The Importance of Finding out Who is the Owner, Construction Lender, or Payment Bond Surety

The Importance of Finding out Who is the Owner, Construction Lender, or Payment Bond Surety for Purposes of Serving, Recording and Pursuing Preliminary Notices, Mechanics Liens, and Payment Bond Claims in California Law

Preliminary Notices, Mechanics Liens, Stop Notices, Payment Bond Notices, and Payment Bond Claims all must be served on the “reputed” Prime Contractor, the Owner of the Project, and the Payment Bond Surety or Construction Lender to be valid.

How do you find out who these people are, and where to serve them?

  1. Look at your Subcontract and the prime Contract Documents
  2. Write/email the General Contractor and the Owner or Contracting Public Agency
  3. Check the Building Permits for the Project.
  4. Search Public Records, such as at the County Recorder’s or County Assessor’s office regarding the property, such as Ownership Records and Deeds of Trust from a Construction Lender
  5. On a Public Works Job send a written “Public Records Act” Request to the Public Agency, asking for a Copy of the Prime Contractor’s Payment Bond, if they will not provide this to you informally.

A recent San Diego Court of Appeal case suggests that Subcontractors and others perhaps may not need to search public records for lender information, if they have received what appears to be reliable information on the identities of these persons from the Prime Contractor, Owner or other job documents.

“[A] ‘reputed construction lender’ is a person or entity reasonably and in good faith believed by the claimant to be the actual construction lender.” (Kodiak, supra, 185 Cal.App.3d at p. 87; see also Brown, supra, 148 Cal.App.3d at p. 900.) The same two cases also set forth similar tests for analyzing whether a claimant held a good faith belief that the reputed lender was the actual lender, i.e., would a reasonable person, given the claimant's information, have been led to believe in good faith that the reputed lender was the actual lender? (Brown, at pp. 901–902; Kodiak, at p. 87.)


“[Civil Code] Section 3097, subdivisions (i) and (j), require the identity of a construction lender to be disclosed in building permits and deeds of trust...The information about lenders included in public documents is useful for stop notice claimants that (1) have not received reliable information regarding a lender's identity, or (2) have reason to doubt the information received about a lender.

”In other words, if a stop notice claimant has (1) no lender information, or (2) untrustworthy lender information, then the stop notice claimant needs to check county records, e.g., building permits and recorded deeds of trust, in order to prove that he held a good faith belief that the reputed lender was the actual lender.

“However, a stop notice claimant, who has relied on seemingly correct lender information from the owner and/or general contractor, is not required to provide proof of checking the county records in order to raise a triable issue of fact as to whether he held a good faith belief that the reputed lender was the actual lender”

Force Framing, Inc. v. Chinatrust Bank (U.S.A.) (2010) 187 Cal. App. 4th 1368, 1374, 1378.

Whether this ruling will be adopted by other Courts in other areas is not yet decided, so be very, very diligent in determining the identities of these parties at the start of your work.

Ask questions in writing, and demand answers and backup paperwork!

N.B. The contents of this Article do not constitute legal advice or create an attorney-client relationship, and you may not rely on it without seeking legal advice regarding your particular situation and contract from a competent construction attorney. Please also note that statutes and case law are frequently changing and these 2011 materials may become outdated.

For further information on this topic and how the current law may apply to your particular project and issues, Contact Us via email, phone (415)788-1881 or visit our website at for other contract information.

Copyright © 2011 by George W. Wolff & Assoc. All rights reserved.