Mechanics Liens are a mainstay of California construction industry and law. These liens may seem commonplace, but they should not be taken for granted as they are an essential sword and shield for contractors of every level to use to make sure they get paid their due on a project.
What Is A Mechanics Lien?
A mechanics lien is a lien on a piece of real property held by a mechanic, material supplier, artisan, and/or laborer of every class who has bestowed labor and/or materials to improve the property. See 1 Ca Mechanics’ Lien Law & Prac § 4.1 (2021). The lien amount is generally for the reasonable value of the labor and/or material provided by the lien holder. See id. In California, mechanics liens are a constitutional right under the California Constitution. See California Constitution, Article XIV § 3. It is an essential protection for contractors of all levels to make sure that they are compensated for their work and are not swindled out their hard earned pay.
Who Can Make A Claim For A Mechanics Lien?
Under Cal. Civil Code § 8400, to be eligible to make a claim for a mechanics lien, the claimant must:
• Make a direct contribution;
• To a specific work of improvement;
• With the required authorization.
On a construction project, anyone directly involved in the actual creation of all or part of a work improvement like a direct or general contractor, subcontractor, material supplier, equipment lessor, laborer, and design professional are qualified as mechanics lien claimants. Only indirect participants or someone so far removed from the action of the project are not eligible to make a mechanics lien claim.
To qualify as a mechanics lien claimant, your work is authorized if either it is provided at the request of or according to an agreement with the owner of the project, or if it is provided or authorized by a person having charge of all or part of the project, like a general contractor, architect, subcontractor, etc.
How To File A Lien.
Liens must be recorded with thirty (30) days of the recording of a notice of completion or ninety (90) days following actual completion if no notice of completion is recorded (Civil Code 8414). It is always helpful and best to have attorney help with recording a mechanics lien to make sure that the specific recording process and timelines are followed so that a deadline is not missed or a lien is not disqualified because of some little known technicality.
What Should The Lien Amount Be?
Making sure a mechanics lien is recorded properly is essential, but so is making sure that the amount of your lien is not subject to reduction or being expunged.
The amount of the mechanic’s lien is the lesser of (a) the reasonable value of the work; or (b) agreed price of the work (Civil Code 8430(a)).
The lien is not limited in amount by the contract price for the work of improvement except under certain circumstances before the work commences when the owner files a contract with county recorder and records a payment bond of the direct contractor in an amount not less than 50 percent of the price stated in the direct contract. (See Civil Code section 8600(a).)
The claimant can include a claim of lien on work performed based on a written modification of the contract, or as a result of rescission, abandonment, or breach of the contract. If there is a rescission, abandonment, or breach of the contract, the amount of the lien may not exceed the reasonable value of the work provided by the claimant. (Civil Code § 8430(c).)
If you are ever concerned about whether or not your company should file a mechanics lien or need help with any step of the process to ensure your lien rights are protected, please reach out to me and I would be happy to see I may be of assistance. Also, please feel free to contact our firm with any questions you might have on mechanics liens or other construction law issues.
For more information contact:
Luke Landers is an associate in the Los Angeles office of Gibbs Giden where he represents clients in the areas of construction claims and litigation in addition to business and commercial transactions.
Prior to joining Gibbs Giden, Mr. Landers was an associate at a prominent law firm where he represented plaintiffs in serious personal injury and wrongful death matters. Mr. Landers also worked in the administration of Pepperdine University where he handled contract and project administration for the university’s capital building projects.
Before pursuing law, Mr. Landers started his career as an analyst at a middle market investment bank in Dallas, Texas where he focused on mergers & acquisitions and capital raises.