ADU 20-Day Notice and ADU Building

When 20-Day Notices come to the homeowner’s address, they may find themselves puzzled. The reason behind it is a lack of knowledge about what exactly you have to do after you receive a written notice.

The Preliminary 20-Day Notice is a document intrinsic to the accessory dwelling unit construction project. Typically, every homeowner planning an ADU comes across such terms as lien rights and lien waivers. While the former helps the workers who performed the building, safeguarding them from non-payment, the latter later protects the owner from arguments about payment.

If you wonder what this Notice is and how it affects your ADU construction, this article will shed light on the significance of the 20-Day Notice.

ADU Unit and Lien Rights

Why do contractors opt to set lien rights? When they start to build accessory dwelling units, builders must be sure that they receive a fair payment for their job after they complete it. Otherwise, they need to gain compensation to save time, materials, and effort.

Let’s imagine the scenario: the owner of a newly-built ADU claims that the ADU, despite being thoroughly discussed and planned, needs to meet their expectations. If they refuse to pay, the workers will not obtain their fees, even though an ADU builder supplied labor and materials to the site. Filing a lien against the property is often the only practical remedy.

Lien rights enable contractors, subcontractors, or suppliers to lawfully prevent any property sale or refinancing, until the owner resolves all debts. To establish this right, they will need to send a 20-Day Notice to the property owner’s address.

Details of the 20-Day Notice

In relation to an accessory dwelling unit or any other construction, the contractor or supplier in California can send this document within 20 days after material supply or after providing necessary works.

This Notice is not a lien itself. Basically, it is a warning that they can place a lien on your property. But before they can sue, there should be proof that payment didn’t happen. Then, within a 3-month period, they will file a suit in court to enforce the lien. So, the property owner still has some time to complete the payment.

All in all, in California, the contractor or supplier may send this document within 20 days after providing materials or finishing the agreed-upon work, signaling their intention to file a lien on the property. A further lawsuit filed in court can enforce this right.

ADU Owner Actions Required

During the construction of an accessory dwelling unit, you may receive many notices. It’s because your main contractor typically works with multiple subcontractors.

For instance, the main contractor is responsible for managing and overseeing the construction process, while subcontractors are dealing with more specific tasks (HVAC, electrical wires, plumbing, etc.). Each of the subcontractors has to send their own separate Notice to protect their rights. If not sent, they have no legal right to place a lien on your property, even if payment isn’t happening.

There are two simple tips the property owner can follow:

• Firstly, hire a trustworthy contractor to avoid unpleasant scenarios;
• Secondly, protect your property by requesting the release for each Notice you get.

If everyone provides services and payments in accordance with the agreement, there will be no need to apply a lien against your property, so make sure you’re choosing a reputable company you can trust.

Lien Waiver

In this section, we’ll discuss why you need a lien waiver. First of all, it happens that an unethical contractor may decide not to pay subcontractors, vendors, or suppliers after you give them the sum. This means there’s a potential threat to your property because the law can hold the property owner liable for these unpaid sums.

If the contractor needs to fulfill their obligations, you may find yourself in a situation where you owe large sums of money to people you have already paid. That’s why you may need a lien waiver.

So, how do lien waivers help in this case? Let’s have a look at the sequence of actions you take if you have this document:

1. At the end of the construction, you ask the contractor to sign the lien waiver;
2. The contractor fails to pay subcontractors and suppliers, and they’re protecting their lien rights, demanding the costs from you;
3. You use the signed lien waiver as vital proof in a court or legal dispute;
4. It leads to waive lien rights, protecting your property;
5. The dispute continues between the contractor and subcontractors without involving you.

To sum up, the lien waiver is an essential document that can vacate the lien rights of contractors, subcontractors, and suppliers when they sign it after performing work.

Types of Waivers

There are several factors that affect the type of waiver issued. It depends on whether it’s the final sum or progress payment, as well as whether you’re pending payment or have already received it.

The requirements are the following:

• Conditional waiver for progress payments (when the contractor did the work but the payment is pending, they sign a waiver that states they terminate their lien rights as soon as they get the agreed sum);
• Unconditional waiver for progress payments (when the contractor did the work and received payment, no conditions attached);
• Conditional waiver for final payments (the last payment in the series is pending);
• Unconditional waiver for final payments (the contractor received the last payment).

Gaining a Waiver

Typically, ADU unit builders include lien waivers as part of their payment terms. Once they have performed their tasks, they hand an invoice to the client, which goes along with the lien waiver document.

They might use a standard form for this document or a more specific one if your local regulations differ from what they’re used to working with. You can review its validity if you think the form complies with your state or city law.

Additionally, note that the form should have defined terms, be brief, and include all necessary data about the work done and payment amount required, as well as a clear release of lien rights.

20-Day Notice and Rental Agreement

Another situation where you may encounter this term is an ADU rental agreement. When the landlord offers the accessory dwelling unit for lease, laws establish that tenants must obtain a 20-Day Notice in case of eviction.

In this context, this notification informs the tenant that the landlord wants to terminate the monthly tenancy of ADU. Note that landlords state their intention to get your lease terminated without specific cause.

If you’re the landlord who rents the ADU out, the correct eviction procedure is to send this Notice at any point during the rental period. The tenants should leave the ADU apartment by the end of twenty days. Then, the landlord must file an eviction lawsuit, and the court will schedule a hearing before formal evictions proceed.

Frequently Asked Questions — FAQ

How far does an ADU have to be from a house in California?

If the main house is the place you live in constantly, ADU is a secondary building. Thus, although laws don’t regulate the exact distance between the house and an ADU, local governments that issue permits may expect you to make ADUs smaller than the primary house, you can opt for an attached dwelling unit (no distance from the house) or a detached dwelling unit.

How close to the property line can I build an ADU?

According to California ADU building rules, the accessory dwelling unit can be no closer than four feet to the side and rear property lines. Not only does it prevent fire spreading in an emergency, but it also helps to provide better plot ventilation, access to natural light, and boost privacy for all the surrounding homes in the city or town.

Is ADU application submission difficult in Sacramento, California?

There are several factors that determine the complexity of the process, including property characteristics and familiarity with the process. It involves establishing if the property qualifies, following local rules, and obtaining the required permits.

Can I sell my ADU in California?

The state and city laws do not allow selling ADUs separately from the main house. However, you can sell an ADU along with the land and main house. As usual, you’ll need to prepare the property for sale (including ADU maintenance) and contact the real estate agent, who will market it to potential buyers. The process can take several weeks or a few months.