Understanding Mechanics Liens in CA
This article will help you understand mechanics liens, which can be a complex legal tool with significant financial implications. It’s critical for any contractor, business owner, or owner of property to know how this tool relates to them.
A Mechanics Lien: What Is It?
A mechanics lien is a type of legal device used to protect a contractor’s right to payment. A lien can be placed on a property by a contractor (and some other parties) who have not been paid for their labor, supplies, or services. The owner’s title is then “clouded” by this lien. Until the debt is paid off, the owner cannot sell the house. In some circumstances, the mechanics lien holder may also have other ways of enforcing the claim.
A contractor who has not been paid must notify the property owner of the lien. Unpaid subcontractors must also notify the general contractor in charge of the property. The notice may apply to unpaid work performed up to twenty days prior to the date of filing. It is crucial for contractors to file notification of their lien as soon as possible. A contractor will only be allowed to establish a lien for the last twenty days if notice is filed at fifty days. This would result in thirty days of work remaining underpaid and ineligible for lien recovery. For workers, the twenty-day notice obligation does not apply if they have a separate agreement with their employers to be paid for their work. Additionally, it doesn’t apply to contractors who have a written agreement with the property owner directly, as this separate agreement is enforceable, and provides notice to the owner apart from the provisions of a mechanics lien.
Who Files a Mechanics Lien
Section 8400 of the California Civil Code establishes that a mechanics lien can be filed against a property by a direct contractor, subcontractor, material supplier, equipment lessor, laborer, or designer. Keep in mind that the property is the subject of the lien, meaning that only those who supply labor, supplies, or services associated with that property are eligible to file liens against it. The opportunity to file a mechanics lien against the property is not available to others who may have separate contracts that are enforceable against a defaulting property owner.