A mechanics lien is a lien recorded against your real estate. Mechanics liens are filed by contractors, subcontractors, suppliers of materials, or a laborer, who has worked on your property or provided materials for your property but has not gotten paid for that work or materials.
They is a way in which the unpaid party can use your property to collect compensation for the work performed or supplies provided for the property. In California, mechanics liens are recorded in the county recorder’s office. If mechanics liens remain unpaid, your property can be foreclosed.
In some cases, property owners have paid everyone for the work on their property, but still end up with a mechanics lien on their property. This usually occurs when the owner pays the contractor for the work, but the contractor fails to pay his or her subcontractors, workers or suppliers. Unfortunately, the homeowner is responsible for paying those individuals, even if the homeowner has already paid the contractor.
If you have a mechanics lien against your property in California, the property can be foreclosed on to pay the lien. The owner can also run into problems in trying to borrow against, refinance or sell the property if there’s a mechanics lien on it. The owner could end up paying twice for the same job in order to get the mechanics lien released.
Therefore, it’s critical that if you are a property owner in California and you are getting a home built or remodeled, that you do everything you can to prevent a mechanics lien from occurring in the first place.
One of the best things you can do to prevent a mechanic’s lien is to hire only a licensed contractor. You can click here to check that a contractor’s license in California is valid. You shouldn’t stop there though – you should also find out which subcontractors will be working on the job, and check their licenses as well.
Ask your contractor to provide you a list of all of the workers, suppliers and subcontractors to be used on the job. Finally, you should go online to check with your courthouse to find any lawsuits that have been filed against your contractor.
While a contractor may have been involved in a lawsuit or two and may still be a reputable company or individual, a pattern of lawsuits may indicate a problem.
Another thing you can do to prevent a mechanic’s lien is to keep on top of the paperwork involved. Your initial contract should be very detailed in identifying subcontractors for each part of the job, when they will get paid, and what the price is for each job.
The price and identification of material suppliers should be in the contract as well. You should keep up with the work of subcontractors or suppliers, whether or not they have been paid, and to whom money is owed.
Don’t take a step back and assume it’s your contractor’s responsibility to handle all that – the contractor is not the one who could end up with a mechanic’s lien filed against their property.
Once a certain subcontractor’s work is finished or materials are supplied, get a signed lien release which says that they have been paid and do not have a lien against your property.
Immediately upon the completion of the work on your property, you should file a timely Notice of Completion in your county recorder’s office. This may reduce the length of time a contractor, subcontractor, worker or supplier has in which to record a mechanics lien.
If you do discover that you have a mechanics lien on your property, don’t panic. It may not be valid. A qualified real estate attorney can help you determine if it is valid or invalid. If a mechanics lien claim is invalid, it is typically because the required timelines for filing the claim were not met by the contractor, subcontractor, supplier or laborer.
Often, but not always, a party who is filing a mechanics lien must give you a Preliminary Notice at a certain time; they must give you a Notice of Mechanics Lien; and they must have filed the mechanics lien within a certain time. If the lien is invalid, you can remove it.
The easiest way is to ask the party who filed it to remove it, and threaten a court action. If the contractor, subcontractor, worker or supplier fails to remove it, there is a swift court procedure to ask the court to remove it.
If you have a mechanics lien on your property, don’t panic or do anything right away. The best thing to do is to contact a real estate attorney who is experienced in removing mechanics liens from property. If you are in the Oakland – Walnut Creek area, call Attorney Robert Levy at 510-465-0025. He can help you remove the mechanics lien from your property.