Understanding construction liens in California
Mechanics lien rights in California
California mechanics liens are available to a broad spectrum of project participants. This includes direct contractors (aka prime or general contractors), subcontractors, design professionals, material suppliers, and equipment lessors.
If the work being performed requires a license, then the claimant must be licensed in order to file a mechanics lien. In fact, not only can unlicensed contractors not file a mechanics lien, they won’t be able to recover payment through a lawsuit either.
Construction managers are a special situation in California. A controversial appeals court decision in the state suggests that Construction Managers Probably Can File a Mechanics Lien in California…Even without a license, but recent legislation was advertised as reversing that. However, recent legislation suggests that the case for construction manager lien rights is even stronger after that legislation.
How to protect your mechanics lien rights in California
Nearly every party on a California construction project will need to send a preliminary 20-day notice within 20 days of first furnishing labor or materials to the project to secure their rights to file a mechanics lien. This notice may be sent late, but it will only protect work or materials furnished in the 20 days preceding the notice. If you are required to do so, failing to send a preliminary notice will be fatal to your mechanics lien rights.
Information to include in your California mechanics lien claim
To properly file a California mechanics lien, the claim must contain all of the required information. The information needed includes:
- The amount claimed
- Owner’s information
- General description of labor and materials provided
- Description of the property
- Hiring party’s information
- Claimant’s information
- Proof of service affidavit
- Required statutory statement in boldface type found under §8416(a)(8)
Failing to provide all of the required information, or making a mistake in the information you provide can invalidate your lien claim. It’s important to use a lien claim form that meets the statutory requirements for formatting and language, and to verify the information you include on the claim form.
- Download a free California mechanics lien form here, prepared by construction attorneys to meet the state’s legal requirements.
- Find a California property owner
- Learn how to describe the labor & materials you provided
Filing a mechanics lien in California
Filing a lien in California isn’t rocket science, but it can be tricky:
- Read our step-by-step guide to learn exactly how to file a mechanics lien in California.
This involves filling out the proper Claim of Lien form, delivering a copy of the lien to the property owner, and filing the claim in the county recorder’s office where the property is located.
As far as California’s deadline to file, the general rule is that the mechanics lien must be filed within 90 days of the completion of the work of improvement.
However, if a Notice of Completion or Notice of Cessation has been filed, the deadline is shortened. For direct contractors, it is 60 days from when the notice was recorded. For all other parties, it will be shortened to 30 days after the notice has been recorded.
Lien release requirements
If you’ve been paid, there is no statute that explicitly requires the claimant to file a lien release. Typically final payment will be exchanged for a release of the lien claim.
However, if the property owner sends a written request to remove the claim and the lien claimant refuses, then the owner may petition to court with a release order. If the removal is granted, the claimant may be liable for reasonable attorney’s fees.
Enforcing a California lien
If you have not been paid, a California mechanics lien must be enforced through a lien foreclosure action within 90 days from when the Claim of Lien has been filed. If no action is taken within 90 days, then the lien claim will expire and no longer be enforceable.
If the owner and claimant agree, the deadline to enforce the claim can be extended by filing a notice of credit extension. If this notice is filed, the deadline to enforce the claim is 90 days after the expiration of the extension of credit. However, this can’t be extended any later than 1 year after completion of the work of improvement.
Once an action to enforce the lien has been filed in the Superior Court (liens can’t be enforced in small claims court), the complaint must be served on the owner within 60 days of filing. Proof of this service must then be subsequently filed with the court within 60 days of service. Also, a Notice of Lis Pendens must be filed in the county recorder’s office within 20 days.
Removing a lien in California
When a mechanics lien is filed, property owners generally want to get rid of it as quickly as possible. There are generally three ways to remove a lien from property in California.
1. Pay the Lien Claim
This is a no-brainer, especially if the mechanics lien is valid. If you haven’t paid a contractor or supplier for the work or materials they provided, paying the outstanding bill is the most effective way of clearing the lien.
If the property owner already paid the general contractor the full amount, but the GC failed to make all of the payments to their subcontractors and suppliers, the mechanics lien may still be valid. If they aren’t able to make the GC pay, the owner can end up paying for the same work twice.
However, if the lien is invalid, a California property owner has a few other options.
2. Allow the lien to expire
California has one of the shortest lien expiration dates of all US states. In California, a lien claimant must act to enforce their lien within 90 days of filing. As a property owner, you may decide to wait out the 90-day period and let the claim expire.
3. Petition for a Release Order
Under California Civil Code 8400 – 8494, a property owner can petition the court for a release order, releasing a California mechanics lien from the property. In order to make a petition, the property owner must give the lien claimant 10 days notice, giving them time to release the lien voluntarily.