Home>Levelset Community>Legal Help>We are a subcontractor for interior finished goods. In California for residential projects where we contract with the general contractor (we are generally the flooring contractor), are we allowed to pre-lien (and enforce liens) on a tract by tract basis or do we have to do it per lot? What about for commercial? Of course we would love to be able to do it on the tract vs each lot . If your legal team is provide the relevant authority to back it up-either CA Civ. Code Section or case law that would be helpful. Thanks, Steffani
We are a subcontractor for interior finished goods. In California for residential projects where we contract with the general contractor (we are generally the flooring contractor), are we allowed to pre-lien (and enforce liens) on a tract by tract basis or do we have to do it per lot? What about for commercial? Of course we would love to be able to do it on the tract vs each lot . If your legal team is provide the relevant authority to back it up-either CA Civ. Code Section or case law that would be helpful. Thanks, Steffani
From "tract" vs. "lot" question, it appears that the question potentially surrounds work on residential developments, rather than just a bunch of entirely separate residential properties. Note that the rules regarding notices and liens for work on residential or commercial property are the same. There are a few factors to consider regarding the ability to lien such projects.
First, if the project is a new development with a single owner, and your work is done prior to the subdivision of the property, any lien claim would then have to be against the total pre-divided parcel. If the property has been divided, or if there are multiple owners, or if there are multiple contracts under which the work was performed, the calculation is a bit trickier.
California does allow a single lien to be filed in some circumstances in which one would generally assume multiple liens must be filed, however. California Civil Code § 8446 states that:
A claimant may record one claim of lien on two or more works of improvement, subject to the following conditions: (a) The works of improvement have or are reputed to have the same owner, or the work was contracted for by the same person for the works of improvement whether or not they have the same owner. (b) The claimant in the claim of lien designates the amount due for each work of improvement. If the claimant contracted for a lump sum payment for work provided for the works of improvement and the contract does not segregate the amount due for each work of improvement separately, the claimant may estimate an equitable distribution of the amount due for each work of improvement based on the proportionate amount of work provided for each. If the claimant does not designate the amount due for each work of improvement, the lien is subordinate to other liens. (c) If there is a single structure on real property of different owners, the claimant need not segregate the proportion of work provided for the portion of the structure situated on real property of each owner. In the lien enforcement action the court may, if it determines it equitable to do so, designate an equitable distribution of the lien among the real property of the owners. (d) The lien does not extend beyond the amount designated as against other creditors having liens, by judgment, mortgage, or otherwise, on either the works of improvement or the real property on which the works of improvement are situated.
So, if the project was ultimately contracted for by one party, it is technically allowable to file one lien. Although, with the general requirement to partition the work between the different properties, it is only a potential way to save filing costs. Also, county recorders routinely raise issues with such liens, despite the fact that they are allowed by statute. Since liens are indexed by property description it becomes a nightmare to get such a lien recorded properly, as a practical matter. Finally, the notice and service requirements are not modified, such that the property owner(s) must be provided notice/lien even if there are many owners and only one lien is being attempted to be filed.
Filing multiple liens may be the safest (albeit more expensive) option here. It is probably a good idea to have the contracts (if standard) and situations evaluated by an attorney that can look at them and spend some more time in order for you to set a policy. To the extent that the situations are not standardized, the situation should be evaluated on a case by case basis.