If you own a construction business in California, it’s important for you to know and understand the key elements of the California Mechanics Lien Law. The provisions in the California Lien Law are designed to protect your Lien Rights; however, you have to make sure that you follow the law exactly as it is laid out in the California Civil Code § 8000 et seq. One small mistake can invalidate your entire Mechanics Lien claim.
If you need to file a Mechanics Lien in California, you must comply with the statutes laid out in the California Lien Law. Navigating the California Mechanics Lien Law on your own can be difficult, so we’ve highlighted a few key provisions to help you better understand the laws and requirements for your California-based business.
In California, a Preliminary Notice is a Requirement
The first thing to note is that a Preliminary Notice is required in the state of California. According to the California Lien Law, if you do not deliver a Preliminary Notice “at the start of furnishing labor or materials”, you risk losing your Mechanics Lien rights. The law requires everyone who is not in direct contract with the property owner to deliver a Preliminary Notice within 20 days of first furnishing labor and materials to the project. General contractors (that is, those who are in a contract with the property owner) must file a Preliminary Notice only if the project has a construction lender. It’s also important to note that the Preliminary Notice must contain all of the information required by California Lien Law, and it must be sent to the property owner, general contractor, and construction lender (if applicable).
As a General Rule, You Have 90 Days to File a Mechanics Lien in California
When it comes to filing a Mechanics Lien claim, you need to know the deadline for filing your Mechanics Lien. In the state of California, you have 90 days from the actual completion of the project to file a Mechanics Lien. However, if the property owner or contractor files a Notice of Completion formally announcing the project’s completion date, the deadline may be reduced to 30 days from when the notice was filed.
California Limits the Amount You Can Claim in a Mechanics Lien
California’s Lien Law is one of the strictest in the country when it comes to the amount you can and cannot include in a Mechanics Lien claim. According to the California Lien Law, the value of a Mechanics Lien claim is limited to the lesser of (1) the reasonable value of the work provided by the claimant or (2) the price agreed upon by both parties (as laid out in the contract). This leaves no room for additional fees, such as late payment penalties, attorney fees, interest, or lien costs.
These are just three key provisions included in the California Mechanics Lien Law. There are hundreds more that are just as important to the success of your Mechanics Lien. Don’t risk your Mechanics Lien Rights by trying to navigate the laws on your own – hire a Preliminary Notice and Mechanics Lien Service to prepare and serve your California Preliminary Notices and Mechanics Liens. While there are many reasons to use a professional Preliminary Notice and Mechanics Lien Service, the best reason is the research that the service provides.
Quite often the information gathered by your sales force or customer service team may list a business owner and not the property owner. The job address referenced on your clients work order may be completely different than the address actually being improved. Any misinformation entered into the initial prelim may end up on your lien document and render your entire effort as being invalid.
CRM Lien Services will thoroughly research and verify all of the information included in your Preliminary Notice and Mechanics Lien so your Lien Rights are fully protected. We stay current with the changes to the California Lien Law so your notices are prepared according to the latest statutes.
If you’d like to request a proposal for our services, click here.