Reminder! Failure to Comply with Mechanic’s Lien Requirements Has Disastrous Results

By Matthew W. Quall and Ana de Alba

Any developer, owner, contractor, subcontractor, material supplier, or design professional should be aware of the changes that have been made to California Mechanic’s Lien Law which have taken effect as of January 1, 2011. Failure to properly implement these changes will have drastic consequences as it will render a Mechanic’s Lien unenforceable as a matter of law.

STATUTORY REQUIREMENTS:

  1. Prerequisites That Remain Unchanged
    1. Recording a Mechanic’s Lien After Valid Notice of Completion or Cessation Has Been Recorded
      • General Contractors
        If a claimant is a general contractor on the Project, it must record its Mechanic’s Lien within 60 days after a valid notice of completion or cessation has been recorded.
      • Subcontractor or Supplier
        If a claimant is a subcontractor or supplier on the Project, it must record its Mechanic’s Lien within 30 days after a valid notice of completion or cessation has been recorded.
    2. Recording a Mechanic’s Lien If No Valid Notice of Completion or Cessation Has Been Recorded
      • General Contractors, Subcontractors, or Suppliers
        Where no valid notice of completion or cessation has been recorded, then all claimants must record their Mechanic’s Liens within 90 days after completion of the work of improvement, as completion is defined in Civil Code section 3260.
    3. Mechanic’s Liens Must Include:
      • Statement of the Claimant’s Demand
      • Name of Owner or Reputed Owner
      • Description of Site Sufficient For Identification

  2. Prerequisites Effective January 1, 2011. In addition to existing statutory requirements, the 2011 changes require a claimant to:
    1. Include A New Statutorily Defined Warning Notice on Notice of Mechanic’s Lien
      • As of January 1, 2011, a claimant must include the following statutorily defined warning notice on the Notice of Mechanic’s Lien, printed in at least 10 point boldface font:

        NOTICE OF MECHANIC’S LIEN ATTENTION!
        Upon the recording of the enclosed MECHANIC’S LIEN with the county recorder’s office of the county where the property is located, your property is subject to the filing of a legal action seeking a court-ordered foreclosure sale of the real property on which the lien has been recorded. That legal action must be filed with the court no later than 90 days after the date the mechanic’s lien is recorded.
        The party identified in the mechanic’s lien may have provided labor or materials for improvements to your property and may not have been paid for these items. You are receiving this notice because it is a required step in filing a mechanic’s lien foreclosure action against your property. The foreclosure action will seek a sale of your property in order to pay for unpaid labor, materials, or improvements provided to your property. This may affect your ability to borrow against, refinance, or sell the property until the mechanic’s lien is released.
        BECAUSE THE LIEN AFFECTS YOUR PROPERTY, YOU MAY WISH TO SPEAK WITH YOUR CONTRACTOR IMMEDIATELY, OR CONTACT AN ATTORNEY, OR FOR MORE INFORMATION ON MECHANIC’S LIENS GO TO THE CONTRACTORS’ STATE LICENSE BOARD WEB SITE AT www.cslb.ca.gov.

      • Note, failure to include this warning notice prior to recordation will render your Mechanic’s Lien unenforceable as a matter of law.
    2. Serve The Notice of Mechanic’s Lien & Copy of Mechanic’s Lien Upon The Property Owner or Reputed Owner
      • As of January 1, 2011, a claimant must serve the Notice of Mechanic’s Lien and a copy of the Mechanic’s Lien via first class mail, registered mail, or certified mail, evidenced by a certificate of mailing, on the property owner or reputed owner prior to recordation of the lien.

        The Notice of Mechanic’s Lien must be addressed to the owner or reputed owner at the owner’s or reputed owner’s residence, place of business or at the address shown on the building permit on file with the authority issuing the building permit.

        If a claimant is unable to effect service upon the owner, the Mechanic’s Lien must be served via first class mail, registered mail, or certified mail, evidenced by a certificate of mailing, on the construction lender or prime contractor.

      • Note, failure to properly serve this Notice will render your Mechanic’s Lien unenforceable as a matter of law.
    3. Memorialize Service Of Mechanic’s Lien By A Proof of Service Affidavit
      • When recording a Mechanic’s Lien with the county recorder, the claimant must now also include a Proof of Service Affidavit as well as the Notice of Mechanic’s Lien with the lien.
      • The Proof of Service Affidavit must be signed by the person serving the Notice of Mechanic’s Lien and must include the date, place, manner of service and facts establishing that service was made in accordance with the service requirements. It must also include the name and address of the person that was served with a copy of the Notice of Mechanic’s Lien and Mechanic’s Lien.
    4. If You File A Complaint to Foreclose A Mechanic’s Lien, You Must Record A Notice of Pendency of Action Within 20 Days
      • The Proof of Service Affidavit must be signed by the person serving the Notice of Mechanic’s Lien and must include the date, place, manner of service and facts establishing that service was made in accordance with the service requirements. It must also include the name and address of the person that was served with a copy of the Notice of Mechanic’s Lien and Mechanic’s Lien.

  3. Should You Have Any Questions/Concerns, Contact Lang, Richert & Patch
  4. Failure to properly adhere to the 2011 requirements will render your Mechanic’s Lien unenforceable as a matter of law. The Construction Practice Group at Lang, Richert & Patch has more than 50 years combined construction litigation experience and is available to help protect your interests. Please contact us to address any construction issues, including the proper filing and recording of your Mechanic’s Lien and enforcement procedures through litigation.