“…nothing lasts forever”
Just like Adam Levine sings, nothing lasts forever — not in life, not in love…and not in the world of construction liens and notices.
In fact, there are strict deadlines associated with just about every step in the mechanics lien process, starting with the deadline to send a preliminary notice (it’s called a 20-day notice in California for a reason), to the deadline by which a mechanics lien must be filed.
And last but certainly not least, there is a deadline that stipulates how long a mechanics lien claim lasts. In California, this time frame is quite short — just 90 days. It’s one of the shortest effective time periods for a mechanics lien claim anywhere in the nation. Therefore, it’s no surprise that lien claimants in California often want to know if extending a mechanics lien is possible.
However, as this post will explain, “lien extensions” are not only rare in California, they’re also very difficult to accomplish.
How to Extend the Life of a California Mechanics Lien
First things first: Can a mechanics lien in California even be extended? Technically, yes it can. However, the term “lien extension” is nowhere to be found in the language of California’s lien law, nor is there a process for claimants to file a “lien extension” document to get a mechanics lien’s life extended.
Here’s what is available to extend a lien in California: if the lien claimant and the property owner agree to credit terms for payment of the underlying claim amount, those parties can agree to extend the mechanics lien life with a “Notice of Credit.”
To summarize, there isn’t a right to extend a mechanics lien. In every circumstance, a mechanics lien must be foreclosed upon within 90 days from its filing date, and if it was not so enforced, the lien ceased to have any effect. However, if the owner and the lien claimant agree to terms of credit on the debt, the law allows the parties to suspend the foreclosure period for the duration of those terms (up to one year).
Here’s an example:
A plumber files a mechanics lien for $15,000. The owner agrees to pay the plumber $3,000 per month for 5 months. Since the foreclosure period will expire before the expiration of the payment term, the parties can agree to suspend the foreclosure period with a “notice of credit,” to keep the lien claim alive (without foreclosure) until the 5 month payment period expires.
Time Will Be Tight!
The process of extending a California mechanics lien as described above is not simple, nor is it speedy. This is unfortunate because most of these “credit deals” get consummated at the last minute, leaving the parties to scramble to get the now-required notice of credit filed with the recorder. Yes, you read that correctly: the notice of credit must be filed with the county recorder.
You will want to get started on this as early as possible for two primary reasons.
First, the “Notice of Credit” document must be signed by both the property owner and the lien claimant. Accordingly, there are some logistical challenges to getting the document filed, especially if these two parties reside in different counties or states.
Second, you should expect the county clerk or recorder to be perplexed when you show up to record this document. Notices of credit are rarely recorded, and the clerks seem to be a little out-of-touch with the document’s purpose and requirements. Seemingly every time you try to record the document, the clerks will reject it at first for whatever reason. So, be prepared to have to fight a little bit when trying to record your notice of credit in California.