Public project- non payment of Subs

Public project- non payment of Subs

Postby Kirbart » Fri Dec 05, 2014 2:13 pm

A Subcontractor on a public project informs you that he has not received payment for 2 months.
Who would withhold funds and how can the Contractor prevent the funds from being withheld?

a. Architect, Lien releases
b. Planning Department, notice of non responsibility
c. Public works, Bonded stop notice
d. Lender, Stop notice






CIVIL CODE
SECTION 9350-9364 ,
ks 18
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Re: Public project- non payment of Subs

Postby beachboy » Sat Dec 06, 2014 12:35 am

my answer is d.
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Re: Public project- non payment of Subs

Postby Kirbart » Sat Dec 06, 2014 11:30 am

CIVIL CODE
SECTION 9350-9364 ,
ks 18
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Re: Public project- non payment of Subs

Postby DaveW » Wed Dec 10, 2014 2:26 pm

I'm going to take a stab at this and say C. While I'm not entirely certain, I'm inclined to believe that because the project is public, a lender is not invovled in a public project. I also remember reading about how a bonded stop notice is a way for contractors to ensure a level of protection for themselves.

I'm going to look up the reference right now...
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Re: Public project- non payment of Subs

Postby DaveW » Wed Dec 10, 2014 2:56 pm

I think I was right.

Stop Notice is a lien on funds. it gives a subcontractor or material supplier an instrument to recover missed payments without placing a lien on the property.

Stop Notice is the only remedy available on public projects.

Since the project is public, the public works entity receives the stop payment notice from the subcontractor.

The direct contractor can issue a RELEASE BOND to the public works to prevent the witholding of funds.

The RELEASE BOND is sent by the GC's insurer for 125% of the claim.

I am not sure why the answer refers to it as a Bonded Stop Payment Notice. This is the confusing part.

9364. (a) A public entity may, in its discretion, permit the direct
contractor to give the public entity a release bond. The bond shall
be executed by an admitted surety insurer, in an amount equal to 125
percent of the claim stated in the stop payment notice, conditioned
for the payment of any amount the claimant recovers in an action on
the claim, together with court costs if the claimant prevails.
(b) On receipt of a release bond, the public entity shall not
withhold funds from the direct contractor pursuant to the stop
payment notice.
(c) The surety on a release bond is jointly and severally liable
to the claimant with the sureties on any payment bond given under
Chapter 5 (commencing with Section 9550).
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Re: Public project- non payment of Subs

Postby hnQ_9999 » Sun Apr 02, 2017 2:26 pm

Kirbart wrote:A Subcontractor on a public project informs you that he has not received payment for 2 months.
Who would withhold funds and how can the Contractor prevent the funds from being withheld?

a. Architect, Lien releases
b. Planning Department, notice of non responsibility
c. Public works, Bonded stop notice
d. Lender, Stop notice


Interesting question.
Only two kinds of stop notice are worth choosing.
Stop notice can stop the fund from a bond or a lender.
A public project can be funded via a bond or directly
gets fund from a bank or a lender (?).
Without knowing the source of the test writer, I just
close the eyes and pick either (c) and (d).

Anyone ?
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Re: Public project- non payment of Subs

Postby adventurer4hire » Sun Apr 02, 2017 8:47 pm

hnQ_9999 wrote:Interesting question.Only two kinds of stop notice are worth choosing.Stop notice can stop the fund from a bond or a lender.A public project can be funded via a bond or directlygets fund from a bank or a lender (?).Without knowing the source of the test writer, I justclose the eyes and pick either (c) and (d).Anyone ?

I also think the answer is C, and here is why. (I could be totally wrong in what I am about to say, and if I am, someone strike me down so I don't go through life ignorant! I am the first to admit that I am not an expert on this) But it is my understanding that a true "Public Project" does not get funding from a bank or 'lender". I interpret the question's use of the term "lender" as a financial institution such as a bank, and NOT to mean some sort of creative financing. Such as from a group of private investors, or some complicated limited recourse or non-recourse financing, or something else. Because the question doesn't mention anything about that, all it mentions is "Public Project". Getting back to the question, since we know that a Public Project, in the truest sense, is a project that is funded by the Government through the use of tax money or bonds, and the resulting Building is meant to be owned or operated by the Government, then the answer is C. The type of projects where tax payer money is involved, and there is also a loan involved is in projects that are Public-Private-Partnerships (PPP). The only example I can think of at the moment is a Sports Stadium because it has been in the news a lot lately with the football teams in Oakland and Los Angeles. In a project like that, there are public funds, but it is not a "Public Project" because the government is not going to own or operate the stadium. Again, the question does not make any reference to a PPP, just a Public Project, AND I am also assuming that a Bonded Stop Notice is referring to a Release Bond. Therefore, given the choices available, C is the most correct answer.

After that long-winded explanation, I hope I am right... ha!

*edit(forgot I wanted to add this):
http://www.wisegeek.com/what-is-a-public-project.htm
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Re: Public project- non payment of Subs

Postby hnQ_9999 » Mon Apr 03, 2017 10:14 am

Hi,
While agree with you (c) is most appropriate answer to this question,
I have a few thought: I do not think GC gets checks from the client, directly from
CA Treasury Dept. These checks must be made via a popular bank, where "bonds"
being "translated" to money (?). And that is where the term "lender" gets into confusion,
at least for me. (Though I can see "lender" being hinted to "private project" if you
play the elimination game here)
I think the correct term used in CCR is "stop payment notice".
And why in public project, Sub can claim up to 125% value is not clear to me, given
this is tax money.
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Re: Public project- non payment of Subs

Postby Coach » Mon Apr 03, 2017 10:51 am

hnQ_9999 wrote:These checks must be made via a popular bank, where "bonds"
being "translated" to money (?). And that is where the term "lender" gets into confusion,

A bank is not always a lender and a lender is not always a bank.
If you send someone a check are those funds always from a loan?
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