Mechanics Liens Process for Contractors and Subcontractors
Firm handshakes can no longer be trusted by contractors and subcontractors to ensure they get paid. Proper use of a mechanics lien is one of the best ways to obtain a security interest in the owner’s property. An experienced California real estate attorney can help ensure you follow the statutory process for preparing, filing, and enforcing a mechanics lien.
Need for Mechanics Lien
Contractors and subcontractors can use mechanics liens to collect payment for their construction work and supplies. The lien allows for taking possession of the property on which the work was completed if the property owner fails in making the necessary payments.
Mechanics liens are typically filed against property owners when they fail to pay their contractors and subcontractors. Filing a mechanics lien should not be your first go-to option, however. You should try and obtain your payment in an amicable fashion.
Call the property owner. Send them reminder emails and notifications for the property. You should let them know that you fully intend on pursuing legal remedies to get your fair and due payment.
This will let a judge know that you tried your best to resolve the dispute in good faith before filing a suit. If the property owner is hell-bent on not paying you, it may be time to file a lawsuit for a breach of contract and other damages (quantum meruit) along with a mechanics lien.
Process for Filing a Mechanics Lien in California
You can file a mechanics lien in 6 easy steps. While these steps may seem straightforward, it’s recommended that you have a reputable law firm represent your interests. California law requires you to do the following for filing a mechanics lien:
Include the provision in your contract
Contractors are usually required to inform the property owner regarding the right to payment and filing of a mechanics lien. This language should be included in your services or materials contract. It will essentially protect your rights in case you are not paid and have to file a lien down the road.
Send direct notice to the property owner
You are required to send notice to the property owner directly within 45 days advising them of the right to file a lien. Contractors should also explain that the property owner has the authority to make direct payments to the subcontractors for materials or work. This is an important notice as it preserves your access to filing a mechanics lien.
Obtain owner information
Subcontractors may not have direct access to the property owner. They should demand the name and address of the property owner for which they are providing the materials and services. It’s best to make this demand in writing with the contractor.
The mechanics lien cannot be filed right away. You should first ask the property owner for payment before using the lien option. The property owner should also be given the opportunity to pay. Send a nonpayment letter to the property owner reminding them of the dues.
File a Statement of Lien
You only get 120 days for filing the Statement of Lien. The timer starts from the day you completed the work and not when the due date for the payment was missed. You may end up waiving your right to claim a lien if you miss this deadline. The original Statement of Lien has to be filed with the county recorder. A copy of the same needs to be sent to the property owner using certified mail.
You can take further legal action against the property owner. You get 365 days from the last day of work to file a complaint against the property owner
Your first step when considering filing a mechanics lien should be hiring an attorney. It’s best to work with an established law firm with the necessary experience.
Do You Have a Right to File a Lien?
You will need to determine whether you have the right to file a mechanics lien or not. Certain construction laws in California state the circumstances in which contractors and subcontractors can file a lien.
Just because the property owner did not pay you, doesn’t give you an automatic right to file a lien. On a related note, you can always lose the right to file a lien even if you had that right at the beginning of the project.
“Frivolous lien” refers to a lien when you did not have the right to file it. This can lead to an expensive legal mess. There is a lot of room for error in these situations since nothing is set in black or white. This makes it important for you to work with a qualified real estate business lawyer who understands the laws and your needs.
Speak With an Experienced Real Estate Attorney in California Today
It can be difficult and confusing to figure out whether you have lien rights or not. The real estate lawyers at Peterson, Martin & Reynolds can help you understand all available legal options to recover the money you are owed from the property owner.
To schedule your initial consultation with our office, call us today at (415) 849-2564 or fill out our online contact form.