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Mechanics lien and bankruptcy

CaliforniaBankruptcyPreliminary NoticeRight to Lien

I am a contractor in California. Work was performed pre BK filing. Preliminary notices filed after BK filed for work performed prior to BK. Company owing the money is not the owner of the property. Is it a problem that I have not yet filed the prelim?

1 reply

Aug 7, 2018
A mechanics lien attaches to the underlying property where work is performed - not to an individual party who owes payment. Meaning, if a contractor has failed to make payment to their subcontractor and the contractor later filed bankruptcy, that contractor's bankruptcy will not prohibit a lien claim from the subcontractor because the lien claim is tied to the property, not that contractor. Thus, when a customer (who is not the property owner) has declared bankruptcy, pursuing a mechanics lien is one of the most effective ways to ensure payment. We discuss mechanics liens and bankruptcy in depth in this article, which should provide helpful insight for mechanics liens and bankruptcy: The Indispensable Guide to Mechanics Liens In Bankruptcy. Of course, it's worth noting that not all work performed prior to sending a preliminary notice will be protected in California. California preliminary notice should be sent within 20 days of a party's first furnishing to the project. If sent beyond 20 days from the start of the project, notice will be effective - but it will only protect the work performed within 20 days prior to sending the notice.
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