In California, all construction professionals on private projects who follow the proper procedures have a right to record a mechanic’s lien. When owed money for work on a private project, this lien secures that interest to ensure that the claimant can be paid. But there are many procedural pitfalls standing in the way of obtaining and perfecting the right to a mechanic’s lien. This article broadly covers the eligibility for obtaining, and requirements for perfecting, mechanic’s liens in California.
What is a Mechanic’s Lien in California?
Article XIV, section 3 of the California Constitution creates the right to a mechanic’s lien in California for all “Mechanics, persons furnishing materials, artisans, and laborers of every class.” This is a lien on real property available to construction workers and professionals that improve the property in question. The legislator has further codified mechanic’s lien rights and requirements in California Civil Code Division 4, Part 6, Title 2, Chapter 4, sections 8400-8494.
Who is Entitled to File a Mechanic’s Lien in California?
Any person that provides authorized work for a work of improvement or site improvement is entitled to a mechanic’s lien in California, provided that they follow the statutory procedure to secure and perfect that right. (Civ. Code, §§ 8400-8402.) Work is “authorized” if it is either requested by the owner, a party with possession of the premises (i.e. a tenant), or a party authorized by another party with authority to perform work. (Civ. Code, § 8404.)
Is Preliminary Notice Required to Record a Mechanic’s Lien?
In order to secure the right to record a mechanic’s line in California, you must file a preliminary notice unless you have a direct contractual relationship with the owner or are a laborer. (Civ. Code, § 8410.) The preliminary notice must be served on the owner, the direct contractor, and the construction lender (if any). (Civ. Code, § 8200.) The preliminary notice must be given within 20 days of commencing work. (Civ. Code, § 8204.) If preliminary notice is given later, any mechanic’s lien must be restricted to the reasonable value of work that was performed no more than 20 days before the preliminary notice was given. (Civ. Code, § 8204.)
How Long Does a Direct Contractor have to Record a Mechanic’s Lien?
A party that has a direct contractual relationship with the owner has 90 days from project completion to record a mechanic’s lien, absent a notice of completion or notice of cessation. (Civ. Code, § 8412.) But if a notice of completion or notice of cessation is recorded, then the direct contractor has 60 days from the date of that notice to file a mechanic’s lien.
When Can a Direct Contractor File A Mechanic’s Lien?
A direct contractor can record a mechanic’s lien after the contractor completed the direct contract. As a practical matter this means project completion or some other cessation of labor that ends the contract. (Civ. Code, § 8412.)
How Long Does a Subcontractor, Material Supplier, or Laborer have to Record a Mechanic’s Lien?
A party that does not have a direct contractual relationship with the owner also has 90 days from project completion to record a mechanic’s lien, absent a notice of completion or notice of cessation. (Civ. Code, § 8414.) But if a notice of completion or notice of cessation is recorded, then a party other than a direct contractor has 30 days from the date of that notice to record a lien.
When Can Subcontractor, Material Supplier, or Laborer File A Mechanic’s Lien?
A party other than the direct contractor can record a mechanic’s lien they cease to provide work on the project. (Civ. Code, § 8414.) Care must be given as further work on the project after recording you mechanic’s line will invalidate the lien
What Constitutes Completion for the Purposes of Mechanics Lien Deadlines?
Actual completion of the work of improvement is what defines completion for the purpose of the 90-day mechanic’s lien deadline. Assuming that the project is completed. However, if the project is not actually completed, completion is defined by either occupation or use by the owner, accompanied by a cessation of labor; or cessation of labor for a continuous period of 60 days. (Civ. Code, § 8180.)
When May a Notice of Completion be Filed?
A notice of completion may be filed within 15 days after the date of completion of the project. (Civ. Code, § 8182.) When recorded, a notice of completion will reduce the deadline to record a lien to 60 days from the recordation of that notice for direct contractors, and to 30 days for everyone else.
When May a Notice of Cessation be Filed?
A notice of cessation may be recorded after a continuous cessation of labor, by all trades, for 30 days. (Civ. Code, § 8188.) When recorded, a notice of cessation will reduce the deadline to record a lien to 60 days from the recordation of that notice for direct contractors, and to 30 days for everyone else.
What Amounts Can be Included in a California Mechanic’s Lien?
A California mechanic’s lien may include the lessor of, the reasonable value of the work provided or the price agreed to between the claimant and their customer. (Civ. Code, § 8430.)
Is a Notice of Intent to File Lien Ever Required in California?
In California, a notice of intent to file lien in never required as a precursor to recording a mechanic’s lien. You might consider sending such a notice to encourage payment without incurring the additional costs of recording and releasing a lien. But there is no requirement to do so.
Does a Mechanics Lien Expire?
A timely recorded mechanic’s lien will expire 90 days from the date of recording unless an action is brought to foreclose the lien. (Civ. Code, § 8460.) If legal action is time commenced to enforce the lien, the lien will remain valid for the duration for the proceedings. But the court may in its discretion dismiss the proceedings for want of prosecution if the action is not brought to trial within two years. (Civ. Code, § 8462.)
What is the Effect of a Mechanics Lien Release Bond?
A mechanic’s lien release bond will release the lien claim from the property in question, instead securing the mechanic’s lien claim with the release bond. The release bond must be for at least 125% of the lien amount. When a mechanic’s lien release bond is recorded, the deadline to file an action on the bond is extended to 6 months from notice of the mechanic’s line release bond. (Civ. Code, § 8424.)
What is the Priority of a Mechanic’s Lien?
While a powerful right, a mechanic’s lien is limited to the value of the equity in the property after all superior encumbrances. The priority of a mechanic’s lien is determined by that date that the project commenced. (Civ. Code, § 8450.) With limited exceptions, a California mechanic’s lien will be senior to any other obligations that arose after the date of project commencement. (Civ. Code, § 8458.) But encumbrances that existed on the date of project commencement will have priority over the lien. (Civ. Code, § 8450.)