Don’t shoot the Messenger

 

Looks like the California Mechanics Lien process just got a little more expensive.

Governor Brown has signed into law an amendment to the California Government Code:

Title 3, Division 2, Part 3, Chapter 6, Article 5 “Fees”

Effective January 1, 2018 the recordation of a Mechanics Lien, Notice of Completion and possible a Release of Mechanics Lien will now be subject to an additional $75.00 recording fee, Ouch! Now this new fee reaches far beyond the recording of a mechanics lien. It applies to almost any document which applies to real estate and must be recorded. So many many transactions of California Real Estate will be handicapped by this new charge.

Naturally, just like the new California state tax increase on gasoline, the public is being encouraged to contact their representative and launch a complaint as to what may have the appearance of unfair price gouging. After years of being subject to reasonable rates like $8.00 per page or something close to this rate, the new $75.00 surcharge surely takes on the aura of this kind of behavior. However, until this is changed, or overturned by the courts. Everyone will need to pay the new fee.

So what is the best strategy? How should you prepare to work with these unavoidable increases?

For Starters: Make sure that you are prepared to RECOVER these fees within the scope of your business contract. Have your attorney review your sales order, proposal, quotes, etc. and make sure the language is included that will allow you to recover all of your cost to pursue a mechanics lien without risking these cost.

Also, avoid choosing the California Mechanics Lien process for amounts that are minimal. If you need to expose yourself to a higher lien filing cost, be ready to follow it through and that your claim is bullet proof.

Make sure that your negotiations take all of these cost into consideration. If you hold a mechanics lien on a property and have negotiated a price in exchange for a release of lien, it would be wise to add the cost of having a Release of Lien prepared, including the new cost to record the release.

The mechanics Lien will continue to be the best tool for securing your unpaid receivables on any construction project. However, reviewing your collections processes and taking action to ensure your mechanics lien is supported by well researched preliminary notices, and guarded by an alert system that keeps you away from stressful, 11th hour decisions, will keep you in the drivers seat.

For additional information on these new California Government Code changes contact CRM

1-800-773-5467

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