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Enforcing a mechanics lien on privately-owned construction projects anywhere in the United States is a process that generally follows the same procedure: serve a pre-notice if required, prepare the lien, record the lien and then, if necessary, take legal action to enforce it. The final step is releasing the lien once you’ve been paid.
Despite the basic formula, each state has its own lien laws and requirements. California’s lien process varies enough from the standard formula that it’s worth an article all its own.
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In California, protecting your lien rights starts with a Preliminary Notice.
The Preliminary Notice should be served within 20 days of the first furnishing of labor or materials to the construction project. The Preliminary Notice preserves your right to a mechanics lien if you are not paid. You can serve a Preliminary Notice later than 20 days after you’ve begun furnishing labor and materials for the project. However, only the work provided within the 20 days prior to serving the notice and work furnished thereafter can be included in the mechanics lien.
As subcontractor or material supplier, your Preliminary Notice must be served by you to the direct or primary contractor, the property owner, and any construction lenders. If you are the direct or primary contractor, your Preliminary Notice is served upon the property owner and the construction lenders.
If you are unpaid, the next step is to record the lien. The timing of recording the lien is dependent on the completion of the work of improvement. This can be a bit tricky to understand.
Generally, once the project is complete, you have 90 days to record a lien and serve it on the property owner. However, that timeline can be shortened if the owner records a Notice of Completion or Cessation. If that occurs, the timeline becomes shorter. Once a Notice of Completion or Cessation has been recorded, subcontractors and material suppliers have 30 days to record their liens, and direct contractors have 60 days from the recording of the notice. There is a requirement for the owner to notify any company that has served a Preliminary Notice that there is a recorded Notice of Completion or Cessation on the project. Failure to notify will extend the timeframe to record your lien.
Once the lien is recorded, you have 90 days after recording to file suit to enforce (foreclose) the lien. The lawsuit must name all interested parties, including the owner, lenders, and other contractors or material suppliers who have recorded liens against the property. The mechanics lien becomes void and unenforceable if the lawsuit is not timely filed. To protect your rights, be sure you are following all deadlines and requirements of the lien process. The general rules explained above can vary depending upon the circumstances of your project.