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How shall we proceed in this situation?

CaliforniaMechanics Lien

We were hired directly by a homeowner for interior design and staging services for the remodel and sale of their home. The services originated July 20 and ended October 25. The owner who contracted us is one of 3 owners of the Family Trust who owns the home. He is not the Trustee. The Trustee and the owner who hired us are now in legal disagreement, and the Trustee is failing to respond to or pay invoices. The house is currently in contract (contingencies lifted yesterday) and the potential buyers want to close next Friday. There was never a Preliminary Notice sent by us (not sure we needed to?). We'd like to have something official, either a NOI or a Mechanics Lien filed prior to the closing of escrow next week. Could you please advise if we can: a) File a Mechanics Lien without a Preliminary Notice? b) If not, what would you recommend?

1 reply

Nov 22, 2019
California mechanics lien claimants typically need only send preliminary notice when they were hired by someone other than an owner. That comes straight from § 8200-8216(e)(2) of the California Civil Code, which reads: "A claimant with a direct contractual relationship with an owner or reputed owner is required to give preliminary notice only to the construction lender or reputed construction lender, if any." So, when hired by an owner, no preliminary notice is required in order to preserve the right to lien - unless there is a construction lender on the job.

Who has the right to file a California mechanics lien?

Keep in mind that California mechanics lien claims are generally only available to the extent that the claimant has performed work that's permanently improved the project property. So, lien claims will be available for work that's done that changes the property - like changing flooring, moving walls and plumbing, etc. But, acts that only temporarily improve or alter the property and are intended to be short term changes might not give rise to lien rights.

Options outside the mechanics lien process

Keep in mind that there are always alternative options to mechanics liens. Levelset discusses some of those here: Can’t File a Lien? Here Are Some Other Options For Recovery. Let's briefly look at some of those alternatives below.

Invoice reminders and demand letters

Sometimes, something as simple as a reminder can work to compel payment. Sending a document like an invoice reminder may sometimes be enough to push a customer to do the right thing and pay what's owed. More on that here: How Invoice Reminders Help Contractors Get Paid Faster. Escalating things a bit with a document like a payment demand letter can be a good step, too. Sending a demand letter that includes specific legal threats can go a long way toward getting paid. That way, a customer knows nonpayment isn't an option and that you're prepared to take whatever steps necessary. You can learn more about demand letters here: Demand Letters for Contractors – How To Write One That Gets You Paid.

Breach of Contract

Payment is a crucial term of any contract. And, if a customer fails or refuses to pay what's owed, there's a strong enough chance that a breach of contract claim will be available. Alternatively, if there isn't actually a contract, then there's a chance that an unjust enrichment claim might be on the table, instead.

Small claims court can streamline legal claims

Note also that, if legal claims do have to be made, filing a claim in California small claims court can be a more efficient alternative to traditional litigation.
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