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Construction Lawsuits, Cannabis Tenants & Business Recovery: California Property Owners’ Legal Guide

April 22, 2026 0 Comment Category: Construction

From contractor lawsuits and mechanics’ liens to cannabis facility lease defaults and high-stakes business disputes, California property owners and commercial operators face complex legal exposure. This guide answers the questions we hear most.

PART 1: How to Defend Against a Contractor Lawsuit in California

How do I defend against a contractor lawsuit in California?

Defending against a contractor lawsuit in California requires evaluating the validity of the contractor’s license at the time of the work, whether the required preliminary notices and mechanic’s lien procedures were followed correctly, and whether the work was actually completed or materially defective. 

Key defenses include: 

• Contractor unlicensed at time of contract (bars recovery under Business and Professions Code §7031); failure to complete work or substantial performance; defective workmanship creating setoff or counterclaim; improper lien filing (failure to serve preliminary 20-day notice, lien filed after deadline); and contractual limitations on damages.
• A property owner who acts quickly when served with a contractor lawsuit or lien can significantly reduce exposure.

What are my rights if a contractor sues me for unpaid work?

If a contractor sues you for unpaid work in California, you have the right to challenge whether the work was properly performed, whether the contractor was properly licensed, and whether they complied with contract terms and change order procedures. You may also assert a cross-complaint for defective work, cost to repair, project delays, and consequential damages. California law requires strict compliance with preliminary notice and lien filing deadlines; a missed deadline can void the contractor’s entire claim. Retaining a construction litigation attorney early allows for strategic counterclaims that often offset or eliminate the contractor’s recovery.

What is defending a mechanic’s lien in California?

A mechanic’s lien is a claim recorded against your property by a contractor, subcontractor, or supplier who claims they were not paid. To challenge a mechanic’s lien in California, a property owner can: 

• Verify that the claimant served the required Preliminary 20-Day Notice
• Check whether the lien was recorded within the statutory deadline (generally 90 days after project completion)
• File a petition to release the lien if it is procedurally defective. 
• Post a lien release bond to clear the title while the dispute proceeds. Even valid liens can be defeated if the underlying work was defective or the contract was breached by the contractor.

PART 2: Evicting a Cannabis Tenant from Your California Property

How do I evict a cannabis tenant from my property in California?

Evicting a cannabis tenant in California follows the same Unlawful Detainer process as other commercial evictions, but with important nuances. Cannabis tenants often operate under municipal licenses that create additional complexity in the notice and possession timeline. Landlords must:

• Review the lease for specific cannabis-use provisions and termination rights
• Serve a compliant written notice (3-Day Notice to Pay or Quit, or notice of material breach, depending on the default)
• File an Unlawful Detainer action in Superior Court after the notice period
• Coordinate with local authorities if hazardous materials or compliance issues are present in the facility. Because cannabis facilities often involve substantial equipment, lease enforcement provisions and personal guarantees are especially important to pursue.

What are the landlord’s rights for cannabis manufacturing facility leases in California?

Landlords of cannabis manufacturing or distribution facilities in California retain full rights to enforce commercial lease terms, including rent payment obligations, use restrictions, compliance with licensing conditions, and property condition requirements. A cannabis tenant’s municipal or state license does not protect them from eviction or lease enforcement. If a cannabis tenant defaults, the landlord may recover possession through Unlawful Detainer, sue for unpaid rent and holdover damages, claim against any personal guaranty, and assert restoration costs if the tenant’s operations damaged the property. Given the significant capital improvements often made by cannabis operators, lease provisions governing restoration, equipment removal, and hazardous materials cleanup are often critically important.

PART 3: Recovering from a Business Dispute in California

How do I recover money from a business dispute in California?

To recover money from a business dispute in California, you typically pursue one or more of the following paths:

• Breach of contract claim in Superior Court, seeking damages for the losses caused by the other party’s breach
• Demand for specific performance if monetary damages are inadequate and the contract involves unique obligations
• Fraud or misrepresentation claims if you were deceived in the transaction
• Arbitration if the underlying agreement includes an arbitration clause. Gathering documentary evidence early, such as contracts, emails, invoices, and financial records, is essential. An experienced business litigation attorney will evaluate whether a pretrial injunction is needed to preserve assets and assess the defendant’s ability to satisfy a judgment.

What is the best way to resolve a business contract dispute in Los Angeles?

The best way to resolve a business contract dispute in Los Angeles depends on the size of the dispute, the relationship between the parties, and the strength of each side’s legal position. For smaller disputes under $25,000, a demand letter followed by small claims or limited civil court may be efficient. For complex commercial disputes with substantial financial exposure, strategic litigation in the Los Angeles Superior Court, coupled with early settlement negotiations, typically produces the best outcomes. If the contract includes a mandatory mediation or arbitration clause, that process governs. Retaining litigation counsel before making demands often improves leverage and avoids tactical mistakes that weaken your position.

What is business litigation?

Business litigation is the legal process of resolving disputes between companies, business partners, investors, contractors, and individuals involving commercial or financial relationships. In California, business litigation commonly involves breach of contract claims, partnership and shareholder disputes, fraud, misrepresentation, unfair business practices under Business and Professions Code §17200, trade secret misappropriation, and complex transactional disputes. Business litigation may be resolved through negotiated settlement, mediation, arbitration, or trial in the Superior Court. Unlike transactional legal work, business litigation is adversarial; one side is seeking to enforce or defend rights that the other side is contesting.

When should I hire a business litigation attorney?

Hire a business litigation attorney immediately when: 

• You receive a demand letter or are served with a lawsuit
• A business partner or counterparty refuses to perform a material contract obligation 
• You discover financial fraud or misrepresentation in a completed transaction
• A mechanic’s lien or judgment is filed against your property or business assets
• You need to move quickly to preserve evidence, freeze assets, or seek an emergency injunction. Waiting to consult counsel until a dispute escalates significantly increases both legal costs and the risk of an adverse outcome. Most commercial disputes have important early deadlines that, if missed, cannot be recovered.

Why Choose Davidovich Stone Law Group

Davidovich Stone Law Group is a California-based litigation firm. We are not a general practice firm; we concentrate exclusively on commercial real estate disputes, construction litigation, and business disputes involving substantial financial exposure.

We represent commercial property owners, landlords, developers, contractors, and business operators throughout Los Angeles and California. Our approach is litigation-focused, strategy-driven, and results-oriented.

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