Mechanic’s Lien DENIZE & SARAH

WHAT IS A MECHANIC’S LIEN  A Mechanic’s Lien is a security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property. The lien exists for both real property and personal property.

Phrased simply…  A Mechanic’s Lien is a method used by those employed for the purpose of improving property to ensure that property owners will pay them for services and materials. If the property owner does not pay for the services or materials, the worker can initiate a court proceeding to force a sale of the property to pay for the services and materials.

What is a 20 day notice?  It is a preliminary notice or pre lien form that is used by any subcontractor in California to protect lien rights. This notice informs the property owner that there is a subcontractor working on the project so that the owner can make sure the subcontractor is paid by the general or prime contractor.

What code section supports the 20 day notice?  California Civil Code sections 3097 &

The following parties are entitled to mechanic’s lien rights in California?  ­Direct Contractor ­  Subcontractor ­  Material Supplier  Equipment Lessor  Laborer  Design Professional  Person providing work authorized for a site improvement

WHEN SHOULD YOU FILE A LIEN?  When contractors, subcontractors, or other related parties to the construction industry need to resolve payment problems.

California Mechanics Lien: How To File A Mechanic’s Lien in California  When filing a mechanic’s lien in California, one must be careful. Any little mistake can invalidate your lien, and there are plenty of opportunities to make a mistake.

Step 1: Do You Have The Right To Lien?  Before filing a lien in California, you must first determine whether you have the right to file the lien. This requires you to answer two questions.

First:  Did you provide lienable services or materials and are you among the class of parties protected by the lien laws? This can be a complicated question, and is especially complicated when the work you performed does not fit within a traditional contracting role (i.e. construction managers).

Second: Did you deliver required notices? Pre­ lien notices are typically required in California for those who do not contract with the property owner, who must deliver a “20 ­Day Preliminary Notice” to the prime contractor, the property owner and the construction lender. If you failed to deliver this notice within 20 days of first furnishing labor or materials to the project, and you were required to deliver it, you are prohibited from filing a lien.

How do you enforce a lien, and what is the time limit to do so?  Upon the recording of the enclosed MECHANIC’S LIEN with the county recorder’s office of the county where the property is located, your property is subject to the filing of a legal action seeking a court­ ordered foreclosure sale of the real property on which the lien has been recorded. That legal action must be filed with the court no later than 90 days after the date the mechanic’s lien is recorded.

What is the effect of a bankrupt owner on a lien?  Section 546(b)(1) permits the post-petition perfection, and/ or maintenance or continuation of perfection, of a property interest, such as a mechanic’s lien, that arose prior to a debtor’s bankruptcy filing, to be effective against any third party that acquired rights in the property prior to the date of perfection, and/or the date of any act to continue or maintain perfection of the lien. The stay does not prevent a mechanic’s lien creditor, whose lien arose prior to bankruptcy, from perfecting or maintaining its lien post-petition if, under state law and in the absence of bankruptcy, the creditor could have perfected or maintained its mechanic’s lien and had its perfected lien rights relate back and have priority over any other entity acquiring rights in the property prior to perfection or maintenance of perfection.

What is a lien release bond?  Release of Lien bond is required by anyone who wishes to discharge a lien against real estate. The lien bond will discharge the mechanic's lien and allow the owner of the property the legal right to sell or deal with the property as the discharge of mechanic's lien bond guarantee to the claimant of the lien any payment that is still due to them with interest and cost.

Purpose of a Notice of Completion  The recording of a valid “Notice of Completion” with the County Recorder is an event of significance to owners, contractors, subcontractors and suppliers alike. The recording of a Notice of Completion is one of several methods used to trigger the time period for the recording of mechanics liens and service of stop payment notices.

What does CC §3117 state and what does it do?  Section 3117 states that where projects are built pursuant to more than one original contract, with each contract covering a particular portion of the work, the owner may record separate notices of completion for each particular portion of the work performed under each contract, rather than waiting for completion of the project as a whole.