Mechanics lien are crucial tools in the construction industry, providing security for contractors, subcontractors, laborers, and material suppliers. In California, the mechanics lien process is governed by specific legal requirements designed to ensure fair payment practices.
California mechanics liens are part of a broader framework of construction remedies, including stop notices, bond remedies, and the rights and remedies of the principal parties involved in private works of improvement.
At CRM Lien Services, we specialize in ensuring that you get paid quickly and reliably. We can prepare and file mechanics liens for you, taking into account California state-specific rules and regulations. We can also help you secure your right to lien by preparing and serving Preliminary Notices, which are required in the State of California for subcontractors and material suppliers.
This guide will walk you through everything you need to know about mechanics liens in California, including who can file one, the necessary notices, filing procedures, and more. By understanding these processes, stakeholders can protect their financial interests effectively.
Key Takeaways
- A mechanics lien in California secures payment for contractors, subcontractors, laborers, and suppliers by placing a claim on a property for unpaid work or materials. It ensures fair compensation and balances the interests of all parties involved in a construction project.
- Filing a mechanics lien involves serving a preliminary notice within the first 20 days of starting work on the job site (for subs and suppliers only), accurately preparing the lien, filing it with the county recorder’s office within set deadlines, and serving it on the property owner. Following these steps and deadlines is crucial to maintain lien rights.
- CRM Lien Services helps clients file mechanics liens correctly and efficiently, handling all necessary documentation and notices to ensure compliance with California laws. This service reduces the need for attorney involvement and ensures lien rights are secured.
What Is a Mechanics Lien in California?
A mechanics lien California is a legal claim against a property by those who have supplied labor or materials for its improvement but have not been paid. It serves as a security interest in the property, ensuring that those who contribute to its value are compensated. This lien can significantly impact the property owner’s ability to sell or refinance the property until the debt is settled.
Mechanics liens are governed by California Civil Code sections § 8000- § 9566. These laws outline the rights and responsibilities of all parties involved, ensuring fair compensation for work performed and materials provided. The mechanics lien process helps balance the interests of property owners, contractors, and suppliers, providing a structured method for resolving payment disputes.
How does a Mechanics Lien work in California?
A mechanics lien is a powerful legal tool used to secure payment for work or materials supplied to a construction project. Here’s an in-depth look at the process in California:
1. Eligible Parties
In California, several parties involved in a construction project can file a mechanics lien, including:
- General contractors
- Subcontractors
- Laborers
- Material suppliers
- Equipment lessors
- Design professionals (e.g., architects, engineers)
A direct contractor, often referred to as the prime contractor, is responsible for hiring subcontractors and obtaining materials for the project. They play a crucial role in ensuring payments to subcontractors and suppliers to avoid potential legal actions and liabilities for property owners.
These parties must have a direct contractual relationship with the property owner or with someone who has such a relationship (e.g., subcontractors under a general contractor).
2. Preliminary Notice Requirement
Most claimants must serve a Preliminary 20-Day Notice to preserve their mechanics lien rights. This notice informs the property owner, general contractor, and lender (if any) that the claimant is involved in the project and reserves the right to file a lien if unpaid. The notice must be served within 20 days of first furnishing labor, services, equipment, or materials. If the notice is served late, it only covers work or materials provided in the 20 days preceding the notice and thereafter.
The Preliminary Notice is required for any subcontractor or material supplier for non-residential, commercial, residential and public projects. The Preliminary Notice is not typically required for General Contractors, the one exception being if it is a residential project, and there is a construction lender involved that is financing the project. In this case, the preliminary notice must be served within 20 days in order to notify the lender of the lien rights that you have.
3. Lien Preparation
The mechanics lien must include specific information:
- The property owner’s name
- A description of the work performed or materials supplied
- The address or legal description of the property
- The name of the hiring party
- The amount owed
- The claimant’s information
It is critical to ensure all information is accurate to avoid invalidating the lien.
4. Filing the Mechanics Lien
The mechanics lien must be filed with the county recorder’s office in the county where the property is located. This must be done within specific timeframes:
- 90 days after the project completion or cessation of work: This is the standard deadline.
- 60 days after a notice of completion/cessation: If the property owner files a notice of completion or cessation, the deadline is shortened to 60 days for general contractors and 30 days for other parties.
5. Serving the Lien
After filing, a notice of lien must be served on the property owner. This can be done by certified mail, return receipt requested, or by personal delivery. Proof of service should be retained as it may be required in a dispute.
6. Enforcing the Mechanics Lien
If the debt remains unpaid, the lien claimant must enforce the lien through a foreclosure lawsuit. This lawsuit must be filed within 90 days of recording the lien. If the lawsuit is not filed within this period, the lien becomes void. The enforcement process involves:
- Filing a lawsuit in the county where the property is located
- Recording a notice of pendency of action (lis pendens), which provides public notice of the lawsuit and affects the property title.
7. Releasing the Mechanics Lien
Once payment is received, the lien claimant must release the lien. This involves filing a lien release form with the county recorder’s office. Failure to release a satisfied lien can result in penalties.
8. Deadlines and Compliance
It’s crucial to adhere to all deadlines and procedural requirements to maintain lien rights. Late or improperly served notices and liens can invalidate the claim.
9. Penalties for Wrongful Liens
Filing a fraudulent or wrongful lien can lead to significant legal penalties, including damages to the property owner and attorney fees. It’s essential to ensure the lien is justified and accurate.
10. Best Practices
- Maintain Detailed Records: Keep thorough documentation of all work performed, materials supplied, contracts, and communications.
- Timely Notices: Serve Preliminary Notices and file liens within the required timeframes.
- Seek Advice from Experts: Consulting with an expert on Lien Law in the state of California can help navigate the complexities and ensure compliance with California State Statutes. Feel free to call our team at 800-773-5467 to receive a free consultation on what steps you can take to lower your risk and remedy non-payment for your construction projects.
Understanding and correctly following the mechanics lien process in California is vital for securing payment for construction-related services. For specific guidance and assistance, legal consultation is recommended.
It is important to be knowledgeable on the statutory requirements of lien law in California, or to partner with a service like CRM, who are equipped and experienced in California’s Lien Law. As a quick reference, you can check out our 50 State Guide which will provide you the exact steps required to protect yourself under lien law based on the type of work you are doing and your role on the project. We also recommend reading the California State Statutes on Lien Law, especially if you are doing many different types of construction projects such as private, public, or residential jobs.
With our assistance at CRM Lien Services, you don’t have to worry about all the nitty-gritty details of California lien law. You can simply provide a few pieces of basic information regarding the job you are working on, and we take care of everything else to make sure your lien rights are secured so you can get paid.
Additionally, you won’t need to involve an attorney unless or until the lien is enforced in court, which makes our services much more affordable than what a construction attorney would charge. To submit your order for a Mechanics Lien in California, please fill out our Mechanics Lien request form here.
Who Can File a Mechanics Lien in California as a Lien Claimant?
In order to file a Mechanics Lien successfully in California, you need to ensure you have lien rights, meaning you have a right to place a lien on a property, and you meet all the requirements of California Mechanics Lien Law. So, how do you know you have lien rights in California?
There are two main criteria that qualify you for lien rights:
- Your construction work is considered a work of improvement for the permanent benefit of the property you are working on.
- You have served the necessary prerequisite notices according to the California State Statutes. This means you have served a valid Preliminary 20-Day Notice within the required timeframe and to the required entities.
If you are the General Contractor on a construction job or are working directly for the property owner, then you automatically have lien rights without needing to serve any prerequisite notices. The one exception, however, is if you are a General Contractor working on a residential project and there is a construction lender financing the project. In this case, the preliminary notice is required within the first 20 days of supplying labor, material, or services.
However, if you are working for someone other than the property owner on a construction project, such as a General Contractor or a subcontractor, then you are required to serve a Preliminary 20-Day Notice at the beginning of your job to have a right to lien later.
Detailed Breakdown of Eligible Parties:
General Contractors
General contractors who have a direct contract with the property owner automatically have lien rights, except if you are the GC on a residential job and there is a construction lender financing the work. They do not need to serve a Preliminary Notice but must file the lien within the statutory deadlines. A prime contractor, who is responsible for hiring subcontractors and obtaining materials and equipment for the project, also has these lien rights. However, if the prime contractor fails to pay the subcontractors or suppliers, it can lead to the filing of a mechanics lien against the property owner.
Subcontractors
Subcontractors hired by the general contractor must serve a Preliminary Notice to the property owner, general contractor, and lender to maintain their lien rights. This notice must be served within 20 days of starting work or delivering materials. An unpaid contractor, including subcontractors, laborers, or suppliers, has the legal right to file a mechanics lien against the property for unpaid compensation.
Laborers
Laborers who perform physical work on the project also have lien rights. Laborers are also required to serve a preliminary notice to the property owner, general contractor and lender to secure lien rights.
Material Suppliers
Suppliers of materials used in the project must serve a Preliminary 20-Day Notice to the property owner, general contractor, and lender. This notice ensures their right to file a lien if they are not paid. In many cases, serving the preliminary notice at the beginning of the job will result in faster payments, as you have proactively informed all key stakeholders on the job that you have valid lien rights.
Equipment Lessors
Those leasing equipment for the project must also serve a Preliminary 20-Day Notice to preserve their lien rights.
Design Professionals
Architects, engineers, and other design professionals involved in the project must serve a Preliminary 20-Day Notice to ensure their lien rights.
Understanding who can file a mechanics lien and the specific requirements involved is essential for securing payment in construction projects. Adhering to the legal requirements and deadlines ensures that lien rights are preserved and enforceable.
What is a Preliminary Notice in California?
A Preliminary Notice in California, also known as a 20-day Preliminary Notice, is a document that subcontractors, suppliers, and other parties involved in a construction project must serve to the property owner, general contractor, and lender. This notice informs these parties that they are providing labor, materials, or services to the project and that they may have the right to file a mechanics lien if they are not paid.
Here are some key points about the Preliminary Notice in California:
- Purpose: The main purpose of the notice is to protect the right to file a mechanics lien, stop notice, or bond claim. Without serving this notice, subcontractors and suppliers may lose their right to these remedies.
- Timing: The notice must be served within 20 days of starting work or delivering materials. If served later, it will only cover the work or materials provided in the 20 days before the notice was served and any work or materials provided afterward.
- Content: The notice must include specific information, such as the name and address of the party giving notice, the name of the property owner, a general description of the work or materials provided, and a description of the property.
- Service: The notice must be served by certified mail to the property owner, general contractor, and construction lender (if any).
- Record Keeping: It’s crucial to keep proof of service, such as return receipts, as evidence that the notice was properly served.
- Impact: Serving a Preliminary Notice does not mean a lien has been filed; it simply preserves the right to file a lien if necessary.
- Exemptions: There are some exemptions, including for laborers who work directly for the property owner.
By serving a Preliminary Notice, parties involved in a construction project in California can secure their financial interests and ensure they have legal recourse if they are not paid for their work or materials.
What Happens When a Claim of Lien Expires in California?
In California, a mechanics lien claim typically expires 90 days after it is recorded if no legal action is taken to enforce it. This means the lienholder must file a lawsuit to foreclose the lien within this 90-day period. If the lienholder does not initiate foreclosure proceedings within this timeframe, the lien becomes invalid and unenforceable.
This expiration underscores the importance of timely legal action to preserve the lienholder’s rights. Once expired, the lien no longer affects the property’s title, and the claimant loses their security interest in the property.
Legal Consequences and Actions
- Loss of Security Interest: The primary consequence of an expired lien is the loss of the security interest in the property. The lienholder can no longer use the property as leverage to secure payment.
- Need for Alternative Remedies: With the lien expired, the claimant must seek alternative legal remedies to recover the owed amount, such as suing for breach of contract or seeking payment through other legal means.
- Notice of Expiration: Property owners may request that the lienholder releases the lien officially once it expires. If the lienholder fails to do so, the property owner can file a petition to have the lien removed from the public record.
To avoid losing lien rights, it is crucial for lienholders to be aware of the 90-day enforcement period. Taking prompt action by filing a foreclosure lawsuit ensures that the lien remains valid and enforceable. For property owners, understanding this expiration timeline helps manage potential claims against their property effectively.
How do I File a Mechanics Lien in California?
Filing a mechanics lien in California involves a series of steps that must be carefully followed to ensure the lien is valid and enforceable. Here’s a detailed guide to help you through the process, including the associated costs:
Step 1: Serve a Preliminary Notice
Before filing a mechanics lien, you must serve a preliminary notice to the property owner, general contractor, and lender within 20 days of starting work or delivering materials (required primarily for subcontractors and material suppliers). This notice secures your right to file a lien if unpaid.
Step 2: Complete the Claim of Lien Form
Fill out the Claim of Lien form accurately. The form must include:
- Your name and address.
- The property owner’s name and address.
- A detailed description of the work or materials provided.
- The amount owed.
- A legal description of the property.
Ensure compliance with California Civil Code section 8416, which requires specific statutory language.
Step 3: Serve the Claim of Lien
Serve the completed Claim of Lien on the property owner and general contractor. This can be done via certified mail, return receipt requested, or through personal delivery. Maintain proof of service, which is crucial for enforcing the lien.
Step 4: Record the Lien with the County Recorder’s Office
Record the lien at the county recorder’s office in the county where the real property is located. This step involves:
- Submitting the Claim of Lien Form: Ensure all details are correctly filled.
- Paying the Required Fees: Recording fees vary by county but typically include a basic charge for the first page and additional fees for extra pages. On average, the cost ranges from $75-$120.
Step 5: Enforce the Lien
If the debt remains unpaid, you must file a foreclosure lawsuit to enforce the lien within 90 days of recording. This legal action can lead to the sale of the property to satisfy the debt. If you do not file the lawsuit within this period, the lien expires and becomes unenforceable.
Additional Considerations
- Notice of Completion: If the property owner files a Notice of Completion or Cessation, the timeframe to file a lien may be shortened to 60 days from the filing date.
- Accuracy and Compliance: Ensure all forms and notices are completed accurately and served within the required timeframes to avoid invalidation of the lien.
By meticulously following these steps and ensuring compliance with all legal requirements, contractors, subcontractors, and suppliers can protect their right to payment for work and materials supplied to a construction project in California.
If you choose to work with us, we will ensure that all formatting and filling requirements are taken care of and that your Mechanics Lien is valid and acceptable with the county recorders office.
Get in touch
At CRM, we have been serving customers in California and across the United States with mechanics lien and preliminary notice services since 1986. We have a wealth of expertise, are licensed and insured, and our team is made up 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!
