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How to proceed with a lien against a property when the client is losing the home?

We are the contractor on this project. We have performed all reconstruction/wtr work. We have placed a lien on the property since we have not received payment. The lien was placed within the allowed period. The property owner is now trying to sell the property. We have been contacted by the escrow company involved to send them a conditional waiver and release (expecting payment once escrow closes). The property now fell out of escrow. The property is now back on the market - might go into auction due to loan delinquency. Since there is a lot of movement with this property how should we proceed with the lien to recieve payment?

1 reply

Mar 9, 2020

When a mechanics lien has been properly secured against the project property, there are a few usual steps to follow after that lien is filed, including sending a Notice of Intent to Foreclose, as necessary. Levelset discusses those steps in detail, here: The 4 Steps to Take After Filing a Mechanics Lien. In addition to those steps, it's worth keeping an eye on the lien enforcement deadline. In California, this timeframe is relatively short - 90 days after the lien was filed. So, if 90 days pass after the lien is filed and the lien claimant hasn't filed a lien enforcement suit, that lien will no longer be valid and enforceable - making recovery a bit harder. However, a California mechanics lien claimant can extend their lien enforcement deadline if they can get the owner to sign a Notice of Credit document, then file that with the county recorder. A Notice of Credit can be a win-win: it allows an owner to extend the time for payment without forcing them into a lawsuit, and it gives a lien claimant more time so they don't have to file a lawsuit before they're ready. But, if it looks like the property may soon go into foreclosure, or if it otherwise looks like there will be some battling to do in order to get paid, it might be wise to consult a local California construction attorney to see what steps they may advise in order to get paid. They may have other options they use in order to force payment on a lien.

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