For construction projects, general contractors typically hire multiple subcontractors to perform various scopes of work, with the expectation that the general contractor will pay them from the amount the owner pays for the project. Unfortunately, sometimes this process does not go as planned, leaving the subcontractor without payment. A mechanic’s lien is a type of lien that protects subcontractors and suppliers from this scenario.
A mechanic’s lien is a type of secured interest against the real property that protects a subcontractor’s right to payment. These liens provide important protection, but they also have specific requirements and deadlines to meet for them to be valid. Even small errors can lead to having these invalidated, which is why working with an attorney is so important.
Filing Requirements and Timing
In California, those interested in recording a mechanic’s lien must serve the property owner, construction lender, if one exists. and general contractor a notice within the first 20 days of starting work on the property. When the project is complete, the subcontractor must record a mechanics lien within 90 days. Failing to meet either of these deadlines will mean loss of the right to record a mechanics lien for that project. The mechanic’s lien is recorded with the county recorder’s office in the county where the property is located. It also must be sent to the owner of the property. Finally, within 90 days of filing the lien, a lien claimant must file a lawsuit to enforce the lien. If a lien claimant does not sue on the lien within those 90 days, the lien will expire.
These are the rules for California. Other states may be similar but have slightly different forms and time frames. For that reason, working with an attorney is essential to ensure you protect your right to record a lien and get paid.
Notices to Provide
In order to record a mechanic’s lien, the lien claimant must file the following notices:
- Preliminary Notice – Filed within 20 days of starting work, this notice lets the owner, general contractor, and lender know of the claimant ’s intention to file a mechanic’s lien.
- Notice of Completion or Cessation – This is the official notice that work on the property has been completed. It is not required, but if it is filed, then it shortens the deadline for filing a mechanic’s lien from 60 days after completing the job to 30.
- Mechanic’s Lien – This is the official lien that is recorded with the county recorder’s office.
- Lawsuit to Collect – This lawsuit allows the claimant to collect the money they are owed.
The Homeowner’s Responsibility with Mechanic’s Liens
For most work on a residential home, the general contractor is responsible for paying the subcontractors and suppliers, and the homeowner pays the general contractor for the entire project. The mechanic’s lien statutes ensures the subcontractors and suppliers are paid, even if the general contractor fails to do so. The property’s owner then becomes responsible for paying the subcontractors and suppliers for the work performed and materials provided.
In some cases, this can result in the homeowner paying twice for the work: once to the general contractor and again to the subcontractor and/or supplier. In these instances, working with an attorney can help protect the homeowner from unnecessary expenses while still ensuring that the contractors and suppliers are all paid for their work.
If you are interested in pursuing a mechanic’s lien to protect your rights to be paid, please contact the team at Lanak & Hanna.
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