Skip to content
CalContractorPrep
Menu

Section 4 of 7

CSLB Liens and Other Remedies Practice Questions

10 free practice questions on liens and other remedies, part of the Insurance and Liens section (about 12% of the exam). Try each one, then open the answer: every choice is explained and the law is quoted.

Questions and answers

  1. Insurance and Liens

    1. A subcontractor will supply labor and materials on a private home project. Under Civil Code section 8200, to whom must it give preliminary notice before it can record a lien claim?

    • A. Only the direct contractor that hired it, and no one else
    • B. The owner, the direct contractor, and any construction lender
    • C. Only the county recorder where the property is located
    • D. Only the owner, and only if the owner lives in the home
    Show answer

    Correct answer: B

    • A. Only the direct contractor that hired it, and no one else

      Wrong: notice only to the hiring contractor is not enough; section 8200 also requires notice to the owner or reputed owner and to any construction lender.

    • B. The owner, the direct contractor, and any construction lender

      Correct answer

      Right: section 8200 requires preliminary notice to the owner or reputed owner, the direct contractor or reputed direct contractor, and the construction lender, if any, before recording a lien claim.

    • C. Only the county recorder where the property is located

      Wrong: a preliminary notice is given to the owner, the direct contractor, and any construction lender, not recorded with the county recorder.

    • D. Only the owner, and only if the owner lives in the home

      Wrong: section 8200 requires notice to the owner or reputed owner, the direct contractor, and any construction lender, so notice to the owner alone is not enough.

    Explanation

    Civil Code section 8200 says that before recording a lien claim, giving a stop payment notice, or claiming against a payment bond, a claimant must give preliminary notice to three persons. They are the owner or reputed owner, the direct contractor or reputed direct contractor, and the construction lender, if there is one. Giving notice only to the hiring contractor or only to the owner is not enough. A preliminary notice is given to these persons, not recorded with the county recorder.

    Sources

  2. Insurance and Liens

    2. A direct contractor finished its contract. The whole work of improvement was completed on May 25. The owner records a notice of completion on June 1. Under Civil Code section 8412, what is the deadline for the direct contractor to record a claim of lien?

    • A. 30 days after June 1
    • B. 60 days after June 1
    • C. 90 days after June 1
    • D. 120 days after June 1
    Show answer

    Correct answer: B

    • A. 30 days after June 1

      The 30-day period applies to claimants other than the direct contractor, such as subcontractors. A direct contractor gets 60 days after the owner records a notice of completion.

    • B. 60 days after June 1

      Correct answer

      A direct contractor must record before the earlier of 90 days after completion or 60 days after the owner records a notice of completion. Sixty days after June 1 comes before 90 days after the May 25 completion, so the deadline is 60 days after June 1.

    • C. 90 days after June 1

      The 90-day period runs from completion of the work of improvement (May 25), not from the June 1 notice. Also, the deadline is the earlier of the two times, and 60 days after June 1 comes first.

    • D. 120 days after June 1

      120 days after June 1 is not one of the two times in section 8412, and it is later than both of them. The deadline is the earlier of 90 days after completion or 60 days after the notice of completion.

    Explanation

    Civil Code section 8412 says a direct contractor must record its claim of lien before the earlier of 90 days after completion of the work of improvement, or 60 days after the owner records a notice of completion. Here, 60 days after the June 1 notice comes before 90 days after the May 25 completion. So the deadline is 60 days after June 1. The 30-day period applies to claimants other than the direct contractor, such as subcontractors. Neither 90 nor 120 days after June 1 is the earlier of the two deadlines.

    Sources

  3. Insurance and Liens

    3. A material supplier on a private job gave its preliminary notice on time. It now wants to give the construction lender a stop payment notice. Under Civil Code section 8508, what timing rule must the stop payment notice also meet to be valid?

    • A. It must be given before the lien recording deadline ends
    • B. It must be given within 90 days after a lien is recorded
    • C. It must be given only after the owner approves it in writing
    • D. It must be given only after the whole project is finished
    Show answer

    Correct answer: A

    • A. It must be given before the lien recording deadline ends

      Correct answer

      Section 8508 makes a stop payment notice valid only if it is given before the time to record a claim of lien runs out. The supplier already gave its preliminary notice, so this is the remaining rule.

    • B. It must be given within 90 days after a lien is recorded

      The 90-day period after recording is the deadline to sue to enforce a lien. It is not a timing rule for a stop payment notice.

    • C. It must be given only after the owner approves it in writing

      The owner does not have to approve the stop payment notice. The rule is to give it before the lien recording deadline ends.

    • D. It must be given only after the whole project is finished

      The claimant does not have to wait for the project to finish. The notice must be given before the lien recording deadline ends.

    Explanation

    Civil Code section 8508 says a stop payment notice is valid only if the claimant gave any required preliminary notice and gave the stop payment notice before the time to record a claim of lien runs out. The supplier already gave its preliminary notice, so the remaining rule is to act before the lien recording deadline ends. The 90-day period after recording is the deadline to sue to enforce a lien, not a stop payment notice rule. The owner does not have to approve the notice, and the claimant does not have to wait for the project to finish.

    Sources

  4. Insurance and Liens

    4. A subcontractor recorded a claim of lien on a commercial building 120 days ago. There was no extension of credit, and it never filed a lawsuit to enforce the lien. Under Civil Code section 8480, what may the owner do?

    • A. Ask the CSLB to cancel the claim of lien from the record
    • B. Record a notice of nonresponsibility to remove the lien
    • C. Nothing, because the lien stays until the claim is paid
    • D. Petition the court for an order releasing the property
    Show answer

    Correct answer: D

    • A. Ask the CSLB to cancel the claim of lien from the record

      The CSLB does not remove recorded liens. Under section 8480, the owner's step is to petition the court.

    • B. Record a notice of nonresponsibility to remove the lien

      A notice of nonresponsibility is for an owner who did not contract for the work, and it must be given early, not after a lien is recorded.

    • C. Nothing, because the lien stays until the claim is paid

      The lien does not last until the claim is paid. It expires if no action to enforce it is started within 90 days after it is recorded, and 120 days have passed here.

    • D. Petition the court for an order releasing the property

      Correct answer

      Section 8480 lets the owner petition the court for an order releasing the property when the claimant has not started an action within the section 8460 time of 90 days after recording. No lawsuit was filed in 120 days, so the owner may do this.

    Explanation

    Under Civil Code section 8460, a claimant must file an action to enforce a lien within 90 days after recording it, or the lien expires. Civil Code section 8480 lets the owner petition (ask) the court for a release order when the claimant did not start an action in that time. The CSLB does not remove recorded liens. A notice of nonresponsibility is for an owner who did not contract for the work, and it must be given early, not after a lien is recorded. The lien does not last until payment; it expires when the 90 days pass.

    Sources

  5. Insurance and Liens

    5. A subcontractor on a public works job gives the public entity a valid stop payment notice for $15,000. Under Civil Code section 9358, what must the public entity do?

    • A. Withhold enough from the direct contractor to pay the claim
    • B. Pay the subcontractor $15,000 at once from the contract funds
    • C. Stop all work on the job until the claim is settled
    • D. Send the notice to the payment bond surety and take no action
    Show answer

    Correct answer: A

    • A. Withhold enough from the direct contractor to pay the claim

      Correct answer

      Section 9358 says that, on receipt of a stop payment notice, the public entity must withhold from the direct contractor enough money due or to become due to pay the claim. It may also hold back enough for its reasonable cost of any litigation over the notice.

    • B. Pay the subcontractor $15,000 at once from the contract funds

      The statute does not tell the public entity to pay the claimant directly. Its duty is to withhold enough funds from the direct contractor to pay the claim.

    • C. Stop all work on the job until the claim is settled

      The statute does not tell the public entity to stop the work. Its duty is to withhold enough funds from the direct contractor to pay the claim.

    • D. Send the notice to the payment bond surety and take no action

      A payment bond is a separate remedy, and it does not replace the public entity's duty to withhold funds from the direct contractor.

    Explanation

    Civil Code section 9358 says that, on receipt of a stop payment notice, the public entity must withhold from the direct contractor enough money due or to become due to pay the claim. It may also hold back enough for its reasonable cost of any litigation over the notice. The statute does not tell the entity to pay the claimant directly or to stop the work. A payment bond is a separate remedy, and it does not replace the duty to withhold.

    Source

  6. Insurance and Liens

    6. A subcontractor gives the construction lender an unbonded stop payment notice (a notice without a bond). No payment bond was recorded. Under Civil Code section 8536, must the lender withhold funds to pay the claim?

    • A. Yes, it must withhold the full amount of the claim stated
    • B. Yes, but it must withhold only one half of the claim
    • C. No, it may choose not to, because the notice is unbonded
    • D. No, because only an owner must ever withhold for a notice
    Show answer

    Correct answer: C

    • A. Yes, it must withhold the full amount of the claim stated

      Because the notice is unbonded, the lender may at its option elect not to withhold, so it is not required to withhold the full claim.

    • B. Yes, but it must withhold only one half of the claim

      Nothing in section 8536 sets a half-claim amount. For an unbonded notice, withholding is the lender's choice.

    • C. No, it may choose not to, because the notice is unbonded

      Correct answer

      Correct. Section 8536 lets the construction lender, at its option, elect not to withhold funds when the stop payment notice is unbonded.

    • D. No, because only an owner must ever withhold for a notice

      Section 8536 does apply to a construction lender, which must normally withhold enough to pay the claim. The lender may decline here only because the notice is unbonded.

    Explanation

    Civil Code section 8536 says a construction lender that receives a stop payment notice must normally withhold enough funds to pay the claim. But the lender may, at its option, choose not to withhold when the notice is unbonded. Here the notice has no bond, so withholding is the lender's choice. If the notice had been bonded, and no payment bond had been recorded first, the lender would have to withhold. Nothing in the statute sets a half-claim amount.

    Sources

  7. Insurance and Liens

    7. A construction lender holds $30,000 under stop payment notices. Two suppliers gave bonded notices, one a week before the other. Their claims add up to more than $30,000. There are no other notices. Under Civil Code section 8540, how is the $30,000 split?

    • A. Each supplier gets a share in proportion to its claim
    • B. The supplier that gave its notice first is paid in full
    • C. Each supplier gets an equal half of the withheld funds
    • D. The supplier that sued first to enforce its claim is paid first
    Show answer

    Correct answer: A

    • A. Each supplier gets a share in proportion to its claim

      Correct answer

      Right: when the funds are not enough to pay all bonded claims in full, they are split pro rata, in the ratio that each claim bears to the total of all bonded claims.

    • B. The supplier that gave its notice first is paid in full

      Wrong: pro rata distribution is made without regard to the order in which the stop payment notices were given, so giving notice first does not matter.

    • C. Each supplier gets an equal half of the withheld funds

      Wrong: an equal split ignores the size of each claim. Each supplier's share is in the ratio its claim bears to the total of all bonded claims.

    • D. The supplier that sued first to enforce its claim is paid first

      Wrong: pro rata distribution is made without regard to the order in which enforcement actions were started, so suing first does not matter.

    Explanation

    Civil Code section 8540 pays bonded stop payment notices first. If the funds are not enough to pay all bonded claims in full, the money is split pro rata, meaning in the ratio that each claim bears to the total of all bonded claims. The statute says this is done without regard to the order in which notices were given or lawsuits were started. So being first does not matter, and an equal split ignores the size of each claim.

    Sources

  8. Insurance and Liens

    8. Before work began, the owner filed the direct contract with the county recorder. Later, the direct contractor asked a subcontractor to build a deck. The deck is not in the direct contract or any change to it. Under Civil Code section 8432, does the subcontractor's lien cover the deck work?

    • A. Yes, because the direct contractor asked for the deck work
    • B. Yes, because all authorized work on a site can be liened
    • C. No, because subcontractors can never lien for extra work
    • D. No, because the filed contract gave it notice of the scope
    Show answer

    Correct answer: D

    • A. Yes, because the direct contractor asked for the deck work

      Who asked for the work does not matter. Section 8432 says the lien does not cover work outside the direct contract or a change to it, whether or not a contractor authorized it, if the claimant had notice of the contract terms.

    • B. Yes, because all authorized work on a site can be liened

      Not all authorized work can be liened. Under section 8432, work outside the direct contract or a change to it is not covered when the claimant had actual knowledge or constructive notice of the contract terms.

    • C. No, because subcontractors can never lien for extra work

      This goes too far. Extra work can be covered when it is in a change to the direct contract, so subcontractors are not always barred.

    • D. No, because the filed contract gave it notice of the scope

      Correct answer

      Correct. Filing the contract with the county recorder before work began gave constructive notice of its terms, so the deck work, which is outside the contract and any change to it, is not covered by the lien.

    Explanation

    Civil Code section 8432 says a lien does not cover work that is not in the direct contract or a change to it, if the claimant knew or had constructive notice of the contract terms. Constructive notice means the law treats the person as knowing, even if it did not read the contract. Filing the contract with the county recorder before work begins gives that constructive notice. So the deck is not covered, even though the direct contractor asked for it. Extra work can be covered when it is in a change to the contract, so subcontractors are not always barred.

    Sources

  9. Insurance and Liens

    9. Under Civil Code section 8204, when should a claimant give the preliminary notice for a private work of improvement?

    • A. Within 10 days after it first furnishes work
    • B. Within 20 days after it first furnishes work
    • C. Within 30 days after it first furnishes work
    • D. Within 90 days after it first furnishes work
    Show answer

    Correct answer: B

    • A. Within 10 days after it first furnishes work

      Wrong: section 8204 sets the deadline at 20 days after the claimant first furnishes work, not 10 days.

    • B. Within 20 days after it first furnishes work

      Correct answer

      Right: section 8204 says a preliminary notice shall be given not later than 20 days after the claimant first furnishes work on the work of improvement.

    • C. Within 30 days after it first furnishes work

      Wrong: 30 days is a deadline for recording a claim of lien, not for the preliminary notice, which is due within 20 days after the claimant first furnishes work.

    • D. Within 90 days after it first furnishes work

      Wrong: 90 days is a deadline for recording a claim of lien, not for the preliminary notice, which is due within 20 days after the claimant first furnishes work.

    Explanation

    Civil Code section 8204 says a preliminary notice shall be given not later than 20 days after the claimant first furnishes work on the work of improvement. Thirty and 90 days are deadlines for recording a claim of lien after a notice of completion or after completion, not for the preliminary notice. Ten days is not the deadline in section 8204.

    Source

  10. Insurance and Liens

    10. A material supplier first delivered materials to a job on March 1. It did not give a preliminary notice until April 10. Under Civil Code section 8204, for which materials may it record a lien?

    • A. All materials it delivered, starting on March 1
    • B. Materials delivered on or after March 21 only
    • C. Materials delivered on or after April 10 only
    • D. No materials, because its notice was given late
    Show answer

    Correct answer: B

    • A. All materials it delivered, starting on March 1

      Wrong: because the notice was late, the supplier may record a lien only for work provided within 20 days before the notice and after, so deliveries before March 21 are not covered.

    • B. Materials delivered on or after March 21 only

      Correct answer

      Right: a late preliminary notice still allows a lien for work provided within 20 days before the notice was served and any time after. Twenty days before April 10 is March 21.

    • C. Materials delivered on or after April 10 only

      Wrong: the lien is not limited to work after the notice date; it also covers work within 20 days before the notice, back to March 21.

    • D. No materials, because its notice was given late

      Wrong: a late notice does not wipe out all lien rights; section 8204 lets the claimant give notice at any time afterward and lien work from 20 days before the notice onward.

    Explanation

    Civil Code section 8204 says a claimant who gives a late preliminary notice may still give it, but may record a lien only for work provided within 20 days before the notice was served, and after that. Twenty days before April 10 is March 21. So the supplier keeps lien rights for materials delivered on or after March 21, but loses them for earlier deliveries. A late notice does not wipe out all lien rights, and it does not limit the lien to work after the notice date.

    Sources

Keep studying

Read the Section 4 study notes: Insurance and Liens

Study guides for this section