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is a lien necessary if i am only storing construction material for a contractor? I didn't sell the product to the contractor.

we are a supply firm who has been asked by a contractor to provide monthly warehousing of items we did not sell to the contractor. We do not own the warehouse; we sub lease space on a as needed basis from the warehouse owner. how do we protect ourselves to assure payment and mitigate our liability of storing the contractors items?

1 reply

Oct 1, 2018

Generally, a mechanics lien is only an appropriate remedy to the extent labor or materials were supplied to a work of improvement, for which the claimant remains unpaid. Amounts due for reasons not directly related to a specific work of improvement are usually not subject to mechanics lien protection. This is because a mechanics lien is directly tied to and encumbers a particular piece of property - the property that was being improved through the work. Mere storage of materials that were not sold by the claimant, is likely too far removed for mechanics lien protection.

There are other protections for such cases, however. Even lien protection. The California commercial code specifically provides for a "warehouse" lien for the storage of goods. This lien arises automatically upon the storage of the goods, and can be enforced through a sale of the goods stored (provided the proper steps are taken to do so). Additionally, moveable property may be subject to a UCC security agreement. A UCC lien is a voluntary security interest, and if filed, the beneficiary party is given an interest in some property (like goods, or inventory, or other supplies) to secure some amount owed.

There are also contractual agreements that can be tailored to the specific situation at issue to provide more protection or easier recovery in the case of nonpayment for storage of the goods.

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