I am planning to file a mechanics lien in CA on a project which includes retention. We have not billed the retention amount yet -- can we include the retention amount on the mechanics lien?
Dec 12, 2018
That's a good question. Looking to the California lien statute should help provide some clarity here. § 8430-8434 of the California Civil Code discusses what amounts are subject to lien - and none of those sections distinguish retainage amounts from other amounts subject to lien. Rather, under § 8430, "(a) The lien is a direct lien for the lesser of the following amounts: (1) The reasonable value of the work provided by the claimant. (2) The price agreed to by the claimant and the person that contracted for the work." No mention of retainage or billing. Taking a step back, it can help to look at exactly what retainage is when determining whether it's lienable. Retainage represents some percentage of what's owed for work performed, but is being withheld until later. Thus, since lien rights exist for work owed but unpaid - retainage would seem to fall under that umbrella. At the same time, there are business considerations to take into account. If retainage is not yet owed and has not been billed - it might be jarring to another party on the project to see retaiange amounts included in a lien. On the other side of the coin, if there have been payment issues serious enough that a lien claim might be necessary for recovery, and if it looks like payments won't be recovered without the use of a lien, then including retainage amounts (for work already performed) might be the right move. At the end of the day, that's a business decision. But as far as whether retainage can be included in a lien claim - retainage represents amounts that must be paid for work performed, so including retainage amounts that relate to work already performed in a lien claim should not be improper. Finally, with respect to retainage, this article may be helpful for other retainage questions: Retainage – What Rules Apply And How To Get Your Hands On The Money?