California Mechanic’s Lien Update: New Preliminary Notice
As is commonly known, California is a mechanic’s lien state that requires as a condition precedent to a mechanic’s lien, the filing of a preliminary 20 day notice. This basic format has not changed over the years, but there have been some small wrinkles as of late.
As of January 1, 2011, the 20-Day Notice has been changed to add new wording under the “Notice to Property Owner” section. It is absolutely required to use the new forms.
All construction professionals, including general contractors, subcontractors, laborers, and material/equipment suppliers who do not have a direct contract with the owner, are required to serve this preliminary notice before the mechanic’s lien.. For example, a general contractor with a direct verbal or written contract with the owner who acts as the prime is not required to give the Notice.
Effective July 1, 2012, California Civil Code Section 8200 requires that any claimant that has a direct contract with the owner must serve a preliminary notice on the construction lender. If there is no construction lender, the general contractor does not have to serve the pre-lien notice.
In other words, if you are working on residential project that is self-financed by the owner, either from their own funds or by refinancing their property other than a construction loan, only subs and suppliers need send by certified mail the pre-lien notice.
But how do you determine the construction lender? Sometimes you can tell right away because a sign by the bank (for example: “Construction Funding by Bank of XYZ”) is placed at the project. And many times, the building permit itself states the designation of the lender. Thankfully, SB 189 now requires that in all contracts between the owner and general contractor, there is designation of the construction lender. If all that fails, National Lien Law as a form called Request for Preliminary Lien Information” which requires the owner and/or the general to divulge this information.
Just give us a call at 800-995-9434 and we can email you the form.