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How to handle projects with multiple addresses and owners.

we are currently helping a client turn a location with 4 properties and 2 owners into one large property. At this point, however, they are listed as separate properties and my organization has lumped these properties under 1 contract with a combined cost. We tried to send a prelim on the property, but it was rejected by the Zlien team because this project has multiple properties and owners. My question is how do we protect ourselves in such a case where the estimate become less reliable when the project is split up by properties, due to the nature of the project? Even further, lets say we could split it up evenly, what happens when all these properties become one? Since we are doing the civil Engineering work, at what point do we classify the properties as one location?

1 reply

Oct 5, 2018

That's an interesting situation, and unfortunately, California's lien laws don't provide guidance for every circumstance. However, the general rules should help provide a little clarity here. Plus, the rules for actually filing a lien claim might provide a little insight, too. First, under § 8410 of the California Civil Code, "A claimant may enforce a lien only if the claimant has given preliminary notice to the extent required by Chapter 2 (commencing with Section 8200)..." Under § 8200, notice must be sent to the owner of the property, among others. So, at this point, it's clear that notice must be sent as required in order to preserve lien rights, and for notice to be effective, the owner of the property (to which the notice extends) must receive notice. Thus, when a project entails property owned by 4 separate owners, each owner must likely receive notice. Continuing along, under § 8202(a)(2), "An estimate of the total price of the work provided and to be provided" must be included in this notice. However, that section does not specifically contemplate a situation where multiple properties are being improved under the same contract. So, there's little guidance as to how amounts should be represented in preliminary notices sent to multiple owners for the same job. The California Civil Code does provide guidance on how such a situation should be handled in the context of a mechanics lien filing - and considering a preliminary notice is a prerequisite to filing a lien and contains some of the same information - it may be a good idea to operate under a similar fashion. § 8446 states that one lien claim may be made on multiple properties under certain circumstances. One of these circumstances is that the claim of lien should designate the amount due for each property. Further, when there's a lump sum for payment (and specific amounts aren't allocated to the separate properties), the statute calls for the amounts designated to each property to be proportionate to the amount of work on each property. But, importantly, section (c) under § 8446 states "If there is a single structure on real property of different owners, the claimant need not segregate the proportion of work provided for the portion of the structure situated on real property of each owner." So, mirroring what would eventually be required for a lien filing could be a safe way to proceed in sending notice - whether that be sending notices with one amount for the total improvement, or sending notices estimating what proportion of the overall work will be done on each property. Of course, since a situation such as this doesn't really appear to be provided for in the California Civil Code, there isn't much guidance on how notice must be handled. That's unfortunate, but sending notice as closely as possible to what's specifically required may be the safest way to move forward.

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