Overview:

The risks associated with the construction lending industry’s “mechanics lien law” are the most draconian and punitive in real estate. These laws, due to their complexity and potential consequences, often necessitate the involvement of a lawyer to guide the property owner through the liability maze.

·       A mechanic’s lien is a “cloud” against the property title.

·       Any unpaid contractor, subcontractor, laborer, or material supplier can record a lien with the county recorder’s office for lack of payment.

·       The claimant is allowed to file a suit, begin a foreclosure action, and force the sale to pay off the lien.

·       The mechanics’ lien notification period begins at the point of the first drop of a surveyor’s markers, the first evidence of work in progress, the first supplies delivered to the property, or the first shovel in the ground.

Upon completion, the contractor will file a “California Notice of Completion,” which will shorten the mechanics’ lien period for subcontractors and suppliers. If a notice of completion is not filed, contractors and suppliers have 90 days from the date of completion to file a mechanics lien. If a notice is filed on time, within the 90 days, general contractors have only 60 days to file a lien, while suppliers and subcontractors have 30 days.

https://www.cslb.ca.gov/consumers/legal_issues_for_consumers/mechanics_lien/

https://www.levelset.com/mechanics-lien/california-lien-law-faqs/

https://www.nolo.com/legal-encyclopedia/mechanics-liens-in-california-for-homeowners.html

🔧 Who Can File a Mechanics Lien in California?

Eligible parties include:

• Direct contractors
• Subcontractors
• Material suppliers
• Equipment lessors
• Laborers
• Design professionals (only if they have a written contract directly with the property owner) 

Unlicensed contractors cannot file a lien if the work performed requires a license. 

 .📋 Preliminary Notice Requirement

• Must be served within 20 days of first furnishing labor or materials.
• Sent to the property owner, general contractor, and lender (if applicable).
• Late notices only protect work done in the 20 days before service 

🗓️ Deadlines for Filing and Enforcing a Lien

• Filing Deadline:
• 90 days after project completion.
• If a Notice of Completion or Cessation is filed:
• Direct contractors: 60 days from notice.
• Subcontractors/suppliers: 30 days from notice
• Enforcement Deadline:
• Must file a lawsuit to enforce the lien within 90 days of recording it.
• Can be extended by a written agreement to extend credit, but no more than 1 year after project completion 

🏛️ Filing Process

• File the lien with the county recorder’s office where the property is located.
• Must include:
• Lien amount
• Owner’s name
• Description of work
• Hiring party’s name
• Property description
• Claimant’s contact info
• Proof of service affidavit
• Statutory notice language in bold 10pt font 
• No notarization is required, but the lien must be verified 

📬 Notice of Recorded Lien

• Must serve a copy of the lien to the owner via registered, certified, or first-class mail.
• Failure to serve properly makes the lien unenforceable

🧾 Lien Amount Limitations

• Limited to the reasonable value of work or contract price, minus payments received.
• Cannot include attorney fees or collection costs in the lien amount 

🛑 Property Owner Considerations

• A recorded lien can lead to foreclosure if not resolved.
• Owners can prevent liens by requiring lien waivers and monitoring notices of completion 

✅ Mechanics Lien Compliance Checklist – California

📌 Before Work Begins

•  Verify Licensing: Ensure you are appropriately licensed for the work. Unlicensed contractors cannot file a valid lien. 
•  Written Contract: Have an explicit written agreement outlining scope, payment terms, and responsibilities.
•  Preliminary Notice:
•  Serve within 20 days of first furnishing labor/materials.
•  Send to property owner, general contractor, and lender (if applicable).
•  Include description of work, estimated value, and statutory language 

🛠️ During the Project

•  Track Work and Payments: Maintain detailed records of labor, materials, invoices, and communications.
•  Monitor Notices of Completion/Cessation:
• If filed, adjust lien filing deadlines accordingly:
• 30 days for subcontractors/suppliers.
• 60 days for direct contractors 

🗂️ Filing the Mechanics Lien

•  File Within Deadline:
• 90 days after project completion (or adjusted deadline if notice filed).
•  Including Required Information:
• Claimant’s name and address
• Property owner’s name
• Property description
• Work performed and amount due
• Hiring party’s name
• Verification statement (no notarization required) 
•  File at the County Recorder’s Office where the property is located.

📬 After Filing

•  Serve Copy of Lien:
• Send to the property owner via registered, certified, or first-class mail.
• Include Proof of Service Affidavit.
•  Enforce Within 90 Days:
• File a lawsuit to foreclose the lien within 90 days of recording.
• Optionally, obtain a lien bond to remove the lien from the title while resolving the dispute 

🧾 Lien Release and Waivers

•  Use Conditional/Unconditional Waiver and Release Forms for progress and final payments.
•  Ensuring that forms are signed and delivered appropriately is a responsibility that should not be overlooked. This is a crucial step to release lien rights.

⚖️ Legal Considerations

•  Avoid Consequential Damages: The lien amount must reflect only the actual unpaid labor and materials. 
•  Consulting Legal Counsel is crucial, especially for complex disputes or large claims. Their expertise will provide you with the necessary guidance and assurance.