Slow pay, short pay, and no pay situations frequently happen in the construction industry. Due to the many people and moving parts involved in a project, these situations often occur because of miscommunication or simple errors.
Sometimes, however, payment disputes turn into more complicated matters that aren’t easily resolved.
If a contractor or property owner is unwilling to pay you what you are owed for your work in the state of California, you can file a mechanics lien.
Mechanics liens are a valuable tool to help construction industry businesses get paid. They work by placing a lien, or “hold,” on the property as a security for unpaid work.
If the mechanics lien is enforced, it can bring the project to a halt, result in foreclosure, or lead to a forced sale of the property. Because of the powerful nature of mechanics liens, it is important that your lien rights are protected.
In this article, we will cover everything you need to know to ensure that your mechanics lien is valid and enforceable in the state of California.
California Lien Law
Before filing a lien, it is important that you understand California’s lien law.
Successfully filing a mechanics lien can be a very detailed process with multiple requirements, regulations, and deadlines. Any mistake, even a small one, can result in the invalidation of your lien.
Each state also has its own set of rules, so it is necessary to understand the filing requirements for your specific state and county.
Who Can File a Mechanics Lien?
In the state of California, various parties can file a mechanics lien if they are unpaid.
According to California lien law, anyone who has provided materials or services during a construction project under a contract with the owner, contractor, or subcontractor, has the right to file a lien. These services include but are not limited to:
As such, the protected parties would be:
- Direct contractors
- Material suppliers
- Equipment lessors
- Design professionals
How to Protect Your Lien Rights
Businesses headquartered in California or working on projects based in the state are required to send a California 20 day preliminary notice. That means that you must send a prelim within 20 days of the start of every project.
Pre liens are the first step to protecting your right to payment as they ensure that you have mechanics lien rights if you ever choose to file.
They also inform the general contractor, property owner, and lender of your work and involvement with the project, helping them keep track of your payments, so they aren’t delayed or accidentally withheld.
How Long Do I Have to File a Lien in California?
After you have completed your work on the project, if you do not receive payment, you have the right to file and record a mechanics lien.
Depending on your role and whether a “Notice of Completion or Cessation” is filed, the deadline for filing a mechanics lien can differ.
Direct contractors, such as general contractors, must file the claim within:
- 90 days after completing work on the project.
- 60 days after a “Notice of Completion or Cessation” is recorded by the owner.
All other claimants, such as subcontractors, must file the claim within:
- 90 days after completing work on the project.
- 30 days after a “Notice of Completion or Cessation” is recorded by the owner.
Filing and Serving a Mechanics Lien
Filing a mechanics lien in California involves multiple steps. First, you must prepare the California lien form with the correct formatting and information.
It is important that you get the right mechanics lien form for the state of California.
Once you have successfully completed the form with the required information, you will need to serve a copy of the lien to the property owner. This can be done through:
- Registered mail
- Certified mail
- First class mail
Failure to serve a copy of the claim of mechanics lien before filing it with the county recorder will cause the mechanics lien to be unenforceable by California law.
You must also keep a record of your mailing and prepare and sign a “proof of service affidavit.”
Once that is completed, the lien must be filed in the county recorder’s office in the county where the project is located. Keep in mind that you do not need to wait for the mailing to be delivered, simply sent, in order to file the lien with the county recorder’s office.
Protect Your California Lien Rights With CNS
Mechanics liens are the most valuable tool in the collection process for construction businesses. However, in order to ensure your lien rights, you must carefully follow all California mechanics lien law rules and regulations.
At CNS, we understand the challenges that one might encounter when preparing a mechanics lien as well as the time-consuming nature of them.
That is why we have designed our mechanics lien services to help you avoid common mistakes that could jeopardize your payment and save you valuable time.
Contact us today to file a mechanics lien.
Or, if you haven’t already, get a pre lien started to secure your lien rights.
Prefer to call? You can reach us at 800-366-5660.
Disclaimer: CNS is not an attorney, and if you need legal advice, please contact one.