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Is this a case of fraudulent mechanic's lien?

A trash box provider (hauling for broken concrete) is threatening to place a lien on my property, claiming that they haven't been paid for their service, despite our contractor paying and the provider having already taken the trash box (would not have taken the box if they haven't been paid). They claimed that there was cardboard boxes in the trash, and that there was an additional charge since cardboard is not allowed in the box. Our contractor agreed to pay and asked for a receipt from the dump site for charges so that he can reimburse. The provider refused to provide and decided escalate to a mechanic's lien. We reached out to try to find out what's going on but they refuse to talk to the owner (both via phone call and by certified mail). The only tripping point we have is that my contractor failed to receive a receipt for payment, but as mentioned before the provider would not have taken the trash box without payment for their service. What is my recourse here? Is this a fraudulent lien?

1 reply

Jun 17, 2020

It's extremely common for mechanics liens to be filed when there's a dispute over what's owed. Proving fraud on a lien claim tends to be an uphill battle, plus even if the lien claimant is wrong - that doesn't automatically constitute fraud. So, while it's hard to say whether or not a lien is fraudulent, it's not as simple as proving that the claimant overcharged. A claimant overcharging on their lien could result in the lien being considered invalid in some situations. But, as stated at CA Civil Code § 8422(a), "...erroneous information contained in a claim of lien relating to the claimant’s demand, credits and offsets deducted, the work provided, or the description of the site, does not invalidate the claim of lien" unless the issue was intentional or unless a new purchaser is damaged by the error.

Recourse after a mechanics lien has been filed

First, note that it's your contractor's responsibility to resolve the mechanics lien dispute. § 8470 states that the contractor must defend mechanics lien actions at their own expense and that the owner is entitled to withhold the amount of the claim from their direct contractor. Plus, if there is a judgment, then the owner can recoup funds from their contractor. So, the contractor should be really motivated to resolve a lien dispute. Still, once a lien has been filed, an owner has a few different options for proceeding on their own. For one, identifying potential flaws in the lien claim (if there are any) and demanding that the lien be released is a common tactic. Filing an action to challenge the lien claim might be another option. Bonding off the lien claim could be yet another option, and you may be able to push your contractor to do that for you. Finally, if it looks like an enforcement lawsuit will soon be filed, then offering to sign a Notice of Credit will help diffuse the situation and would allow more time to resolve the matter. In any event, consulting with a California construction lawyer would be useful for determining how to approach the situation, especially if your contractor will pay for it. Additionally, this article might provide some value: A Mechanics Lien Was Filed on My Property – What Do I Do Now?

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