Payment delays and non-payment are not unusual in construction. Mechanics liens exist to protect construction professionals from unpaid work. This article discusses how mechanics liens work in California, who they are for, and how contractors, subcontractors and material suppliers can ensure their mechanics lien is valid and enforceable in the even they need to use one.
What is a mechanics lien in California?
Mechanics liens are a tool for contractors, subcontractors, and material suppliers to recover payment in case of issues on a construction project. It works by placing a “hold” on a project property as a security for unpaid work. If work remains unpaid, the mechanics lien can be enforced and result in the foreclosure of a property or a forced sale.
What is the purpose of a mechanics lien in California?
Why do you file a mechanics lien in California?
Mechanics liens are meant to protect construction professionals from unpaid work. Once a person who was contracted to perform work or deliver supplies to a construction project is not paid for the work or supplies provided, they can file a claim of lien to recover payments.1 This is often the last resort for contractors, subcontractors, and material suppliers. Filing a claim of lien after exhausting methods to collect is a legal avenue that can protect you from clients who are unable or unwilling to pay and can result in the sale of the property to pay for unpaid contractors and suppliers. The mechanics lien process in California also allows ample notice and time for the owner to pay and make the situation right before it results in foreclosure.
However, the right to file a lien comes with responsibilities. It is easy for contractors to lose their right to lien if they are not familiar with the lien process and fail to fulfill the requirements for filing a lien in California, such as pre-lien notices, also called the California 20-day preliminary notice.2 You may learn all about this notice here: California Preliminary Notice for Private Works: Facts and Timelines.
How do mechanics liens work in California?
How does filing a California Mechanics Lien Claim help me get my money?
Mechanics liens place a “hold” on the property where the work or supplies were provided. Once a mechanics lien has been filed and recorded, the property owner was unable to resolve the issue of unpaid work within the timeframe provided by law (90 days after mechanics lien is recorded)3, the claimant can move to enforce the lien. The court can then foreclose or order the sale of the property in order to pay lien claimants.
Who is responsible for a mechanics lien in California?
Anybody who has the right to lien must ensure that they file the required preliminary notices in California. If unpaid after work completion, the claimants are also responsible for recording the mechanics lien with the county recorder. Claimants can use lien services like Handle to ensure that all required notices are sent and all deadlines are met, eliminating the risk of losing the right to file a mechanics lien if they go unpaid.
As for paying for the work provided, the person who contracted for the work–usually the owner–is ultimately responsible for ensuring that all parties who provided work are paid. This means the owner is ultimately responsible if a subcontractor or other low tier subcontractors are left unpaid by the contractor who hired them. This is why California requires specific notices to be filed and recorded to ensure that all parties are notified of their responsibilities and risks they’re subject to throughout the construction project.
Who can file a mechanics lien in California?
Who can make a Mechanics Lien? Who can record a mechanics lien in California? Should I file a California mechanics lien?
As the law states, anybody who has provided any of the following to a project, under a contract with the owner, contractor, or subcontractor for the project has a right to lien as long as they provide the required preliminary notice/s4:
- Labor
- Skills
- Services
- Materials
- Supplies
- Equipment
- Appliances
- Power
- Surveying
In summary, the following has lien rights in California:
- Direct contractors (preliminary notice not required)
- Subcontractors and all lower-tier subcontractors
- Material suppliers
- Equipment lessors
- Laborers (preliminary notice not required)
- Design professionals
- Architects
- Landscape architects
- Professional engineers
- Land surveyors
Can subcontractors and sub-subcontractors (and other lower-tier subcontractors) file a mechanics lien in California?
Yes, as long as they file the required 20-day preliminary notice5.
Can an unlicensed contractor file a mechanic’s lien in California?
No. California is strict about licensing and makes it difficult for unlicensed contractors to continue operating by only extending rights to licensed contractors6
Can a contractor file a lien without a contract in California?
Do I need a written contract to file a California mechanics lien claim?
No. California puts an emphasis on doing things by law, so without a contract, you lose lien rights.
Can you file a mechanics lien without a preliminary notice in California?
Can you file a California mechanics’ lien claim without a preliminary notice to the owner?
If you are not a direct contractor or laborer, you cannot file a mechanics lien without a preliminary notice.7 You lose your right to file a lien if you didn’t file a preliminary notice. Direct contractors are protected even without preliminary notices because of the Mechanics Lien Warning included in their direct contracts with the owner.
What is the deadline for filing a mechanics lien or recording a claim of lien in California?
How many days after the project can I file a mechanics lien?
Direct contractors
Direct contractors/prime/original contractors and anyone who has a direct contract with the owner can file and record a mechanics lien claim after work completion. Once work is completed as described in their direct contract with the owner, they have 90 days to file and record a mechanics lien with the county recorder.
Suppose the owner recorded a Notice of Completion or Notice of Cessation with the county recorder to mark the end of work. In that case, the direct contractor only has 60 days to file and record the mechanics lien with the recorder since the date the owner recorded the notice of completion or cessation, or 90 days after work completion, whichever date is earlier of the two. 8
Other claimants (Subcontractors and lower-tier subcontractors)
A claimant that’s not a direct contractor must record a mechanics lien claim after they stopped work on a project and should do so not later than the earlier of the following dates:9
- 90 days after completion of the work improvement
- 30 days after the owner records a notice of completion or cessation with the county recorder
How long does a subcontractor have to file a mechanics lien claim in California?
Subcontractors and other lower-tier contractors can file a mechanics lien within 90 days of work completion. However, suppose the property owner has filed a Notice of Completion or Notice of Cessation with the county recorder. In that case, claimants have 30 days within the notice filing to file their mechanics lien.10 Ideally, everybody who has sent a preliminary notice to the owner will have received a copy of the Notice of Completion or Notice of Cessation within ten (10) days of its filing from the owner (as described in the statutory statement in the preliminary notice)11 and a notification from the county recorder12.
What are the dates to remember regarding the California mechanics lien?
For direct contractors, they must remember to file and record a mechanics lien within 90 days of work completion. If the owner filed a Notice of Completion or Notice of Cessation with the county recorder, the direct contractor must file the mechanics lien within 60 days after the Notice of Completion or Notice of Cessation was filed.13
Subcontractors and all other claimants who are not the direct contractor must file a mechanics lien within 90 days of work completion. If the owner filed a Notice of Cessation or Notice of Completion, subcontractors and other non-direct contractor claimants now only have 30 days after the Notice of Completion or Notice of Cessation was filed to record their mechanics liens.14
What does verifying the status of my project mean?
Knowing the work completion date is important because it’s the beginning of the countdown for the 90 days you have to record a valid mechanics lien. In many cases, the work completion date is straightforward and could even be outlined in the contract.15, 16
However, there are also cases where the project changes midway, and the work extends or shortens, changing the date of work completion. You can verify the project’s status by communicating with the person or entity you contracted with–either the owner or another contractor–to ensure that you are on the same page. You can also check public records if the owner has filed a Notice of Completion or Notice of Cessation with the county recorder where the project is located. Legally, the owner is required to notify everyone who served them a preliminary notice within 10 days of filing a Notice of Completion or Cessation.17 The county recorder should also notify parties who recorded their preliminary notices with the county.18
Can I file a California mechanics lien claim when the project is on a government-owned property?
Can I file a mechanics lien on public projects? What kind of projects can I file a mechanics lien for?
Mechanics liens do not cover public projects in California. However, all public projects in the state must be bonded. That provides protection both to the public entity contracting for the work and the contractors and suppliers working on public projects. The rules for filing preliminary notices in California cover both public and private construction projects. In the case of public projects, not serving a preliminary notice will result in losing the right to assert a bond claim.19
What are the requirements for filing a mechanics lien in California?
For subcontractors and other claimants whose contracts are not direct with the owner, a 20-day preliminary notice is required to retain the right to file a mechanics lien. Here’s our article on how to file the 20-day preliminary notice covering answers to some of the most frequently asked questions. Without a preliminary notice, claimants who are not the direct contractor or laborer lose their right to lien.
Direct contractors, while smart to still file preliminary notices, are not required to file a preliminary notice in order to retain their right to lien claims because of the Mechanics Lien Warning included in direct contracts in California.20
If you have satisfied the preliminary notice requirements in California, you are eligible to file a mechanics lien in case of payment issues21, after work is completed and before the deadline to file a mechanics lien has passed 22, 23. It is also best practice to send a notice of intent to lien before filing and recording a mechanics lien to remind the owner of unpaid work and allow them to settle their arrears before you move on to enforcing a mechanics lien. Note that a notice of intent to lien is not required in order to file a mechanics lien.
How do you file a mechanics lien in California?
What is the process of filing a mechanics lien in California?
NOTE: Before filing a mechanics lien, you need to file a preliminary notice within 20 days of the first day of work. If served late, the preliminary notice will only cover the work or supplies provided from the 20 days preceding the date you served the preliminary notice and onwards. This protects your right to file a mechanics lien.
If you’ve satisfied the preliminary notice requirements, completed the work and/or delivered the supplies contractually required, and remain unpaid, you can now file a mechanics lien. It’s also best practice to send a notice of intent to lien before going ahead with your mechanics lien claim. However, that is not required.
Once you’ve decided to file a mechanics lien claim, here are the steps you need to follow.
STEP 1: Prepare your mechanics lien document. It must be a written document, typed or printed, and signed and verified by the claimant (you).24
Information you must include in your mechanics lien document
California Civil Code requires that the following information be included in your mechanics lien claim:
- Statement of the claimant’s demand ($), after all just credits and offsets
- Name of the owner or reputed owner, if known
- A general statement of the kind of work provided by the claimant
- Name of the person who employed or contracted with the claimant
- Description of the site sufficient for identification
- Claimant’s address
- The following statement, printed in at least 10-pt boldface type. The letters of the last sentence should be in uppercase type, except the CSLB URL, which should be in lowercase type.
NOTICE OF MECHANICS LIEN
ATTENTION!Upon the recording of the enclosed MECHANICS LIEN with the county recorder’s office of the county where the property is located, your property is subject to the filing of a legal action seeking a court-ordered foreclosure sale of the real property on which the lien has been recorded. That legal action must be filed with the court no later than 90 days after the date the mechanics lien is recorded.The party identified in the enclosed mechanics lien may have provided labor or materials for improvements to your property and may not have been paid for these items. You are receiving this notice because it is a required step in filing a mechanics lien foreclosure action against your property. The foreclosure action will seek a sale of your property in order to pay for unpaid labor, materials, or improvements provided to your property. This may affect your ability to borrow against, refinance, or sell the property until the mechanics lien is released.
BECAUSE THE LIEN AFFECTS YOUR PROPERTY, YOU MAY WISH TO SPEAK WITH YOUR CONTRACTOR IMMEDIATELY, OR CONTACT AN ATTORNEY, OR FOR MORE INFORMATION ON MECHANICS LIENS GO TO THE CONTRACTORS’ STATE LICENSE BOARD WEB SITE AT www.cslb.ca.gov.”
- Proof of service affidavit proving the service of a copy of the mechanics lien to the owner or reputed owner–or direct contractor or construction lender, if unable to serve a copy to the owner/reputed owner. You will acquire this proof of service in the next step, but keep in mind that this part is required in order to have a valid mechanics lien claim.
STEP 2: Serve a copy to the owner or reputed owner, and acquire a proof of service affidavit25
Once you’ve prepared the mechanics lien document, verified all information included, and signed it, you must now serve a copy of the mechanics lien to the owner of the property you’ve provided work or materials for. This step is required–and to prove you have completed this step, you need to include a proof of service affidavit and attach a certificate of mailing to the mechanics lien document.
These are the accepted delivery methods and the proof of service you need to secure at the time of delivery:
To serve a copy of the mechanics lien to owners or reputed owners located in or outside California, you must mail the document through any of the following methods:
- Registered mail
- Certified mail
- First class mail
Proof of service: For all three methods, the proof of service is a certificate of mailing. Make sure that the certificate of mailing satisfies the following:
- Postage prepaid
- Addressed to the owner or the reputed owner
- Includes the title or capacity of the person or entity served
- Addressed to either their residence, business address, the address indicated on the building permit for the project on file with the agency that issued the permit, or the address provided in the Construction Trust Deed.26
If you are unable to serve a copy of the mechanics lien to the owner, you may serve the copy of the mechanics lien to the construction lender OR the original contractor. You still need to complete a proof of service affidavit and attach the proof of service (certificate of mailing) to the mechanics lien.
Deliver the copy of the mechanics lien through any of the following methods:
- Registered mail
- Certified mail
- First class mail
You must make sure that you get a certificate of mailing for any of the delivery methods, and attach that to the mechanics lien along with the proof of service affidavit.
Service of the copy of the mechanics lien is deemed complete at the time of mailing for all mailing methods.
WARNING: Failure to serve a copy of the mechanics lien claim, including the required NOTICE OF MECHANICS LIEN statutory statement required, will invalidate your mechanics lien and make it unenforceable as a matter of law.
STEP 3: Once you’ve completed the document and attached the proof of service along with the proof of service affidavit, you can now file and record it with the county recorder where the property you’ve delivered work or supplies for is located.
Here’s a quick checklist to ensure a valid mechanics lien recording:
- The document must include all required information
- The document must be signed and verified by the claimant (you)
- The document must include the NOTICE OF MECHANICS LIEN statement, printed in at least 10-point boldface type.
- The letters of the last sentence should be in uppercase type, except the CSLB URL, which should be in lowercase type.
- The document must include a proof of service affidavit confirming that you sent a copy of the document to the owner or reputed owner
- A certificate of mailing from when you mailed a copy of the document to the owner or reputed owner must be attached
As long as you’ve completed all the items on the checklist, you can now record the mechanics lien with the county recorder. The county recorder is required to accept your recording even if the parties you’ve served a copy of the mechanics lien didn’t provide acknowledgment.
What happens if there is incorrect information in the mechanics lien?
Since most of the information required in the mechanics lien document is similar to the information needed for the preliminary notice, there’s very little chance of having incorrect information if you cross-check. Ultimately, the claimant is responsible for ensuring that all information on the mechanics lien is correct. The claimant can also check public records to ensure that the information included in their claim is correct.
California Civil Code states that erroneous information in a claim of lien relating to the claimant’s demand, the description of the work provided, or the description of the site will not invalidate the claim of lien. However, here are the instances where the lien can be forfeited or invalidated27:
- The claim of lien was made with intent to defraud
- The property worked on is now owned by an innocent third party after the claim of lien has been recorded, but the claim of lien was so deficient that the new owner didn’t look further into the lien in any way
- The claimant willfully included any labor, services, equipment, or materials not delivered for the property described in the claim to the claim of lien
What items can be included in the amount of a lien? What should the lien amount be?
According to law, the claimant’s demand must be the lower of the following amounts28:
- Reasonable value of the work or supplies the claimant provided
- Contract price for work or supplies delivered
However, the lien is not limited in amount by the contract price for the work of improvement except for bonded projects.
The claimant is not prevented from including in the claim of lien work or supplies delivered based on:
- a written modification of the contract
- Result of a cancellation, abandonment, or breach of contract
Any work or materials provided that was not included in the direct contract with the owner is not lienable. If there were changes to the contract after the project started, if the subcontractors had knowledge or constructive notice of the changes in the direct contract, work or supplies provided outside the contract is not lienable. In this case, recording the original contract or modification of the contract to the county recorder before the start of the work of improvement is enough constructive notice, so, in the case of subcontractors and lower tier subs, always check the public records with the county recorder to ensure that your contract is consistent with the work or supplies included in the direct contract with the owner.
A direct contractor can only enforce their lien after deducting all lien claims of other claimants who provided work or supplies under their contract with the owner. The same applies to subcontractors–they need to subtract all lien claims for work or supplies delivered under their contract before enforcing their lien claim.29
What is the form number for a mechanics lien in California?
The information that needs to be included in the Mechanics Lien is outlined in Section 8416 of the California Civil Code. There is no statutory form. However, the information required as described in the section must be complete in the mechanics lien document you’re filing with the county recorder, including the statutory statement described.
How to fill out a California mechanics lien online?
You can use Handle to fill out and record a mechanics lien online. California requires that a copy of the mechanics lien document be served to required parties and the mechanics lien be recorded with the county recorder/s where the property is located. Handle will ensure that a copy of the lien is served to required parties with proof of service included and that your mechanics lien is recorded in the correct counties to ensure a valid lien claim.
What information do you need to file a mechanics lien in California?
You need the following information to be included in your mechanics lien document:
- Claimant’s demand after all just credits and offsets
- Name of the owner or reputed owner. You can ask the direct contractor or check public records if you don’t know. Handle’s Owner Lookup can also find the correct information for you.
- A general statement describing the kind of work provided by the claimant
- Name of the person who employed or contracted with the claimant. If you, the claimant, are a subcontractor or lower-tier sub, provide the name of the person or entity who hired you.
- Description of the site sufficient for identification
- Claimant’s address
- Proof of service affidavit. This portion should be completed and signed by the person who mailed the claim of mechanics lien to the owner or reputed owner (second step, before recording the lien with the county recorder)
- The affidavit should include the following information
- Name and address of the owner or reputed owner to whom the claim of mechanics lien was served
- The title or capacity of the person or entity served with the claim of mechanics lien
- The affidavit should also include a certificate of mailing, postage prepaid, that the person who delivered the notice to the owner can acquire at the time of maling. The accepted mailing methods are first class, registered, and certified mail.
- The following statement must be included in the mechanics lien document, printed in at least 10-pt boldface type. The letters of the last sentence should be in uppercase type, except the CSLB URL, which should be in lowercase type.
NOTICE OF MECHANICS LIEN
ATTENTION!Upon the recording of the enclosed MECHANICS LIEN with the county recorder’s office of the county where the property is located, your property is subject to the filing of a legal action seeking a court-ordered foreclosure sale of the real property on which the lien has been recorded. That legal action must be filed with the court no later than 90 days after the date the mechanics lien is recorded.
The party identified in the enclosed mechanics lien may have provided labor or materials for improvements to your property and may not have been paid for these items. You are receiving this notice because it is a required step in filing a mechanics lien foreclosure action against your property. The foreclosure action will seek a sale of your property in order to pay for unpaid labor, materials, or improvements provided to your property. This may affect your ability to borrow against, refinance, or sell the property until the mechanics lien is released.
BECAUSE THE LIEN AFFECTS YOUR PROPERTY, YOU MAY WISH TO SPEAK WITH YOUR CONTRACTOR IMMEDIATELY, OR CONTACT AN ATTORNEY, OR FOR MORE INFORMATION ON MECHANICS LIENS GO TO THE CONTRACTORS’ STATE LICENSE BOARD WEB SITE AT www.cslb.ca.gov.”
How much does it cost to file a mechanics lien in California?
How much is it to file a mechanics lien?
The cost for filing a mechanics lien in California varies depending on the county, but it generally ranges between $20 and $50, plus a Building Homes and Jobs Act recording fee of $75, as of January 2018. Some counties may also charge a real estate fraud fee that ranges from $3-10 dollars per document, if they require it.
Before you file a mechanics lien, it is a good business practice to call the county clerk’s office ahead and inquire about the exact filing costs applicable to you.
Where do I need to file a mechanics lien?
Before filing the mechanics lien with the county recorder, you are first required to serve a copy of the mechanics lien document you prepared to the owner of the property, including the NOTICE OF MECHANICS LIEN statutory statement, through the following methods30:
- Registered mail
- Certified mail
- First class mail
The person who mailed the copy of the mechanics lien must secure a certificate of mailing, postage prepaid, when they mail the document, regardless of the method they chose in the three allowed ways to deliver. This is required to be attached to the proof of service affidavit included in the mechanics lien document.
Failure to serve a copy of the claim of mechanics lien including the required NOTICE OF MECHANICS LIEN statutory statement required will cause the mechanics lien to be unenforceable as a matter of law.
After serving the copy of the lien to the owner or reputed owner and completing the proof of service affidavit with the certificate of mailing attached, the completed mechanics lien document must be filed and recorded with the county recorder/s where the property you’ve delivered work or materials for is located. Tthe county recorder must record the mechanics lien as long as the information included is complete. The mechanics lien claim is considered recorded even without the acknowledgment of the parties who received a copy of the lien.
What are the valid delivery methods for filing a mechanics lien in California?
When you’ve prepared your mechanics lien document, you need to serve a copy of it to the owner or reputed owner. This is an absolute requirement, and the certificate of mailing the person who serves the copy of the lien gets from the mailing method they chose should be attached to the proof of service affidavit required in the document by law. Otherwise, the lien will not be enforceable.
Here are the valid delivery methods for mechanics liens in California:
- Registered mail
- Certified mail
- First class mail
Can an owner or contractor contest a mechanics lien?
Yes. Once a valid mechanics lien has been recorded and attached to the title of a property, the owner has ways to remove the mechanics lien, usually through a petition for a release order with the help of a lawyer.31 Removing mechanics liens is a difficult process and is one reason why mechanics liens effectively promote timely payments.
On the other hand, there are also many reasons why a mechanics lien that has been recorded can be proven invalid, usually due to the failure to file notices and documents in a timely manner32, failure to include required information, or including incorrect information33, 34, not serving copies of the lien to the required parties, or not recording the mechanics lien with the correct county.35
How do I enforce a mechanics lien?
How do I get paid with a mechanics lien? How to perfect a mechanics lien in California? What happens after filing a mechanics lien?
If the claimant remains unpaid after filing a mechanics lien with the county recorder, they can move ahead with the enforcement of the lien, which places the property on a “hold”, pending a decision of the court that may result in the foreclosure or sale of a property to perfect the lien–in other words, the judge can order to sell the property as a way to perfect the lien and get the claimants paid.
After serving a copy of the mechanics lien to the owner/reputed owner and filing and recording the mechanics lien with the county recorder/s where the project is located , you have 90 days36 to commence an action to enforce the lien. This means filing a court lawsuit to enforce the lien. If you fail to file a suit within the 90 days following the recording of the mechanics lien, the lien is now expired and unenforceable.
Within 20 days of filing a court lawsuit (commencing an action to enforce a lien), the claimant/plaintiff must record a Notice of Pendency (Lis Pendens) with the county recorder/s where the property is situated, usually with the assistance of an attorney. From there, the trial will be scheduled. Recording the Notice of Pendency with the county recorder also counts as constructive notice to a purchaser or encumbrancer of the affected property, if applicable.37
There are cases where the owner and the claimant agree to extend credit. This extends the validity of the mechanics lien claim, which gives the owner more time to settle the unpaid work or materials. However, this is rarely the case as parties are often in dispute at this point of the process. If an agreement was made and recorded with the county recorder, the new mechanics lien deadline is within 90 days after the credit expires and within one (1) year of work completion, whichever is earlier.
The action to enforce a lien must be brought to trial within 2 years since the commencement of the action to enforce a lien. Otherwise, the court may dismiss the action in its discretion for lack of prosecution.38
When should I enforce my mechanics lien?
What are the requirements in enforcing a mechanics lien in California?
After sending a copy of the lien document to the owner and filing the mechanics lien with the county recorder/s where the property is located, you have 90 days to commence an action (file a lawsuit) to enforce the lien. If you fail to start the action (file a suit) to enforce the lien in that period, your mechanics lien claim expires and is now unenforceable.
There are cases where the owner and the claimant agree to extend credit. This extends the validity of the mechanics lien claim, which gives the owner more time to settle the unpaid work or materials. However, this is rarely the case as parties are often in dispute at this point in the process. In case an agreement was made and recorded with the county recorder, the new mechanics lien deadline is within 90 days after the credit expires, and within 1 year of work completion, whichever is earlier.
How long does it take to enforce a mechanics lien?
It’s a case-by-case basis because enforcement of the mechanics lien involves a lawsuit. However, there are timelines included in the law.
- After filing the suit to enforce your mechanics lien claim, you must record a Notice of Pendency with the county recorder/s within 20 days. From there, the trial will be scheduled.
- Notwithstanding Code of Civil Procedure Section 583.420, if an action to enforce a lien is not brought to trial within two (2) years since the commencement of the action to enforce a lien (filing a lawsuit to enforce the lien), the court may dismiss the action in its discretion for want/lack of prosecution.
The time from filing a mechanics lien to getting a judgment on the mechanics lien varies due to the many variables in each construction project. In most cases, multiple parties are filing to enforce the lien, in which case prioritization of claimants according to California Civil Code Title 2, Chapter 4, Article 5, Sections 8450 – 8458 apply. The details of how prioritization works are outlined in the next question.
What happens if there are several mechanics liens on a property?
Who gets paid first? How does prioritization work for California mechanics liens?
Because multiple parties can have a valid mechanics lien on a property, there are statutes that dictate who will receive payment first. Some liens have higher priority than others, and it is very important for potential lien claimants to know how their liens are prioritized in the event of a bankruptcy or foreclosure.
In general, how is lien priority determined?
Generally speaking, lien priority is determined by the date of recordation or when a claimant filed the lien with the county recorder. This means that the ranking of which claimants get to be paid first is established based on which liens were recorded the earliest.
This is also known as “first in time, first in right.”
The prioritization involves all encumbrances on the property, including all liens and deeds of trust like loans and mortgages.
How does lien priority work in California?
California lien laws also follow the general rule in which lien priority is ranked according to the date the liens were created (i.e. from earliest to latest recordation date). However, the state slightly diverts from this “first in time, first in right” rule regarding California mechanics liens.
According to statutory rules, lien priority in California may be determined based on when labor and/or materials were furnished to the project, even if the actual lien document has been filed later.
For example, even if a deed of trust for a home equity loan has been recorded earlier, a mechanics lien in California may still be ranked higher in lien priority if the mechanics lien claimant had provided labor or materials earlier than the recordation of a deed of trust.
You may read more about lien priority in this article: https://www.handle.com/lien-priority-california/
Do I need a lawyer to file a mechanics lien?
The action to enforce a mechanics lien results in a lawsuit and is likely to involve a trial. It’s best to enlist the services of a lawyer to represent you for the action to foreclose on a lien claim. It’s not illegal to represent yourself in this lawsuit. However, the best practice is to get a professional who can act in your best interest and knows the law thoroughly. 39, 40, 41
What are the grounds for rejecting a mechanics lien?
What makes a mechanics lien invalid?
Not filing a preliminary notice
For all claimants except for the direct contractor, a preliminary notice is required in order to file a mechanics lien in California in the event of unpaid work.
If you weren’t able to serve a preliminary notice to the owner that covers the work or supplies you’ve provided for a project, you lose your right to lien. If the first 20 days of work or supply delivery has passed and you failed to serve a preliminary notice to the owner, you may still be able to preserve your right to lien for a portion of the project by still filing a preliminary notice.
Preliminary notices cover the right to lien for work beginning from 20 days preceding the notice’s date. So a late preliminary notice can still preserve your right to file a mechanics lien for any work or supplies provided 20 days before the day you serve it. It may not cover all the work and supplies you’ve delivered, but you still get to protect a part of your work. It’s best to file the preliminary notice as early as possible after work begins to avoid unnecessarily losing the right to lien for some or all of your work or supplies provided.
Not following deadlines, not filing a mechanics lien on time
The law is strict regarding the timeliness of recording a mechanics lien in California. All claimants generally have 90 days after work completion to file their mechanics lien. However, the deadline for claimants to file is shortened if the owner files a Notice of Cessation or Notice of Completion to the county recorder/s where the property is located.
For general contractors, the deadline now becomes 60 days after the owner records the Notice of Completion or Cessation.
For all other claimants, the deadline is shortened to 30 days after the owner records the Notice of Completion or Cessation.
You will be notified when a Notice of Completion or Cessation has been filed, but it’s still best practice to check public records to verify the deadline of mechanics lien filing.
Once you’ve served the copy of the mechanics lien to the owner and recorded the mechanics lien with the county recorder/s where the property is located, you now have 90 days to commence an action to enforce the mechanics lien (file the lawsuit) if you remain unpaid. In some cases, an agreement with the owner can extend this deadline through extended credit. However, this is rarely the case.
When you start the action to enforce the mechanics lien via a lawsuit, you have 20 days to file the Notice of Pendency with the county recorder/s where the property is located. This starts the process of scheduling the trial.
Fraudulent lien or wilful inclusion of work/materials not included in the contract
The amount of your demand is required to be included in the mechanics lien document. Ensuring that the amount of money you’re demanding in your lien is not padded in any way is key because any sign of fraudulent declaration of the demand claim can be grounds to invalidate your lien.
Here are the instances where the lien can be forfeited or invalidated42:
- The claim of lien was made with intent to defraud
- The property worked on is now owned by an innocent third party after the claim of lien has been recorded, but the claim of lien was so deficient that the new owner didn’t look further into the lien in any way
- The claimant willfully included any labor, services, equipment, or materials not delivered for the property described in the claim to the claim of lien
- Cal. Civ. Code §8400
- Cal. Civ. Code §8410
- Cal. Civ. Code §8460
- Cal. Civ. Code §8400
- Cal. Civ. Code §8400
- CA BPC § 7031(a)
- Cal. Civ. Code §8410
- Cal. Civ. Code §8412
- Cal. Civ. Code §8414
- Cal. Civ. Code §8414
- Cal. Civ. Code §8202
- Cal. Civ. Code §8214
- Cal. Civ. Code §8414
- Cal. Civ. Code §8214
- Cal. Civ. Code §8414
- Cal. Civ. Code §8214
- Cal. Civ. Code §8202
- Cal. Civ. Code §8214
- Cal. Civ. Code §8200
- CA BPC § 7164
- Cal. Civ. Code §8410
- Cal. Civ. Code §8412
- Cal. Civ. Code §8414
- Cal. Civ. Code §8416
- Cal. Civ. Code §8416
- Cal. Civ. Code §8174
- Cal. Civ. Code §8422
- Cal. Civ. Code §8430
- Cal. Civ. Code §8434
- Cal. Civ. Code §8416
- Cal. Civ. Code §8482
- Cal. Civ. Code §8460
- Cal. Civ. Code §8416
- Cal. Civ. Code §8422
- Cal. Civ. Code §8214
- Cal. Civ. Code §8460
- Cal. Civ. Code §8461
- Cal. Civ. Code §8462
- Cal. Civ. Code §8460
- Cal. Civ. Code §8461
- Cal. Civ. Code §8462
- Cal. Civ. Code §8422