Enforcing a California Mechanic's Lien

In an earlier post, I explained the basics of California mechanics liens. But how do you enforce that lien?

The process is deceptively simple:

1. Serve a Preliminary Notice;

2. Keep accurate records, and keep track of conditional/unconditional waivers and releases;

3. Serve and record a Claim of Lien;

4. File a lawsuit (within 90 days of recording the Claim of Lien).

20-Day Preliminary Notice

California law requires that you serve a preliminary notice if you want to enforce your lien rights. Cal. Civ. Code section 8200. If you do not serve the preliminary notice, you have no right to a mechanics lien.

This is often called a 20-day preliminary notice because it is retroactive for 20 days. Cal. Civ. Code section 8204(a). This means if you serve the notice on day 21, you will not be entitled to a lien for the work you did on day one. If you serve the notice on day 100, you will not be entitled to a lien for the work you did on days one through 80. And if you serve the notice on day 19, you will be entitled to a lien for all of the work performed.

It must be served on the owner (or reputed owner), the direct contractor (or reputed direct contractor), and the construction lender (if any). Cal. Civ. Code section 8200(a). The notice must comply with other format and wording requirements as well. See Cal. Civ. Code sections 8102, 8202.

Keep Accurate Records

I hope this goes without saying.

Keep copies of all contracts, change orders, conditional and unconditional waivers and releases, copies of checks, payment confirmation, written correspondence, etc.

If for no other reason, you will need all of this information when you sit down to figure out the amount owed. See Cal. Civ. Code section 8430. You're entitled to the amount charged or the reasonable value of the goods or services, whichever is lower. See section 8430(a). And you will not be entitled to recovery if you cannot prove your damages.

Claim of Lien

You need to record a claim of lien 1) within 90 days of the end of the project, 2) within 60 days of a notice of cessation being recorded if you're a direct contractor (this is rare for smaller projects), or 3) within 30 days of a notice of cessation being recorded if you're not a direct contractor (again, rare for smaller projects). Cal. Civ. Code section 8412, section 8414.

A claim of lien gives the owner notice of your claim against the property. In some cases, the owner might not even know that you’re owed money!

You’ll also need to record the claim of lien. This means you go to the county recorder’s office and record it against the property. This provides record notice to potential buyers, title insurers, escrow agents, etc. that there is a claim against the property.

File a Lawsuit

Within 90 days of recording your claim of lien, you have to file a lawsuit to foreclose the mechanics lien. Cal. Civ. Code section 8460.

Your attorney (if you’re a corporation or an LLC, you’ll need to have an attorney) will take care of the drafting. But for completion, make sure you have copies of the contract, all change orders, all releases and waivers, the preliminary notice, and the claim of lien attached to the complaint. And you will likely want to sue for other causes of action (for example, breach of contract).

Conclusion

The basic steps are to serve the Preliminary Notice, keep accurate records, record a Claim of Lien, and then file a lawsuit. If you don't strictly follow these procedures, you will not be entitled to a mechanic's lien.