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Home>Levelset Community>Legal Help>Our client filed Chapter 7 Bankruptcy, we filed Mechanics Lien on Landlords building, do we have to remove lien??

Our client filed Chapter 7 Bankruptcy, we filed Mechanics Lien on Landlords building, do we have to remove lien??

CaliforniaBankruptcy

We are a small General Contractor in San Francisco Bay Area, we were in contract with Specialty's Cafe & Baker, to remodel restaurant in San Francisco California. Job was $615,000 we received 1 progress payment of $105,000. with balance due of $510,000. We were two weeks from being complete, when were informed that due to Covid 19 shelter in place, they were closing their doors on all 55 of their restaurants will not to reopen. They filed Chapter 7 Bankruptcy. We filed Mechanics Lien on building they are tenant in. Landlord wants a lien free building, we are in discussions with them to see what can be done to close out permit. They may possibly pay partial?? Is there any recourse with landlord?? Do we have to remove lien if we don't get paid?? How can a large corporation just walk away owing so much money with no recourse?? They claim they owe 1,000 vendors, with only 50,000 in assets, but owe between 1 million and 10 million dollars. (we know they owed us $510,000 on this job) Are we at the mercy of the Landlord?? We had completed a remodel for same customer in February 2020 and they owe us Final Retention Balance of $29,000, we filed Mechanics Lien on that one too. We are sending paperwork to Landlord to see what can be done?? Do we have to remove Mechanics Lien if we don't get paid??

2 replies

Jun 7, 2020
Assuming your contract is with the landlord, which may or may not be the building's owner (?), you have a breach of contract claim against the landlord. Since you have recorded a mechanic's lien, make sure you timely file suit (within 90 days of recording the lien), and after you file suit be sure to timely record your lis pendens, which puts the world on notice of your property claim. A mechanic's lien is a lien again the property, so while your lien in behind any mortgage(s) that pre-date your lien, to the extent there is some equity in the property you have a decent shot of getting paid. If the landlord or owner makes a partial payment, you can always amend your lien. The most important take-away is: don't blow your deadline to file suit! We handle cases for contractors all over California. If you would like to discuss, give me a call, or email, anytime. Thanks, Andrew Carlton & Alberola and/or Andrew Carlton have not been retained by the recipient of the above comment and, moreover, the above comment does not create an attorney-client relationship. The above is general commentary based on limited and insufficient information. If you wish to obtain legal advice, please contact Andrew Carlton at 949-954-6666 x101, or by email at andrew@cnalawfirm.com.
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Jun 8, 2020
The reason you have the lien is so you can forclose on the building if you do not get paid. You should hire a construction attorney to advise you on how to proceed. In general, if the landlord does not pay you in full, you can file a lawsuit to foreclose on the lien and force the property into a foreclosure sale, so that you can get paid. Do not let the landlord bully you on this.
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