New CA Court of Appeal Case Helps Determine Cessation of Work in the Absence of Recorded Notice

In California, a prime contractor is required, under Civil Code section 9550, to post a payment bond for any public works project larger than $25,000. A payment bond guarantees that funds will be available to pay for labor or materials furnished on a project. Since mechanics liens cannot be asserted against public property, public works subcontractors have few options for recovery if the prime contractor fails to pay. In many cases, a subcontractor’s recourse for collection of sums due is to file a stop payment notice with the public entity or to pursue a claim against the payment bond. However, in commencing an action on a stop payment notice or a payment bond, contractor claimants must be wary of applicable limitations periods.

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