Last month, we discussed some of the basics of mechanic’s liens in California, including the timing and notice requirements that must be followed under the 2012 changes to the law. You can read that post here.
This month, we want to dig a little deeper into additional requirements for mechanic’s liens, including perfecting a mechanic’s lien, bond requirements, mechanic’s lien waivers, and the process for enforcing a mechanic’s lien. The first three topics allow homeowners or contractors to get around a lien that is in place, which helps avoid the potential for enforcing the lien altogether.
Perfecting a Mechanic’s Lien
A mechanic’s lien is only valid if the contractor or other labor-provider follows very specific requirements. First, a lien must be recorded with the county where the property is located. This process must be done within 90 days of the completion date. If the owner files a valid notice of competition, however, a direct contractor only has 60 days to file its lien. Indirect contractors have just 30 days to file a lien. Once a project is complete, it’s often a good idea to file a notice of completion to cut off the right to file a lien in many circumstances.
Recording a lien requires that the contractor provide specific information to the county recorder, including:
- A statement of the amount owed
- A description of the project
- The name of the owner of the property
- The name of the person/entity who provided the work and their address
- Information about the property (usually address, but also can be the parcel number)
- Proof of service of the claim to the property owner
- A statement that includes required language in the statute
Only if the lien contains all of this information will it be considered valid under California law. When a mechanic’s lien does not include this information, it can be completely set aside and ignored.
A bond is a written agreement that states that someone will perform a certain act. Then, if they do not complete that act, then they have to pay a certain amount of money, or they lose rights to money that has already been deposited. In the context of a mechanic’s lien, a contractor or homeowner can use a bond to have a lien removed from their property once it is already in place. The property owner or another contractor can file a release bond that is at least 125% of the total lien claimed.
Property owners and general contractors may be able to get lien waivers from subcontractors or those who provide material for a project. A lien waiver essentially states that if the individual or company is paid in full, then they will not put a lien on the property. California law requires particular lien waiver and release language be used for this process. A form is available for this purpose.
Getting Rid of a Mechanic’s Lien: Enforcement or Expungement
When a valid mechanic’s lien is in place, there are really only two ways to force action on the lien. Of course, if the property owner pays the lien amount, the contractor is supposed to voluntarily lift the lien. Otherwise, you will likely need to take other action. To enforce a mechanic’s lien, a contractor must start a foreclosure process on the property. This must be done within 90 days of recording the lien.
Alternatively, a homeowner could also petition a court to release a lien if the contractor has not sued on it or it may be invalid. Before doing that, however, a homeowner must first demand that the lien be lifted or withdrawn. This is sometimes necessary if the lien amount has been paid but has not yet been removed from the property.
Alder Law is prepared to address all of your questions and concerns about mechanic’s liens in California. Give us a call today for more information or to schedule an appointment.