Mechanic's Lien

 

A mechanic’s lien is a claim created by state statutes for the purpose of securing priority of payment of the price or value of work performed and materials furnished in erecting or repairing a building or other structure. In plain English, if you do not pay a contractor or material supplier he can stroll down to the county recorder's office, shell out approximately $20.00, and place a lien on your property.

    A blank mechanic's lien is available here.

    A mechanic's lien is a very powerful remedy for non payment. The I.R.S. and the States are the only others who have the right to place a lien on property without first going to court.

Recording Deadlines

    Primes and subs must record the mechanic's lien within 90 days after completion, unless a valid Notice of Completion or Notice of Cessation ("NOC") is recorded. If a NOC is recorded subs have 30 days and primes have 60 days after the recording to file their liens.

What is Completion?

    The law says that completion means when the work is actually completed. Or stated another way, actual completion consists of full performance of the contract. At first blush this appears definitive, but it is not.

    At the end of the job there is a punch list of things left to be done. The problem is distinguishing between which punch list items are warranty work and which punch list items are work under the scope of the contract. The person wanting completion argues that the job has been completed and the punch list items are warranty work. The person not wanting completion argues that punch list items are part of the original contract.

    The acceptance by the owner or his agent or the cessation of labor for 60 continuous days would be completion.

    Determining the date of completion is a matter of fact and is decided on a case by case basis. Avoid this completion quagmire by filing your liens timely.

Mechanic's Lien Foreclosure

    You must foreclose (file a lawsuit) and file a Lis Pendens (lawyer talk for screwing up the title to the property) to perfect the lien within 90 days of filing the lien, or the lien no longer has any force or effect.

    The sooner you file the lien, and foreclose if necessary, the sooner you get paid.

    Contractors who do not file preliminary notices and/or liens because they do not want to upset the prime contractor or the property owner, lose money.

    You cannot foreclose on a mechanic's lien in small claims court. You need to bring the action in superior court.