If you have recorded a mechanics lien in California, there are some important things you should know about the process moving forward.
Mechanics Liens Expire in 90 Days
To begin with, your lien will expire in 90 days from the date of recording. After that, your lien becomes null and void, completely unenforceable, and must be removed. You must either file a suit to foreclose the lien, get an extension, or release within those 90 days.
An extension may be obtained through a signed and notarized credit agreement with the owner, which must be recorded within the original 90-day window. The extension may be for up to 90 days, but in no case will extend beyond one year from completion of the project. No lawsuit can be filed during the extension, however. The best practice is to consult an attorney soon after recording the lien, and to pursue foreclosure (if necessary) well before the 90-day limit. During COVID-19, it is recommended that you record within 45 days of completion as county clerks have a 6-week backlog of pending documents.
You Must Record a Lien Release
In the event that you are paid or choose not to follow through with a suit to foreclose, a release of the lien must be recorded. Failing to do so will subject the lien claimant to liability for attorney fees and costs to remove the stale lien.
Recording Additional Liens
It may be possible to record additional liens if the window to record a lien is still open when the period to foreclose has elapsed. As those with direct contracts with the owner cannot record a lien until the project is completed (or the contract is breached), the 90-day window for foreclosure will always extend at least as far as the 90-day window to record the lien. No additional liens will be possible beyond that point.
Subcontractors and suppliers, on the other hand, can record a lien whenever their portion of the work is done (or earlier if the contract is terminated). Depending on how long the project as a whole runs, this leaves open the possibility that there will still be time to record additional liens if the original lien expires. Any subcontractor or supplier finishing their work towards the end of the completion of the project a whole should be aware that the owner can reduce the amount of time to record a lien post-completion. The owner can file a notice of completion or cessation, which will leave the subcontractor or supplier with only 30 days from that point.
If an additional lien is to be recorded, any preceding liens should be released with the indication that the underlying obligation remains unsatisfied. The best practice in all cases, however, is simply to foreclose within 90 days of filing the original lien. However, a lien recorded prematurely (before work is completed or the contract is terminated) is null and void, and will require an additional lien to be recorded assuming the window is still open.
Lastly, it may be wise to double check to ensure that all formalities have been observed in the mechanics lien itself. The lien must contain the following information: (1) the claimant's damages after offsets; (2) the name of the owner; (3) the nature of the work done by the claimant; (4) the name of the person who employed the claimant; (5) the claimant's address; (6) a description of the job site; (7) an affidavit of proof of service on the owner; and (8) "Notice of Mechanics Lien" displayed in bold.
The lien must be served on the owner by registered mail, certified mail, or first class mail, with a certificate of mailing, and at the owner's residence or place of business as indicated on the building permit. Failure to serve the lien properly will render it unenforceable. The lien must also be recorded within 90 days, and should be filed in person if the deadline is getting close.
Originally published January 26, 2021
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.