Mechanics liens are a powerful tool for contractors, subcontractors, and suppliers in California to ensure they are paid for the work they do on construction projects. The California Mechanics Lien Law provides a legal mechanism for these professionals to secure payment by placing a claim against a property. This blog will explore how the law works and the various protections it offers contractors in California.
How Does the Mechanics Lien Law Protect Contractors?
The California Mechanics Lien Law is designed to protect those who contribute labor, materials, or services to improve a property. When contractors or subcontractors are not paid for their work, they can file a mechanics lien against the property. This lien serves as a claim against the property, which can lead to the property being sold to pay the debt owed to the contractor. By filing a lien, contractors are given legal leverage to ensure they get compensated for their work.
The law ensures that property owners understand the importance of paying contractors and subcontractors promptly. Without such legal safeguards, contractors would be at risk of not being paid for the work they’ve done, which could jeopardize their business. The lien provides them with a level of protection and a form of recourse.
What Types of Projects Are Covered Under California Mechanics Lien Law?
The California Lien Law applies to a broad range of construction projects, including residential, commercial, and industrial properties. Whether it’s a new build, a renovation, or even a repair project, contractors have the right to file a lien if they are not paid for their work or materials.
These projects can include:
- Residential properties: Homes, apartments, condos, etc.
- Commercial properties: Office buildings, retail spaces, restaurants, etc.
- Industrial properties: Factories, warehouses, and manufacturing plants.
Even if the project is small or involves remodeling or repairs, contractors are entitled to file a mechanics lien under California law, as long as they meet the legal requirements for doing so.
Can a Mechanics Lien Be Filed on Both Residential and Commercial Properties?
Yes, the Mechanics Lien California Law allows contractors to file a lien on both residential and commercial properties. Whether the work is for a residential home or a large commercial building, the contractor is entitled to file a lien if they are not paid for the services they provided.
However, there are some differences in the filing process for residential and commercial projects. For example, contractors must serve a Preliminary 20-Day Notice (which we will cover in more detail later) for residential projects, but this notice is not required for commercial projects. Regardless of the type of property, the lien serves as a legal claim on the property and can be enforced through legal action.
How Does a Mechanics Lien Force Payment From Property Owners?
A mechanics lien can serve as a powerful tool for contractors to secure payment because it ties the payment obligation to the property itself. Once a mechanics lien is filed, it creates a legal claim on the property. If the property owner does not pay the contractor, the lien can be enforced through a court action, potentially leading to a sale of the property to satisfy the debt.
In some cases, the lien may prompt the property owner to pay the contractor to avoid the complication of a forced property sale or other legal action. This leverage is often enough to encourage property owners to resolve outstanding payments.
What Steps Must a Contractor Take Before Filing a Mechanics Lien?
Before filing a mechanics lien, contractors must ensure they take specific steps to protect their rights. These steps include:
- Providing a Preliminary 20-Day Notice: For residential projects, contractors must notify the property owner that they may file a lien if they are not paid. This notice must be sent within 20 days of starting work or supplying materials.
- Finalizing the Work and Payment Terms: Contractors should ensure that all agreed-upon work has been completed or that materials were delivered as promised. Additionally, contractors must have made a reasonable attempt to resolve any payment disputes with the property owner before filing a lien.
- Ensuring Timely Filing: Contractors must file the lien within 90 days of completing their work or delivering their materials. Filing too late may invalidate the lien.
- Documenting Work Performed and Payments Owed: Keeping thorough records of the work done, materials supplied, and payment history is essential. This documentation can help the contractor prove the debt owed in court.
By following these steps, contractors can ensure that they meet all the necessary legal requirements to file a valid mechanics lien in California.
Can a Contractor File a Lien in California Without Completing the Work?
In California, contractors cannot typically file a mechanics lien if they have not completed the agreed-upon work. The law requires that the work must be either fully or partially completed for a lien to be valid. However, if a contractor has delivered materials or worked on the project but has not been paid, they may still be able to file a lien for the materials supplied or work completed.
It’s important for contractors to understand that a mechanics lien is meant to protect them for the work they have done or materials they have provided. Filing a lien for incomplete work or non-delivered materials can result in the lien being invalid or dismissed.
What Is the California Preliminary 20-Day Notice?
The California Preliminary 20-Day Notice is a crucial step in the mechanics lien process, particularly for contractors working on residential projects. This notice must be sent to the property owner, general contractor, and lender (if applicable) within 20 days of starting work or supplying materials. The notice serves to inform these parties that the contractor may file a mechanics lien if they are not paid for their services.
The 20-Day Notice is required for most subcontractors and suppliers on residential properties but is not necessary for contractors who have a direct contract with the property owner or for commercial projects. Sending the notice ensures that the contractor is legally protected if payment issues arise and strengthens their ability to file a lien later if needed.
What Should a Contractor Do After Filing a Mechanics Lien?
After filing a mechanics lien, contractors should take the following steps:
- Notify the Property Owner: It is essential to send a copy of the lien to the property owner. This serves as an official notice of the claim.
- Take Legal Action If Necessary: If the property owner does not settle the debt, the contractor may need to initiate a legal process called “foreclosure” to enforce the lien. This involves filing a lawsuit and possibly forcing the sale of the property to satisfy the debt.
- Maintain Documentation: Contractors should keep records of all communications, notices, and documents related to the California mechanics lien and the project. This information will be helpful if the matter goes to court.
- Stay Within Legal Deadlines: Contractors must act quickly and follow the deadlines for filing a lawsuit to enforce the lien. If the lawsuit is not filed within 90 days of filing the lien, the lien may become invalid.
Taking these actions can help contractors enforce their mechanics lien and ensure they are paid for their work.
Conclusion
The California Mechanics Lien Law provides contractors with a vital tool to protect their right to payment for labor and materials. By understanding the requirements of the law, including the preliminary notices and filing deadlines, contractors can ensure they are in a strong position to secure payment for their services. Mechanics liens serve as an important safeguard in the construction industry, offering contractors legal recourse when property owners fail to fulfill their financial obligations.
At CRM Lien Services, we have been serving customers nationwide with required reference documentation for lien claims since 1986. We assist property owners in navigating the mechanics’ lien process, informing them about their rights and responsibilities, including providing notices, securing payment, and releasing mechanic’s liens.
We have a wealth of expertise, are licensed and insured, and have a team of highly knowledgeable document processors. If you’re looking for a straightforward process for filing a mechanics lien, give us a call or shoot us an email.
We would love to work with you and help you lower your risk and get paid fast!
