should be addressed promptly, typically in writing, with supporting documentation.

You should consult an attorney immediately if you are facing unpaid invoices, improper retainage withholding, threatened back-charges, or a disputed change order. Mechanic's lien and stop notice deadlines are short, and missing them can extinguish your right to use those remedies permanently.