A mechanic's lien, otherwise known as a "construction lien," is a guarantee of payment to contractors, builders, or construction firms that either build or repair structures. Mechanic's liens can also be extended to other parties; for example, material suppliers and subcontractors.
If you're a landowner, you may have to deal with a mechanic's lien placed on your property by a disgruntled contractor, laborer, subcontractor, or material supplier. Under California Civil Code Section 8400 et. seq., these liens are meant to protect either contractors or suppliers who have not been fully compensated for their work on a property.
Mechanic's liens exist to protect contractors, particularly because of the economics of the construction business. Mechanic's liens are a constitutional right guaranteed to contractors under the California Constitution.
As a landowner, a mechanic's lien poses several problems:
- It can result in foreclosure, which forces the sale of the property to satisfy the lien
- A default on the financing relating to the property
- The inability to sell, finance, or refinance the property
- Duplicate expenditures for the same work
Tips for Landowners
As a landowner, certain preventative measures should be taken to minimize the risk of a mechanic's lien, including:
- Work with reputable contractors who promptly pay their subcontractors.
- Don't begin without a clear written agreement with start and end dates, and payment schedules.
- Keep detailed records of all transactions, bills, and payments relating to the project.
- You may want to issue a joint check to contractors and subcontractors when the subcontractor has performed substantial services.
- Secure conditional and unconditional waivers and releases from claimants as the work is completed and as you pay the claimants.
- Once work is completed, be sure to file notices of completion (these notify claimants that they have a specified amount of time to file a lien).
If you still receive a notice of a mechanic's lien, make sure you contact Los Angeles construction law and real estate attorney, Steven R. Lovett. Attorney Lovett can determine if the lien is valid, and he will know how to resolve the issue.
If you are a landowner who is dealing with a mechanic's lien, contact the Law Office of Steven R. Lovett for a free telephone consultation. With almost 40years of experience in construction law, he can help you.