CSLB Law & Business ExamInsurance and LiensMedium
A homeowner hires a licensed contractor directly for a kitchen remodel. Does the direct contractor need to serve a preliminary 20-day notice on the homeowner to preserve lien rights?
- ANo, because residential remodels are exempt from all lien laws
- BYes, but only if the contract exceeds $10,000
- CYes, all contractors must serve preliminary notice regardless of contractual relationship
- DNo, a contractor who has a direct contract with the owner is exempt from serving preliminary notice on that owner
Show answer & explanationAnswer & explanation
Correct answer: D. No, a contractor who has a direct contract with the owner is exempt from serving preliminary notice on that owner
A direct (prime) contractor who contracts directly with the property owner is exempt from the preliminary notice requirement as to that owner, since the owner already knows the contractor is working on the project. Subcontractors and suppliers, who have no direct relationship with the owner, must serve the notice.
Why the other options are wrong
- A. Residential remodels are not exempt from mechanics lien law generally.
- B. There is no dollar threshold exemption based on contract price.
- C. This ignores the statutory exemption for direct contractors dealing with the owner.
Direct Contractor Notice Exemption
A contractor who has a direct contractual relationship with the property owner is not required to serve a preliminary 20-day notice on that owner to preserve lien rights.
- Applies only to the owner, not to lenders
- Subcontractors and suppliers must still serve notice
- Owner already has knowledge of a direct contractor's involvement
Memory trick: If you shook hands with the owner, no notice needed for them.