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will a lien placed on a home in escrow percent the sale from going through promptly?

CaliforniaBonding Off LienLien ReleasesMechanics Lien

I moved out of my home and was having work done in preparation to sell. I asked, in writing, a contractor how much it would cost to update a bathroom and asked if it could be done by a specific date. With no written contract and unknown to me, he work was done and I was presented with a bill for $2380. I have refused to pay because of the issues stated above. Also their license has been suspended by the CSLB for non payment of workman’s comp. I have asked to see the proof that this has been taken care of but they have not been willing to show me any documentation or provide the nameof their carrier, so I don’t know if this has been resolved. According to CSLB representatives it has not been resolved. The problem right now is I have sold my home and escrow closes in two and a half weeks. I believe they have filed lien. I got notice that a fed ex package requiring signature will be delivered tomorrow. It is being sent to the home where I no longer live so I will not receive it. I am worried it is notice of a lien and that even though not legal if their license is suspended, it will Med up my escrow. Can you please tell me (hopefully very soon!) if this will complicate the completion of the sale? If so, I will pay them and then take them to small claims court. Thank you for your kind assistance.

1 reply

Jul 10, 2019
I'm very sorry to hear that - it sounds like an incredibly frustrating situation. Before getting too far along: Yes, a mechanics lien filing - regardless of whether the lien itself is valid or invalid - could certainly complicate or even delay the closing of a property. Further, a seller will typically have a duty to the buyer to disclose a mechanics lien filing to their buyer if they're aware of the lien prior to closing.

While it might not be much consolation, there are a few things to consider regarding a lien claim filed by a suspended business. For one, California construction businesses who aren't licensed at the time work is performed are not able to file a valid and enforceable mechanics lien. Granted, they can still actually file a lien by placing a mechanics lien for recording with the county recorder's office. However, the filed lien could likely be challenged relatively easily. And, conceivably, a lien filed by an unlicensed contractor for work that was never authorized could be successfully challenged by an owner.

Yet another option, and one that could help facilitate closing on a property, might be to bond off the filed lien. When a mechanics lien is bonded off, the claim doesn't disappear - but, it is removed from the property title. So, if someone is selling their home that has a lien on it, that owner could clear their property title by bonding off the lien then turning around and challenging the claim on its merits. Further, once a lien is bonded off, a claimant will have to proceed with legal action against the bond to recover. And, considering the expense of proceeding with a lawsuit, a questionable lien claimant might not pursue the claim much further. Plus, if they do and their claim is seriously flawed, the owner might prevail. For more information on bonding off a mechanics lien, here's a great resource: Primer on Mechanics Lien Bonds and Bonding a Mechanics Lien.

Of course, the fastest and easiest way to have a lien removed is certainly to have a lien claimant remove the lien themselves. Paying a claimant to get a lien removed then trying to recoup that payment is certainly one option for clearing a lien from a property, and it might be one of the quicker options available. Another option might be to send a demand letter requesting that the claimant remove their lien claim due to the lien being improper or even fraudulent. When a lien claimant has improperly filed a lien, and where that lien claim results in serious damage to the property owner (such as, potentially, a lost sale), the lien claimant could face serious liability for the owner's missed opportunity. So, by explaining that to a lien claimant and threatening to proceed against the claimant in full force, an owner might be able to convince the claimant to release their lien on their own volition (or at least may be able to gain some ground in the negotiation for releasing the lien).

I hope this was helpful information! Here are some other resources I think might be valuable here:
(1) A Mechanics Lien Was Filed on My Property – What Do I Do Now?
(2) How Do You Remove A Frivolous Mechanics Lien?
(3) California Mechanics Lien Rules Overview
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