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Can I file a mechanics lien against a tenant who has filed for bankruptcy in California?

I'm a subcontractor working on a larger commercial project. I finished my work on the job in March 2020 but have not been paid since January 2020. My customer who is the GC advised me that the Tenant filed for Chapter 11. They are seeking payment from the property owner who is the mall (tenant is a store inside the mall). Can I file a mechanic lien and what is involed after the lien is filed.

1 reply

May 22, 2020

California subcontractors are generally entitled to mechanics lien rights. And, even when work was done for the tenant and not the owner, the owner's property may be subject to liens. If the owner was involved in the project, or if they were at least aware of the work being performed, then the owner may be subject to mechanics liens for their tenants' improvements. However, the owner can block lien rights for tenant improvements if they file a Notice of Non-Responsibility and post a copy to the job site within 10 days of the owner learning about the improvement. That's a really short time-frame, though - and if the owner doesn't send that document at the start of the job, they might not be able to block liens. So, often, lien claims will be on the table against the owner. Finally, note that even if mechanics lien rights aren't available, that doesn't mean tools won't be available to force payment. Your customer isn't off the hook just because their customer has payment problems. That's true even if the contract has a pay if paid or pay when paid clause. And, if the customer refuses to pay you what you're owed, you may be entitled to bring legal claims like a breach of contract claim. Plus, the threat of legal claims will be effective too - and sending a payment demand letter can force your customer to pay you what you're owed.

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