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Mechanics' Liens


Contractor's and Homeowner's Rights

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A Mechanics' Lien is an effective remedy for contractors, subcontractors, and others involved in the construction or improvement of real estate to resolve payment problems. If a service or materials provider records a Mechanics' Lien against the real estate being improved, the owner can not easily sell or refinance the property without first paying off the debt secured by the lien. A Mechanics' Lien motivates the owner to make sure the contractors get paid, and is a prerequisite to filing a foreclosure action on the property.  


You can find additional materials on mechanics' liens by browsing the library shelves near the listed books or by searching the library catalog.

BASICS:

Preliminary Notices
Claimants who do not have a direct contractual relationship with the owner (e.g., subcontractors) must provide a Preliminary Notice within 20 days of furnishing labor or materials to the job. This ensures that the owner is aware of a potential claimant, so that appropriate steps can be taken to confirm that the contractor is paid. Preliminary Notices must be provided to the owner, general contractor, and lender.

Mechanics' Liens
Mechanics' Liens are available to almost anyone who contributes labor, services, or materials to a real estate improvement project. A Mechanics' Lien is used to exact payment out of the real estate itself by placing a lien on the property, making it difficult for the owner to sell or refinance the property, and if necessary, allowing the lien holder to go to court to have the property sold at auction. As of January 2011, a Notice of Mechanics Lien and a Proof of Service of Affidavit is required to initiate a claim.

Stop Notices
A Stop Notice attaches to the owner's undisbursed construction funds, rather than to the property itself, as is the case in a Mechanics' Lien. A Stop Notice compels the owner or lender to hold the remaining construction funds so that claimants can recover for work already completed. Stop notices are not available to claimants with a direct contractual relationship with the owner.

Removing a Lien or Stop Notice
Once a Mechanics' Lien has been recorded, the claimant must file a court action to enforce the lien within 90 days. If no court action is filed by that time, the lien is no longer valid. However, many title companies don't recognize this fact, and require that the lien be removed before you can pass clear title to a buyer. The easiest way to clear this lien is to ask the lienholder to file a Release of Lien. If they will not, you can petition the court to release the property from the Mechanics' Lien. For more information on this, read our step-by-step guide, Petition to Release Mechanics Lien.

* adapted from Preparing and Recording Your California Mechanic's Lien on Private Works of Improvement, James A. Steele; and Contractor's and Homeowners' Guide to Mechanics' Liens,  Stephen R. Elias.

1.    LEGAL ENCYCLOPEDIAS AND LAW SUMMARIES

California Jurisprudence 3d (Cal Jur) KFC 80 .C35 (Ready Reference)
Vol. 44, Mechanics' Liens
Electronic Access: On the Law Library's computers, using WestlawNext.

Witkin's Summary of California Law KFC 80 .W57 (Ready Reference)
Vol. 4, Security Transactions in Real Property § 26
Electronic Access: On the Law Library's computers, using WestlawNext.

2.    PRACTICE GUIDES

Acret's California Construction Laws Annotated  KFC 230.B8 L63
This set is a comprehensive collection of California laws, regulations, constitutional articles and published opinions governing both public and private works of improvement. Includes an in-depth look at the complete text of the Public Contract Code, along with discussions of significant regulations and case law. 

Acret's California Construction Law Manual: Contractor's Edition  KFC 230.B8 L634
This guide to California construction contract law presents filing procedures, time limits, and examples of mechanics liens. It puts at your fingertips everything you need to know about: pay-if-paid clauses, mistakes in bids, breach of contract, damages and penalties for delay, mechanic's liens and stop notices, prompt payment statutes, arbitration, and much more.

California Construction Law KFC 230 .B8 A23
This title from BNI discusses all aspects of mechanic's liens, stop notices and payment bonds.

California Construction Law KFC230.B8 G53
Discusses statutory remedies including mechanics' liens, stop notices, and bonds, both on public and private works.

California Construction Law Manual KFC230.B8 .C63
Contains sections discussing Mechanics' liens, stop notices, and payment bonds.
Electronic Access: On the Law Library's computers, using WestlawNext.

California Mechanics' Lien Law and Construction Industry Practice
KFC229 .M31
California Mechanics' Lien Law provides in-depth treatment of the basic law and procedure relating to works of improvement, from the standpoint of the contractor.
Electronic Access:  On the Law Library's computers, using the Matthew Bender CD.

California Mechanics' Liens and Related Construction Remedies KFC229 .C3
This CEB practice guide simplifies the procedural maze of Mechanics' Liens, stop notices, and bond remedies.
Electronic Access:  On the Law Library's computers, using OnLaw.

Handling Mechanics' Liens and Related Remedies (Private Works)KFC 229 .H86
This CEB Action Guide describes the rights and remedies, including Mechanics' Liens, stop notices, and bonds of the principal parties involved in a private work of improvement.
Electronic Access:  On the Law Library's computers, using OnLaw.

Preparing and Recording Your California Mechanics' Lien: On Private Works of Improvement KFC 229. Z9 S74
This title assists contractors in preparing their Mechanics' Liens and bonded stop notices on private works of improvement located in California, and includes sample forms.

3.    FORMS 

Preliminary Notice
www.saclaw.org/Uploads/files/forms/CaliforniaPreliminaryNotice.pdf 

Claim of Mechanics' Lien including the required Notice of Lien and a Proof of Service Affidavit
www.saclaw.org/Uploads/files/forms/Claim-of-Mechanics-Lien.pdf

Stop Notice
www.saclaw.org/Uploads/files/forms/StopNotice.pdf

Release of Mechanics Lien
www.saclaw.org/Uploads/files/forms/ReleaseOfLien.pdf  

Release of Stop Notice
www.saclaw.org/Uploads/files/forms/ReleaseOfStopNotice.pdf   

Petition to Release Mechanics Lien
www.saclaw.org/Uploads/files/forms/PetitionReleaseLien.rtf

 

  4.    STATUTES

Acret's California Construction Laws Annotated  KFC 230.B8 L63
This set is a comprehensive collection of California laws, regulations, constitutional articles and published opinions governing both public and private works of improvement. Includes an in-depth look at the complete text of the Public Contract Code, along with discussions of significant regulations and case law.  

5.    WEBSITES

American Subcontractors Association of California
The American Subcontractors Association of California provides information on California Lien Laws.
www.asacalif.com/mechanics.html 

Contractors State License Board
The Department of Consumer Affairs, Contractors State License Board provides a pamphlet to assist homeowners in preventing a Mechanics' Liens.
www.cslb.ca.gov/Resources/GuidesAndPublications/HomeownersGuideToPreventingMechanicsLiens.pdf

Nolo Press
Read this article for general information on how to protect yourself from Mechanics' Liens if your contractor fails to pay subcontractors or suppliers.
www.nolo.com/legal-encyclopedia/home-improvement-avoid-paying-twice-30220.html

  

 updated 11/25/2014 rmm