In California, liens filed on private property are known as Mechanic’s Liens. When a California mechanics lien is filed with regard to work performed on privately owned property, it attaches to and encumbers the fee simple ownership of property.
In most circumstances, California does not allow mechanics liens to be filed on government owned property. However, nearly every project on government owned project is required to have a payment bond in place to protect subcontractors and suppliers. Filing a claim against the payment bond secures your claim for money in a way that is similar to filing a lien claim. In addition to the payment bond, stop notices may also be filed. Both bond claims and stop notices are discussed in more detail below.
Contractors, as well as subcontractors, design professionals, sub-subcontractors and material suppliers can file a California mechanics lien. If a company supplies material to a material supplier, they are not eligible to file a California mechanics lien claim.
Within 20 days of the commencement of work on the property, subcontractors and suppliers should provide written notice to the owner, the general contractor and the construction lender that they are performing work on the property. If the notice is served late, then the claimant can claim a California construction lien for the value of the labor or materials provided in the 20 days preceding the service of the notice and thereafter.
Prime contractors must file a California claim of lien within 60 days after a notice of completion or notice of cessation is recorded, or if no recording of completion or cessation is accomplished, within 90 days after the completion of the work of improvement. Subcontractors and materialmen must file a California claim of lien within 30 days after a notice of completion or notice of cessation is recorded, or if no recording of completion or cessation is accomplished, within 90 days after the completion of the work of improvement.
How California’s Changing Lien Law Affects You
As of 7/1/12, the existing California statutes for mechanic’s liens, stop notices, and bond claims will be replaced by updated statutes. It is important to understand these changes, as they could determine whether or not your lien filing is valid.
Preliminary Notices: Under the current laws, the 20-Day Notice must be served by all subontractors and lower tier contractors or suppliers. On July 1st, this will simply be called a “Preliminary Notice.” Subcontractors and lower tier Claimants must serve the notice on the owner and prime contractor, however laborers are not required to serve this notice. The prime contractor is now required to serve the notice on the lender, if any. The Preliminary Notice must be served within 20 days of first furnishing labor or material. If it is served after this point, your lien claim may be limited to 20 days before the notice was served along with everything done after service. Aside from a slightly altered Notice to Owner section on the document, the required job information is identical to the 20-Day Notice.
Terminology: Under the new statutes, some of the terminology has been changed. A Stop Notice is now called a Stop Payment Notice. The term original contractor will become Direct Contractor. Materialman has been replaced with material supplier. Completion now means the following: (1) actual completion of the work of improvement; (2) occupation or use by the owner accompanied by cessation of labor; (3) cessation of labor for a continuous period of 60 days; or (4) recordation of a notice of cessation after cessation of labor for a continuous period of 30 days. “Completion” has not been redefined on public works and a project will not be deemed completed unless accepted as complete by the public entity.
Who Can File: Design professionals will be able to file liens once the changes take effect.
Deadlines: The deadline for service of a Stop Notice is currently 90 days from completion. Under the new laws, completion will be at 60 days of job cessation rather than 30 days.
Mechanic’s Lien Filing: In California, the unfiled lien must be served upon the owner along with a Notice of Mechanic’s Lien before it can be filed with the clerk. Under the new statutes, a mechanic’s lien may not be recorded unless it has been accompanied by a proof of service of the lien and the Notice of Mechanic’s Lien on the property owner.
Click here for more information on California mechanics liens, or give LienItnow.com a call at 888-543-6765.