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California contractors and material suppliers have a powerful tool to collect money when a property owner or general contractor fails to fails to pay bills in a timely fashion: a mechanic’s lien. Because the law the allows liens to be filed, there are strict procedures to be followed to protect property owners from invalid liens. Here are some tipes to help contractors protect lien rights:
1. A Preliminary 20-Day Notice (Private Work) must be served to all legal parties on a project (Customer, Owner, General Contractor, Lender) within 20 days after first furnishing construction related labor, services, equipment or materials. Each day after the 20th day, you lose a portion of your financial interest in the financial value of construction related labor, services, equipment or materials your company provided for the project. A Preliminary Notice may be given out at a later point in time, but your financial recovery for a Mechanic’s Lien, if filed, can only be for the 20 day period prior to the Preliminary Notice being filed.

2. A Notice and Claim of Lien (Mechanic’s Lien) can be recorded at any time upon completion of a project. It is recorded at the County Recorders Office in the county where a project you provided construction related labor, services, equipment or materials. If the Owner has recorded a Notice of Completion or a Notice of Cessation, you have 60 days to file a Notice and Claim of Lien (Mechanic’s Lien) with the County Recorders Office (General Contractor) and 30 days for all other Subcontractors. If a Notice of Completion or a Notice Of Cessation has not been recorded by the Owner, you have 90 days after completion of the entire project to file a Notice and Claim of Lien (Mechanic’s Lien) with the County Recorders Office. 3. A Notice and Claim of Lien (Mechanic’s Lien) cannot be filed for projects that are City, County, State or Federal related, often called public works projects.4. A party who supplies materials to another supplier does not have Mechanic’s Lien rights in California. 5. The completion of the entire construction project is considered the starting date for the Mechanic’s Lien filing period. 6. An unlicensed contractor can not use the Mechanic’s Lien process in California if the work required a contractor’s license. If the value of the contract is $500 or more, including labor and materials, then the work usually requires a license issued by the Contractor’s State License Board.7. A Complaint to Foreclose a Mechanic’s Lien (legal perfection of a Lien) must generally be filed within 90 days unless the lien claimant grants a properly recorded extension of credit to the property owner. The lien’s effetive period is extended until 90 days after the credit expires, but o more than one year after the completion of the work of improvement. 8. The Conditional Waiver and Release Upon Progress Payment can be requested by the legal parties on a project who have been served a Preliminary 20-day Notice through a promise to make a partial payment for furnishing construction related labor, services, equipment or materials. 9. The Unconditional Waiver and Release Upon Progress Payment can be requested by the legal parties on a project who have been served a Preliminary 20-day Notice for a received partial payment for furnishing construction related labor, services, equipment or materials. 10. If Mechanic’s Lien amount is paid in full, you have an obligation as the party filing a Notice and Claim of Lien (Mechanic’s Lien) to issue a Release of Lien that can then be recorded at the County Recorder’s Office in the county where the project is you provided construction related labor, services, equipment or materials.The information provided in this article is general information only and is not intended as legal advice. DO NOT use this information as a substitute for obtaining qualified legal advice or other professional help. Please contact us at (619) 448-2129 or email us for a consultation.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

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