Mechanics Liens are powerful devices to ensure contractors to get paid for their work. A direct contractor and even a subcontractor can assert a lien (i.e. a right to get paid) on real property (i.e. land or home or building) simply by (1) providing to the property owner a timely notice of lien, (2) filing a timely lien with the county assessor-recorder, and (3) filing a timely lawsuit for foreclosure of lien in court. If the contractor does this, then she can force the client to pay for the work the contractor performed on the property under threat of foreclosure of the property.
This might seem like a just and fair way for workers to get paid for labor honestly done. But consider this. If a client pays the general contractor for the work in-full, and the general contractor then stiffs her subcontractors, declaring bankruptcy, the subcontractors can still sue the client to force the property owner to pay a second time. It seems a little crazy that a property owner, a home owner, or a business owner might have to pay twice, but that’s how mechanics liens sometimes work.
But property owner can defend themselves. Here are the top three ways for property owners to defend against a mechanics lien.
Before a mechanics lien may be recorded by a subcontractor, notice must be provided to the affected party. Cal. Civ. Code § 8410 (explaining that a “claimant may enforce a lien only if the claimant has given preliminary notice” under Section 8200 et seq. and “made proof of notice”). That preliminary notice “shall be given not later than 20 days after the claimant has first furnished work on the work of improvement.” Cal. Civ. Code § 8204. This rule does not apply to direct contractors.
The absence of a timely preliminary notice and proof of service of that notice may be fatal: “A claimant may enforce a lien only if the claimant has given preliminary notice . . . and made proof of notice.” Cal.Civ. Code § 8410; see also Cal. Civ.Code § 8200(c) (stating that preliminary notice is “a necessary prerequisite to the validity of a lien claim”). If the subcontractor makes a mistake by serving a late preliminary notice or no notice at all, then she cannot assert rights under a mechanics lien.
To be effective, a mechanics lien must be filed with the assessor-recorder’s office within “Ninety days after completion of the work of improvement.” Cal. Civ. Code §8412; see also Cal. Civ. Code § 8012 (defining “Contractor” in this section as “include[ing] a . . . subcontractor”).
“[T]he following are deemed to be equivalent to a completion: (a) the occupation or use of a work of improvement by the owner or his agent, accompanied by cessation of labor thereon; (b) the acceptance by the owner or his agent of the work of improvement; or (c) after the commencement of a work of improvement, a cessation of labor thereon for a continuous period of 60 days, or a cessation of labor thereon for a continuous period of 30 days or more if the owner records a notice of cessation of labor.” Picerne Constr. Corp. v. Villas, 244 Cal. App. 4th 1201, 1210 (2016).
The “failure of a claimant to timely record a claim of lien precludes the enforcement of a mechanic's lien.” Picerne Constr. Corp., 244 Cal. App. 4th at 1210; see Cal. Civ. Code § 8412 (explaining that the contractor “may not enforce a lien unless the contractor records a claim of lien after the contractor completes the direct contract”).
“The claimant [i.e. the contractor or subcontractor] shall commence an action to enforce a lien within 90 days after recordation of the claim of lien [with the assessor-recorder]. If the claimant does not commence an action to enforce the lien within that time, the claim of lien expires and is unenforceable.” Cal. Civ. Code § 8460. This statute, like all of the mechanics lien laws are strictly construed. If the contractor fails to sue for foreclosure of mechanics lien within 90 days of filing with the assessor-recorder’s office, then the lien is dead on arrival.
The firm is pleased to report that in a hard fought matter spanning eight years, after a trial, and after four years on appeal, the California Court of Appeal ruled in favor of Tong Robbins’ clients, holding, in plain language, “We agree with plaintiffs.”
Much litigation is consumed in discovery, the formal process of asking questions and obtaining answers. Discovery responses are required to be code compliant, i.e. in accord with the provisions of the California Discovery Act. Failure to make code compliant responses is an easy way for a respondent to lose a discovery motion; and demanding code compliance is an easy way for the propounding party to win.
Sometimes after a plaintiff has lost a particularly acrimonious action the defendant will sue back, arguing that the original lawsuit was frivolous, brought in bad faith, malicious, or otherwise improper. In this second action, the former plaintiff (now defendant) will typically defend by arguing that she did nothing wrong; she was simply following her attorney’s advice. This is not the Nuremberg defense. It is known as the “advice of counsel” affirmative defense.
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