Filing a Construction Lien

A construction project kick-off is often met with a sigh of relief. It means funds will flow through the entire ecosphere of laborers, contractors, subcontractors, and material suppliers. However, the euphoria can quickly fade when progress payments are not made and the relationship with the client starts heading south.

Mechanics Liens on Private California Construction Projects

mechanics-lien-time-limitFortunately, under the California Constitution labor and material suppliers who are contracted on a private construction project with the property owner, prime contractor, subcontractor, or their agents are equip with a powerful legal tool – the Construction Lien or mechanic’s lien.

Filing a mechanics lien ensures the construction company gets paid. Even if the work is not completed or the workmanship is in dispute, if the property is improved and the contractor isn’t paid for that improvement the contractor can file a mechanic’s lien for non-payment of services rendered.

Filing a Mechanic’s Lien Gets the Owners Attention

A Construction Lien can lead to a foreclosure on real estate in order to collect money owed. Because of the serious nature of this type of lien, property owners will typically put up a good fight to save their assets. Strict adherence to the process and timelines involved in filing the lien is absolutely crucial. If the lien is not resolved or it has any chance of being challenged in court, you risk having an expensive legal headache. When involved in a construction dispute it is essential to seek counsel with a Construction Attorney who specializes in Mechanics’ Liens. There are key timelines that must be met when effectively serving a Construction Lien. The process should be taken into consideration when structuring and negotiating payment agreements with clients.

Service Provider Must File Preliminary Notice within 20 Days construction-law-lawyer

The Preliminary Notice basically outlines work to be done and preserves the contractor’s right to file a lien against certain services, labor or materials bought for the client. California Civil Code § 3114. The claim of a lien can only extend for work performed up to 20 days before the notice was served. If the Preliminary Notice is filed late, this will cost the claimant any days of services performed outside the 20 day time frame.

For example, if the Preliminary Notice is filed 35 days into a construction project, 15 days of labor may not be accounted for under a Construction Lien. The property owner must always be notified and served a Preliminary Notice, even if labor is not directly contracted with him or her.

Property Owner Must Record Notice of Nonresponsibility within 10 Days

If the property owner rejects the work proposed in the Preliminary Notice, they must record and post a draft of the “Notice of Nonresposibility” within 10 days of receiving the Preliminary Notice. California Civil Code § 3129. This is the first action the property owner can take against receiving a Construction Lien and protect themselves against any liability.

The Claim of Lien and Stop Notice – The first 90 day period

Contract Agreement 300x200If the project moves forward but the liable party is not making payments. The process of issuing a lien begins with a “claim of lien”. The time frame of when a claim of lien can be filed depends on how the claimant is contracted. The original contractor has up to 60 days after the notice of completion or notice of cessation is issued. Or 90 days without any notice on file. California Civil Code § 3115. Any other subcontractor, service or material provider has a 90 day window to file a claim of lien after the service was provided or contract fulfilled. Along with a Stop Notice, which states all the services provided and cost, the claimant maybe granted a Construction Lien against a property owner.

Filing a Lawsuit – The second 90 day period

The goal of a Construction Lien is to receive fair and equitable dues while preserving the integrity of the legal system. If the idea of a lien doesn’t scare a property owner into making payments, the claimant has 90 days to file a lawsuit. It’s critical to resolve the Construction Lien within this time period. Otherwise, the Construction Lien may not be enforceable. Instead, it can turn into a ‘stale’ lien and the contractor may end up paying a penalty.

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Although Construction Liens give contractors the authority to hold their clients fiscally accountable. The journey can have an ironic outcome if not managed properly. The process of claiming a Construction Lien and enforcing is fairly complex and unique to each situation. Seeking professional help can save time and money in the long run.

Our law firm focuses on construction litigation matters including California mechanic’s liens, stop notice claims, payment bond claims, bidding disputes, contract negotiation and breaches of contract throughout the state of California. Our business and construction lawyers provide legal guidance and counseling to clients at every stage of a construction project.