Define Mechanic Lien
As defined, a mechanic’s lien puts a legal “hold” on a property if the property owner fails to pay their laborers, contractors, subcontractors, or even material suppliers. The mechanic’s lien is filed at the county recorder’s office and may result in foreclosure if it remains unpaid.
The property owner is legally responsible for the payment of the laborers, suppliers, and subcontractors. There are cases where the main contractor has failed to pay their suppliers and staff, and the homeowner has had a lien placed against their property even though they paid the contractor. The purpose of a mechanics lien is to encourage settlement outside of court by applying pressure to the property owner to ensure people are paid for their work.
What Is a Mechanic’s Lien?
Property owners often ask what is a mechanic’s lien. A mechanic’s lien is a way to seek compensation for unpaid work or services. They are placed against real estate to put pressure on the property owner to ensure everyone is paid. A mechanic’s lien is noted on public property records, making it difficult to sell the property in future. This is because the lien will not be erased when the property is sold. The mechanic’s lien will appear in any pre-purchase checks, and the buyer will often demand that the seller pays it before the transaction continues. If the buyer purchases the property with the mechanic’s lien in place, they will be responsible for the lien. If someone tries to seek refinancing or loans with their property as collateral, the bank will often refuse to do so if there is an unpaid mechanic’s lien.
A mechanic’s lien therefore acts as leverage for a subcontractor, laborer, or contract to be paid. It can be more effective and cheaper than filing a breach of contract claim.
Subcontractors and laborers can also file a lien on a property if the contractor does not pay them. While the property owner may not be the one owing pay, it is their property that has the mechanic’s lien. The law decided that it is the property owner’s responsibility to ensure workers are paid and that by placing a mechanic’s lien against their property, they would put pressure on the contractor.
What Can Be Claimed In a Mechanic’s Lien?
Each state places a restriction on what can be claimed through a mechanic’s lien. In most states, a mechanic’s lien can only claim for materials, services, and labor that improves the property. A mechanic’s lien cannot be used to claim emotional distress, lawyers fees, or punitive damages.
Read Local Mechanic’s Liens Laws
What is mechanics lien also depends on the mechanics lien law in your state and county. Individual counties can impose mechanic’s liens laws, so ensure you check the laws for your county as well as your state laws. One county clerk’s office may have different requirements from others. Each state will impose restrictions on when a mechanic lien can be filed. If you miss the deadline, you may not be able to file a mechanic’s lien to seek compensation. If you are in doubt, speak to a local lawyer.
Mechanic’s Lien Law
Civil Code § 8416. Claim of mechanics lien; Form; Contents; Service; Failure to serve
(a) A claim of mechanics lien shall be a written statement, signed and verified by the claimant, containing all of the following:
(1) A statement of the claimant’s demand after deducting all just credits and offsets.
(2) The name of the owner or reputed owner, if known.
(3) A general statement of the kind of work furnished by the claimant.
(4) The name of the person by whom the claimant was employed or to whom the claimant furnished work.
(5) A description of the site sufficient for identification.
(6) The claimant’s address.
(7) A proof of service affidavit completed and signed by the person serving a copy of the claim of mechanics lien pursuant to subdivision (c). The affidavit shall show the date, place, and manner of service, and facts showing that the service was made in accordance with this section. The affidavit shall show the name and address of the owner or reputed owner upon whom the copy of the claim of mechanics lien was served pursuant to paragraphs (1) or (2) of subdivision (c), and the title or capacity in which the person or entity was served.
(8) The following statement, printed in at least 10-point boldface type. The letters of the last sentence shall be printed in uppercase type, excepting the Internet Web site address of the Contractors’ State License Board, which shall be printed in lowercase type:
“NOTICE OF MECHANICS LIEN
ATTENTION!
Upon the recording of the enclosed MECHANICS 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 mechanics lien is recorded.
The party identified in the enclosed mechanics 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 mechanics 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 mechanics 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 MECHANICS LIENS GO TO THE CONTRACTORS’ STATE LICENSE BOARD WEB SITE AT www.cslb.ca.gov.”
(b) A claim of mechanics lien in otherwise proper form, verified and containing the information required in subdivision (a), shall be accepted by the recorder for recording and shall be deemed duly recorded without acknowledgment.
(c) A copy of the claim of mechanics lien, which includes the Notice of Mechanics Lien required by paragraph (8) of subdivision (a), shall be served on the owner or reputed owner. Service shall be made as follows:
(1) For an owner or reputed owner to be notified who resides in or outside this state, by registered mail, certified mail, or first-class mail, evidenced by a certificate of mailing, postage prepaid, addressed to the owner or reputed owner at the owner’s or reputed owner’s residence or place of business address or at the address shown by the building permit on file with the authority issuing a building permit for the work, or as otherwise provided in Section 8174.
(2) If the owner or reputed owner cannot be served by this method, then the copy of the claim of mechanics lien may be given by registered mail, certified mail, or first-class mail, evidenced by a certificate of mailing, postage prepaid, addressed to the construction lender or to the original contractor.
(d) Service of the copy of the claim of mechanics lien by registered mail, certified mail, or first-class mail, evidenced by a certificate of mailing, postage prepaid, is complete at the time of the deposit of that first-class, certified, or registered mail.
(e) Failure to serve the copy of the claim of mechanics lien as prescribed by this section, including the Notice of Mechanics Lien required by paragraph (8) of subdivision (a), shall cause the claim of mechanics lien to be unenforceable as a matter of law.
Mistaken Spelling
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