Mechanics Liens | Who Has Rights & Who Doesn’t

A mechanics’ lien is an involuntary encumbrance against the real property on which the claimant has furnished labor, services and equipment, or material, for the value of the items furnished. As an encumbrance, a mechanics’ lien is a security interest in real property which can be foreclosed. See California Civil Code §8146(a).

Who Has Mechanics Lien Rights and Who Doesn’t

Rights

• Prime or general contractor
• Subcontractor of every teir
• Materialman of the prime contract and all sub-subcontractors
• Laborers
• Persons who have “furnished labors to the job site
• Design Professionals
• Equipment Brokers
• Subrogated Surety –a surety who pays the claim of one who furnished labor and materials

No Rights

• Unlicensed Contractors Civil Code Section 7031(b)
Exceptions:
• Contractor has been duly liscensed as a contractor prior to the performance of the contract.
• Contractor acted reasonably in good faith to maintain proper licensure
• Contractor did not know or reasonably should not have known that he or she was not duly licensed.
• Lenders to contractors and venders of equipment retaining a security interest.
• Alter ego of owner e.g. a corporation formed by the owner to supply lumber.
• One who furnishes merely administrative assistance.
• A tenant making improvements to its leasehold.
• Materialmen of Materialmen or equipment renter to equipment renter.

Simple Steps To Enforce Your Mechanics Lien

A construction lien is a California Constitution Right given to California Construction Contractors and material suppliers who provide materials, services or labor for the improvement of real property. A contractor or material supplier that provides materials, services and/or labor for the improvement of real property and is not paid can take steps to foreclose and sell the property in order to be paid for the services/labor and or material provided.

However, there are strict deadlines that must be met!! There are little to no exceptions.

• Within 20 days of services being provided or materials being delivered, a contractor must provide a 20 day preliminary notice to the owner and/or lender. The reason is to let the property owner know you are working on the property and have the California constitutional right to foreclose and sell the property if you are not paid.
• Within 90 days of last the work performed on the job, a mechanics lien must be recorded unless a notice of completion has been recorded.
• If a notice of completion has been recorded, the direct contractor has only 60 days to record a mechanics lien. A subcontractor has 30 days to record a mechanics lien.

When asserting your lien rights, it is imperative that you comply with very specific time frames. Failure to do so could render your lien unenforceable.

Caveat – A contractor who loses their mechanics lien rights still can still file a breach of contract lawsuit against the party (homeowner or contractor) for breach of contract. This cause of action is in addition to the mechanics lien lawsuit. Both are mutually independent of each other.