The role of the mechanics lien in a California construction project
Any party involved in a construction transaction needs to understand how mechanics liens could impact their bottom line or property rights.
Whether you are a California residential or commercial real estate owner who is going to hire a contractor to complete a building, repair or renovation project on your property, or you are a contractor, subcontractor, material supplier or laborer who will work on such a project, knowing the basics about mechanics liens is important to protect your investment in the project.
Mechanics lien basics
Mechanics liens are authorized under the state constitution and statutes. Broadly, those performing work on construction projects can acquire legal interest in the property to protect their rights to payment for the work they have done that has increased the value of the property, enriching the owners. A mechanics lien holder can enforce the lien and foreclose on the property if the property owner has not fully paid for the services or materials the lien holder provided. This means the lien holder can force a sale of the property and keep what is owed for the work from of the proceeds.
This is a simplified explanation of an extremely complex legal concept. What an owner needs to remember is to take steps to protect the property from mechanics liens. Conversely, a contractor, subcontractor, laborer or material supplier on a building project should follow the procedures necessary to obtain mechanics lien rights in case the owner does not pay in full for the construction services or materials.
Have the guidance of a lawyer
Any party in a construction transaction that could be impacted by a mechanics lien or who should obtain one should seek legal advice as early as possible, preferably before the transaction, so that the construction contracts can be drafted with potential mechanics liens in mind and related legal requirements followed from the beginning of the transaction.
The other reason experienced legal counsel is important where mechanics liens are concerned is that they are extremely complicated regarding proper:
- Service, meaning official delivery of legal documents to certain parties
- Deadlines and calculation of time periods
- Document filing and recording requirements
- Required content in legal documents
- Lawsuits to foreclose liens
- Removal of invalid liens from property records
- Procedures from start to finish
This is an introduction to a very complicated, but very important area of California law. Anyone involved in construction projects should consult an attorney to understand how mechanics liens could be involved and what steps would be wise to take in this regard.
The attorneys of Last & Faoro in San Mateo represent contractors, subcontractors and property owners in a wide variety of residential and commercial construction matters, including mechanics lien issues.