Hi, I’m already using the service but need to amend our lien amount. A portion of the claim is for work on a housing tract. In some cases the work was 100% complete. We were completing others when the builder admittedly defaulted on their obligations to pay the material vendors making impossible for my firm to complete the work already in process. Since there is no contention that we stopped work for no other reason than the Builder defaulting on payment to my firm and others to attain needed materials, are we in good standing to claim the contract amounts of the homes that were being finished at the time of the Bldrs. breach? Thanks, Marshall Pepperman
This is needed because the Bldr has contacted my counsel and wants to work a payment program to pay in increments, the delinquent amounts owed my firm. While they do not deny their actions caused my firm to to be unable to complete all the installations in a few units, we want to be sure we can claim all the units we were in, ordered goods for and completed significant portions of the work on. Or if we can even claim the total of the contract price on partial installs with language that we we complete when paid.
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Amount of a California mechanics lien claimFirst, let's look at what amounts can be claimed in a California mechanics lien. Under § 8430(a) of the California Civil Code, a mechanics lien is limited to the smaller of: (1) The reasonable value of the work provided, and (2) the price agreed to. So, if the value of the work which was actually provided is less than the contract price, then a mechanics lien filed for that work is limited to the value of the work provided.
Of course, this is merely the amount that can be liened. When a lien claimant is negotiating with their customer, they might potentially be able to secure payment for more than just what's lienable. This is especially true where other recovery options - ones that might be available for more than just the amount that can be liened - are in play. For more on what amounts can and cannot be included in a lien claim, we've got some helpful information here: California Mechanics Lien Overview.
Amending a California mechanics lien claim
The California Civil Code sections relating to mechanics lien rights in the state don't specifically provide for the ability to amend a filed lien claim - but they don't disallow them, either. Generally, when a mechanics lien statute is silent about the ability to amend a lien, a claimant is still able to amend their claim of lien - though, such an amendment would likely need to be made prior to the deadline for filing a mechanics lien. So, in California, any lien amendments must likely be made within 90 days of the completion of the work of improvement, or within 30 days after the owner records a Notice of Completion or Cessation. And, where a project is ongoing, this deadline might not be too hard to keep an eye on. Though, under § 8180 of the California Civil Code, occupation by the owner or a continuous cessation of labor for 60 days might also signify the "completion" of the project - so it's important to keep all important variables in mind. For more on amending lien claims, here's a great resource: Mechanics Liens: Can a Lien be Amended?
Enforcement deadlines and extending a California lien
One last thing to consider when potentially coming up with a payment plan for a California lien claim... In California, the deadline to enforce a filed mechanics lien will be 90 days from the date on which the lien was recorded. So, if a payment plan will be instituted for a period greater than this timeframe, it's important to recall that after the 90 days has passed, the claimant might not have a ton of leverage to ensure that payment will be made.
There are a few different ways to ensure that payment is made, even when a mechanics lien is no longer there to enforce payment. We discuss some of those other options in this article, and your attorney should be able to provide more insight on that front.
However, California is one of the rare states that allows a mechanics lien to be extended. California claimants can extend the time they have to foreclose their mechanics liens by filing a Notice of Credit. Of course, the owner must agree to extend the mechanics lien via the Notice of Credit for it to be valid, and even with the extension a lien, the lien can't remain in effect longer than one year. You can learn more about California lien extensions here: Understanding Notice of Credit and Lien Extensions in California.