CALIFORNIA MECHANIC’S LIEN TIPS AND STRATEGIES—PART 1

 In Mechanic’s Lien Law Updates and News

After filing hundreds of California mechanic’s liens over the years, National Lien Law has developed certain tips and strategies to make your collection efforts more successful. These are some of the factors that we have learned:

• Watch out for time deadlines. You can certainly send in your California lien by mail to the recorder, but if you only have a couple of days before the running of the statute of limitations, there is a lurking danger. What if for some reason the recorder rejects it and by the time it is sent back to you and you send it back again, the time has lapsed? The best idea is to hand carry it into the recorder’s office. They usually allow you to make changes right at the counter.

• Make sure you are naming the correct owner(s). Just because a person is listed in your contract, does not mean they are the correct fee simple owner. To double check, simply do a Google search, for example, “Ventura County California assessor’s office, property search.” You can do a name search or a common street address search. It will then pull up the correct owner as well as the Assessor’s Parcel Number (APN), which will be your legal description. There is no need to have any other detailed legal description, at least in California.

• Make sure the amount of the California mechanic’s lien is contained on the first page.

• How much can you ask for? Only put in the unpaid principal. Do not increase that amount by interest, finance charges, costs or attorney’s fees. You can only get them later at trial. Instead, it should be stated, for example: “$10,000. Plus prejudgment interest, costs for recording the California lien, and attorney’s fees according to proof at trial.”

• Add the value of everything you have performed, including any change orders. The change order amounts should be added whether or not they had been signed and whether or not they are contested. You have a good faith right to assert everything you feel entitled to, and do not have to anticipate the other party’s defenses.

• Don’t ever hold off recording your lien because someone says to you: “if you file the lien, you’ll mess up the project and never get paid. Just be patient and the funds will be coming to you shortly.” This is a prescription for fraud. Simply tell them that upon being paid, you will immediately release the lien.

• The time to file a California mechanic’s lien for all persons, whether general contractor, subcontractor or material supplier, is a bit different in California. For everyone, it begins to run upon the completion of the overall project, not just your portion of the work.

• But this time is not extended for warranty work or punch lists. The only exception to a punch list, is if the other party is having you do additional items, as opposed to correcting what you have already done. But remember, the time is extended for any work under the base contract or additional work, including change orders. By all means, if there is anything, no matter how small in value, to be done additionally, go ahead and do it–because it extends the time.

• If you are wrongfully terminated on the job, your mechanic’s lien can be for the value of your labor and materials up until the date of termination. But you cannot record a mechanic’s lien for your lost profits for the balance of the contract that you were denied. That can only be recovered in a lawsuit for breach of contract.

• Some lien claimants like to do a notice of intent to lien before the actual lien. In other words, giving a 10-day warning shot. It is not required by the code. If you have already exhausted your attempts at payment, you are probably wasting your breath doing this. But if you do the notice of intent, attach a sample copy of your mechanic’s lien so they know you are serious.

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