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Mechanic’s lien: Overview, prevention and remedial action – II

| Jun 12, 2019 | Construction Disputes |

An earlier post on this blog provided an overview of mechanic’s lien in California. That post contained the definition of mechanic’s lien and provided details of the parties that can be involved and affected by it. While the complete set of laws governing mechanic’s lien can be found in California Civil Code Sections 8000 to 9566, this post is meant to guide readers about how to prevent mechanic’s lien.

The first step toward preventing a mechanic’s lien case is related to choosing the contractor. Determining factors should include a check on whether the primary contractor is licensed; whether the primary contractor hires licensed subcontractors only; and whether the primary contractor has a good reputation for making payments to the subcontractors, laborers and material suppliers.

The next step is to make sure that a foolproof contract is in place. The contract should clearly specify when and how much payment is to be made by the owner to the primary contractor and the primary contractor to the subcontractors, laborers and material suppliers. In the event that a subcontractor or materials supplier wants to file a lien, the first step for them is to issue a preliminary notice to the property owner. If they do not provide this notice, they lose their eligibility to file a mechanic’s lien against the owner.

If a dispute arises over mechanic’s lien, a property owner needs to conduct checks that involve making sure the primary contractor’s payment of bills toward labor and materials are timely and in order. The property owner can ensure that the subcontractors and materials suppliers are paid by making a check, where the primary contractor and the subcontractor or materials supplier are joint payees.

A property owner also needs to collect an unconditional lien release from subcontractors and material suppliers. This is a primary contractor’s responsibility and an owner is entitled by California law to hold a payment until the lien release. Finally, the owner needs to submit a notice to the county recorder’s office within 15 days of the completion of the work. This notice reduces the time allowed for filing a lien from 90 to 60 days for primary contractors and from 90 to 30 days for subcontractors and material suppliers.