A property owner’s notice of nonresponsibility can be a powerful tool because it limits a mechanics lien foreclosure action to the work of improvement itself, specifically excluding foreclosure of the underlying property. However, a notice of nonresponsibility may only be used in limited circumstances and requires strict procedural compliance. This article will discuss notices of nonresponsibility generally.
What is a Notice of Nonresponsibility?
Pursuant to California Civil Code section 8444, subdivision (a), an owner of real property (or a person claiming an interest in it) that did not contract for the work of improvement, nor participated in it, may give a notice of nonresponsibility. If used correctly, the notice can limit a mechanics lien foreclosure action to the work of improvement itself, specifically excluding foreclosure of the underlying property. This statutory protection is only available to “noncontracting owners” who did not enter into a contract for the work of improvement nor participated in it.
Common circumstances in which noncontracting owners may utilize a notice of nonresponsibility include tenant improvement projects (where the lease does not require the tenant to make improvements), as well as adjacent landowner projects, i.e., lot line improvements, where only one property owner is hiring and paying the contractor.
How Should a Notice of Nonresponsibility Be Prepared?
A noncontracting owner, within 10 days after first having knowledge that work is being performed, may post a notice of nonresponsibility at the project site and record it with the county recorder. When preparing a notice of nonresponsibility a property owner must include the following: (1) the nature of the owner’s title or interest; (2) the name of the purchaser under contract, if any, or lessee, if known; and (3) a statement that the person giving the notice is not responsible for claims arising from the work of improvement. Importantly, a notice of nonresponsibility must be made in writing, either printed or typed, and is subject to other detailed requirements under the statute. (Civ. Code, § 8100 et seq. [requirements for providing written notice].)
How Can Notice of Nonresponsibility Protections Be Lost?
The ability to post a notice of nonresponsibility is forfeited if the property owner is deemed to be a “participating owner.” The owner is deemed to be participating when its lease with the tenant requires the tenant to make improvements to the property, as well as when the owner maintains oversight powers, such as approving the tenant’s construction plans and/or contractor.
Another way an owner may forfeit their notice of nonresponsibility rights is by waiting too long to post their notice of nonresponsibility. An owner should post their notice within 10 days after first having knowledge that work is being performed, otherwise they have failed to comply with the requirements of Civil Code section 8100 and thereby lose the right to post a notice of nonresponsibility.