When someone does work on a house to improve it, they have special rights to be able to collect the value of that work in California. They can file what is called a “mechanic’s lien” on the property where the work occurred. Mechanic’s liens are valuable because they encourage homeowners to pay for improvements to their home. A lien on a property will generally have to be addressed before the house is sold or refinanced, which increases the likelihood that the contractor will get paid. Liens are also available on commercial properties as well.
A mechanic’s lien gives you the right to start a foreclosure action on the property if the lien goes unpaid after your demand for payment. That makes mechanic’s lien a very useful debt collection tool, sometimes even more so than a judgment after a lawsuit.
In this two-part series, we detail some of the need-to-know information for homeowners and contractors about mechanic’s liens in California.
The Basics: Who Can Assert a Mechanic’s Lien?
Any person who provides work to improve a property can file a mechanic’s lien. The individuals or entities who commonly assert mechanic’s liens include:
- Material suppliers
- Equipment lessors
- Design professionals
The lien attaches to the property that was improved. An “improvement” includes any construction or alteration of the property. It can even include things like planting, leveling, and grading in addition to work directly on a home or another property.
Notice and Timing Requirements
In 2012, the California legislature revised the mechanic’s lien statute, and many of those revisions dealt with the timing and notice requirements for mechanic’s liens.
For instance, the definition of “completion” of work. The completion date dictates the deadline for when a mechanic’s lien should be filed. Today, the completion date is when the contractor is completely finished with all work or where labor stops for at least 60 consecutive days (or 30 days if the contractor files a notice of cessation). Previously, the date was whenever the homeowner accepted the work, but that is no longer a requirement under the newly revised law. Notices of completion must also be recorded within 15 days after the actual competition of the project.
Additionally, contractors must also file a notice when they start work as well. This notice is often referred to as the “Preliminary 20-Day Notice,” although the official name has changed since the 2012 law changes (but the 20-day time limit still applies). This notice is required to assert a mechanic’s lien. However, this notice is only required to be provided to the property owner if the contractor does not have direct contact with that person, which means that general contractors often do not need to provide this type of notice. Nonetheless, it must be provided to construction lenders and reputed construction lenders, if there are any.
Next time, we will discuss bonds, waivers, and enforcing a mechanic’s lien once it is in place. In the meantime, if you have questions about mechanic’s liens, whether you want to assert one or you need to fight one, give the team at Alder Law a call to discuss your rights and options.