The life of a mechanics lien in California is quite short – just 90 days. In fact, it’s one of the shortest statutory effective periods anywhere in the nation for a mechanics lien claim. It is not surprising, therefore, that claimants in California are frequently interested in extending its life with some sort of lien extension.
However, this post will explain “lien extensions” are very rare in California, and very difficult to accomplish in that state. Plus, when you finally do get all parties on board, you’ll likely be met with resistance from the clerk’s office.
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 no where to be found in the California Civil Code, nor is there a process for claimants to file a “lien extension” document to get a mechanics lien’s life extended. Nevertheless, 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.”
We’ve discussed this process extensively in the past on this blog: Understanding Notice of Credit and Lien Extensions in California.
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).
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.
Proceed With Care When Extending A California Mechanics Lien Because Time Will Be Tight
The process of extending a California mechanics lien 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 lien extension / notice of credit filed with the recorder (yes, it must be filed with the 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 clerk-recorder to be perplexed when you show up to record this document. These documents are rarely recorded, and the clerks seem to be a little out-of-touch with the documents purpose and requirements. Every time we try to record the document, the clerks reject it at first for whatever reason. We must then keep pushing, and sometimes hire legal counsel to discuss the requirements with the clerk. I’ve recently written about this particular problem in this article: California Clerks Are Confused About California Lien Extension.