California Mechanic’s Lien–When to Serve a Pre-Lien Notice
A California mechanic’s lien requires certain preliminary prerequisites before its filing. But it only applies to some claimants. Here are some of the basic rules.
If you are performing labor for wages only, there is no requirement to serve the 20 day notice. However, if you are performing labor under a stipulated sum contract or T & M/cost plus basis, you must serve the notice. Non-service only applies if you are performing the labor for wages.
Assume hypothetically you are a home improvement contractor working on residential property. You are renovating a master bath and kitchen. The homeowner elects to do their own shopping for the finish materials, and including fixtures, appliances, countertops, flooring, cabinets, etc. You go with them to the various supply shops, give your ideas of general construction strategy, but they actually pick out and pay for the materials themselves.
You then hand them your lump-sum contract which is for labor only. You specify there are three gradients, your hourly rate as principal, a journeyman rate, and the rate for your regular crew members performing basic labor.
You also have a markup for what is called labor burden which covers Worker’s Comp., unemployment insurance deductions, liability insurance, and general overhead. That is built into the hourly rates.
In such a case, you will have to serve the California preliminary 20 day notice if you want to eventually be able to file a mechanic’s lien. This is because you are acting as a contractor, although for labor only.
On the other hand, if you are merely a day laborer, such a notice would not be required.
He be careful in these situations. To make sure you have preserve your right to a California mechanic’s lien, give National Lien Law a call for a free consultation. 800-995-9434, extension one.