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Can I still file a Mechanics Lien with a company that already filed bankruptcy?

CaliforniaBankruptcyMechanics Lien

Can I file a Mechanics Lien with a company that has already filed for bankruptcy and settled the case? Our work was never completed, we were supposed to return to complete it when they got to a certain stage and then they filed for bankruptcy. The property is now in escrow. The Owner was also the General Contractor.

4 replies

Jul 11, 2020

If the bankruptcy is over you may be out of luck. But bankruptcy's usually take over a year so it may not be. Bankruptcy Code section 362(b)(3) allows the recording of a mechanic’s lien after the filing of a bankruptcy petition. But the automatic stay precludes you from filing a lawsuit to perfect that lien. Instead you may file a notice of perfection in the bankrupcty court to perfect the lien per Bankruptcy Code Section 546(b)(2). 

Your normal lien deadlines apply. You have 90 days from project completion (or 150 days from project cessation for a conintuous period of 60 days) to record your lien (absent a notice of completion or cessation which would reduce the deadline to 30 days from any such notice).  

Once the lien is recorded, you still have the 90 days to perfect. But instead of filing a lawsuit, you would file a notice of perfection in the bankruptcy. And you would want to do so ASAP so that the bankruptcy court has notice of the lien as a secured debt. 

To schedule a free telphone consultation send me an email at ryan@huntortmann.com. 

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Jul 11, 2020

If you contracted with the owner, which it sounds like you did, and so long as you are within your time to do so, that is, within 90 days after completion of the work of improvement or 60 days after the owner records a Notice of Completion or Cessation, yes.

Carlton & Alberola
and/or Andrew Carlton have not been retained by the recipient of the above
comment and, moreover, the above comment does not create an
attorney-client relationship. The above is general commentary based on limited
and insufficient information. If you wish to obtain legal advice, please
contact Andrew Carlton at 949-954-6666 x101, or by email at
andrew@cnalawfirm.com. 

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Jul 14, 2020
You can’t file a regular mechanic’s lien if the owner has filed for bankruptcy but you can file a special notice with the bankruptcy court of your right to a mechanic’s lien. It would be best to contact a bankruptcy lawyer to help you with this.
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Jan 11, 2023

I really like the information you share. Thanks to that, I know many more interesting and useful things. getting over it 

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