Frequently Asked Questions

Warning: The information contained in this web site is not intended to constitute legal advice and should not be relied upon as a substitute for advice from an attorney licensed in your jurisdiction that you have retained to represent you.

What is a Mechanic’s Lien and why is it such a powerful legal tool?

The basic theory of Mechanic’s Lien Law is to prevent unjust enrichment of an owner at the expense of the construction individual or firm who provided “work of improvement” to the subject property. California law provides that a party who contributes labor, materials or equipment to the value of the owner’s property is actually granted a form of security interest in the property in which the work was done. While this is a powerful remedy, Mechanic’s Lien Law is complicated and the procedures must be complied with precisely. A failure to comply with the strict guidelines will invalidate the lien right.

How is a “work of Improvement” defined?

The phrase “work of improvement” is defined very broadly by the applicable statute to include almost any type of building or structure on the land; even a ditch, well, bridge, etc., as well as planting for landscaping, or filling, leveling or grading; also demolition and/or demolition of buildings.

Who May Record a Mechanic’s Lien?

Basically, contractors, subcontractors, lessors of equipment, materialmen, architects and all persons and laborers of every class performing labor and services on the subject property are entitled to have a lien or security interest in the subject property for the amount of work or materials provided.

Must the Contractor be licensed?

In order for the contractor to recover for labor and/or materials furnished on the work of improvement, the contractor MUST be licensed. All contractors must be able to prove they were licensed at ALL times during construction of the project. However, this requirement only applies to those who actually perform or supervise construction services directly. The law is not intended to apply to those who only supply material or equipment to be used by others on the work of improvement. Thus, a company that supplies materials or equipment is not deemed to be acting in a capacity of a contractor and therefore is not required to obtain a license.

What are the Basis Procedures to prevail on A Mechanic’s Lien?

i. The Preliminary Notice

A Preliminary notice is the mandatory prerequisite to a Mechanic’s Lien or a Stop Notice (see Stop Notice below) and its purpose is to protect property owners from sudden recordation of a Mechanic’s liens without prior notice. Generally speaking, all claimants, except the general contractor must give this notice or forfeit their lien rights. Moreover, when the contract price exceeds $400.00, the failure to provide notice is in itself grounds for disciplinary action by the Registrar of Contractors (Civ. Code § 3097 (h)).

Comment: Often a general contractor/project owner will try and convince a subcontractor that there is no need for a preliminary notice. The simplest recourse is to state that it is a requirement of the Registrar of Contractors (Civ. Code § 3097 (h) and provide a copy.

The notice must be given not later than 20 days after the claimant has first provided the labor, services, equipment and/or materials to the project. It should be noted that a failure to give the notice within this 20 day period does not preclude the claimant from providing the property owner with the notice at a later date. However, the claimant would only be entitled to claim a lien or stop notice for the labor, services equipment and/or materials within the 20 days prior to the date of the notice and thereafter.

It is vital that the claimant has proof that a preliminary notice was delivered to the property owner. The most satisfactory method is mailing the notice accompanied either by the return receipt of certified or registered mail, and keeping the return receipt as proof of delivery. Note: First class mail without return receipt is not acceptable.

ii. Recording a Mechanic’s Lien

To enforce a lien right, the claimant must record a Mechanic’s Lien in the office of the county recorder of the county (or of the several counties) in which the property is situated. It is crucial that the claimant comply with the following timelines.

General contractors are required to record their claim of lien after the contract is completed and before the expiration of 90 (calendar) days after the completion of the work of improvement if no notice of completion (see notice of completion below) or notice of cessation has been recorded, or 60 (calendar) days after recordation of a notice of completion or notice of cessation. Subcontractors and other claimants, other than the general contractor, must record their claim of lien after they have ceased furnishing labor, services, equipment and/or materials be fore the expiration of 90 days after completion of the work of improvement if no notice of completion or cessation has been recorded, or 30 days after recordation of a notice of completion or notice of cessation.

iii. Filing a Lawsuit

At the time of recordation the case must be calendared for filing of a lawsuit within 90 days following the date of recordation of the notice and claim of lien. It is mandatory that a lawsuit be filed within this time period as the applicable statute requires that no mechanics’ lien may encumber the property for more than 90 days unless a lawsuit is commenced in the proper court. A failure to bring an action to foreclose within the 90 day time period shall render the lien automatically null and void.

Comment: One of cardinal errors made by the claimant is to rely upo n the promises that payment is imminent and the claimant should hold off on the filing of the lawsuit. Often this is simply a strategy to run out the 90 (calendar) day period thus negating this powerful lien right.

What is a Stop Notice For Private Works of Improvement?

The Stop Notice is similar to the Mechanic’s Lien in that it is a powerful remedy for those in the construction industry. While the Mechanic’s Lien is said to attach the actual land being improved, the Stop Notice attaches the construction monies or loan. Essentially, the Stop Notice allows the claimant to earmark for themselves portions of a construction loan fund in the hands of the owner or lender. The Stop Notice is effective because it allows attachment of the un-disbursed construction loan funds.

Is a Mechanic’s Lien remedy available on Public works?

A Mechanic’s Lien may not be recorded against a Public Work of improvement. Instead the law makes available two alternative remedies, the Stop Notice and the Public Works Payment Bond.

i. Stop Notice For Public Work

With a Stop Notice a public entity is required to withhold funds which would otherwise have been made payable to the contractor or those claiming under the contractor. Like a Mechanic’s Lien, a preliminary 20 day notice is required and the Stop Notice must be timely filed. To be effective, the Stop Notice must be served 30 days after the recording of a Notice of Completion or if No Notice of Completion has been recorded then no later than 90 days after completion. Once the Stop Notice has been timely filed a lawsuit must be commenced if payment is not forthcoming. The action must commence no sooner than 10 days after service of the Stop notice and no later than 90 days following the expiration of the time during which the Stop Notices could be served.

ii. Payment Bond for Public Work

Every original contractor awarded a public job in excess of $25,000.00 is required to file a payment bond. The bond shall be in a sum not less than the 100 percent of the total amount payable under the terms of the contract. There is no requirement that the public entity be sued or brought into any litigation for the claimant to enforce any rights they may have under the payment bond. Suit must be brought against the surety or sureties and the principals on the payment bond, at any time after the claimant has furnished the last of the labor and/or materials, but must be commenced before the expiration of six months after the period in which Stop Notices may be served.