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Can I lien a contractor on the first day we are on the job site??

The situation is a contractor of ours is withholding payment from phase 1. Our last day on the job site was November of last year... so we know the time to lien them is over. However we are starting phase two next week and I wanted to put a lien on the new project on the first day we are onsite. Would you advise this?? How common is it for a trade to lien the contractor on day one???

1 reply

Apr 1, 2019

I'm sorry to hear about your payment troubles. First and foremost, I should note that I'm not able to provide you with legal advice for your situation. However, I can provide some information that should be helpful so you can make your own determinations. Anyway, let's first look at how the mechanics lien deadline operates in California. Then, the ability to recover payment after the deadline to lien has passed. After that, we'll look at potentially filing a mechanics lien early on the job. In California, a lien claimant other than a direct contractor must file their mechanics lien after they cease to provide work, but before the earlier of two dates: (1) 90 days after completion of the work of improvement, or (2) 30 days after the owner records a Notice of Completion or Cessation. On a project where there are multiple phrases, it will be important to determine whether separate phases are truly separate for the purposes of the mechanics lien deadline, or whether they all comprise the same overall "project" and ultimately lead up to one, singular mechanics lien deadline. One indicator of whether a deadline will run from the end of a phase or the overall completion will be whether one contract was executed for all work on the job, or whether separate contracts were executed for a claimant's work on separate phases of the job. In a situation where there's only 1 contract for all work to be performed, that would seem to indicate that the claimant's lien deadline might run from the end of the overall project. Even more indicative, though, would be if each separate phase was "concluded" with a Notice of Completion or Cessation. If there is a Notice of Completion executed at the end of separate phases, that'd be a strong indicator that lien deadlines would run from those completions of phases rather than the existence of one overall lien deadline. But, in a situation where there's only one contract for work, and if there's no clear separation of project phases by a Notice of Completion, then it's entirely possible that a lien claimant's deadline will run from the completion of the multi-phase project. If that is the case, a claimant wouldn't be blocked from claiming a lien for work performed but not liened in a prior phase of the project. Next, let's look at payment recovery when a lien isn't available. First, even in a situation where a lien deadline has passed, sending a warning or threat of lien like a Notice of Intent to Lien can go a long way toward compelling payment. This is especially true where the project is still ongoing and a mechanics lien filing could disrupt the flow of work. A mechanics lien is a powerful tool - it can freeze funding, can create fear for an owner, and it can put serious pressure on a contractor to resolve their payment disputes. Because of this, the mere threat of a lien claim will often work to compel payment (regardless of whether a claimant actually intends to file a lien). More on that idea here: What is a Notice of Intent to Lien?. Even outside of the lien process, though - there are ways to resolve payment disputes through collaboration with a customer. zlien explores those ideas here: What if I Don't Want to File a Lien? There are Other Options.. Note also that the California prompt payment or retainage rules may also be applicable, and if payment isn't made according to those rules, a contractor could end up being liable for making payments, plus interest. The California prompt payment rules are broken down here: California Prompt Payment Act: What Contractors Need to Know. Finally, let's look at the potential for an early lien filing. If the lien deadline has passed and some work was left unpaid, that work cannot later be liened based on other, unrelated work. Further, mechanics lien rights will only arise for work performed that's gone unpaid. So, in a situation where a claimant has just begun work, filing a mechanics lien extremely early on the job may not be proper - lien rights for prior work performed for the customer would no longer be lienable, and there would (seemingly) be no amounts to claim a lien on since no work would have been performed and unpaid yet. On that front, it's important to keep in mind that a mechanics lien that is overstated or exaggerated could be problematic for the lien claimant and could open them up to liability. Plus, where a working business relationship will be needed moving forward, filing a mechanics lien off the bat could create tension - if possible, talking out the issue to resolve any misunderstandings is generally a good idea prior to moving forward with more official action. Plus, as noted above, there may be other options to recover payment without the need for filing a mechanics lien. Lastly, here are some additional resources that might be helpful: (1) California Lien & Notice Overview; and (2) How to File a California Mechanics Lien.

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