Before and After You’ve Filed A Mechanics Lien – Know Your Deadlines!
If you’re a contractor or sub-contractor, a mechanics lien is the best way to preserve your right to payment should you find yourself in a dispute with a homeowner.
This right, however, becomes meaningless if you miss the deadline in which to record that lien with the County Recorder’s office.
In most circumstances, contractors and sub-contractors have 90 days after actual completion of work on a project to record a mechanics lien. But if the homeowner has recorded a Notice of Completion within 15 days of actual completion of work on the project, a contractor only has 60 days from the date the completion notice was recorded to file a mechanics lien, and a sub-contractor only has 30 days.
The other exception to the 90-day deadline rule is if the homeowner has recorded a Notice of Cessation. This notice can be used if no work has been performed on a project for 30 continuous days. If a Notice of Cessation has been recorded, then the deadlines to file a mechanics lien match those of a Notice of Completion: 60 days for a contractor from the date the cessation notice was recorded, and 30 days for a sub-contractor.
As imperative as it is that you know your deadlines in advance, it’s equally as important to know what happens after you’ve recorded a mechanics lien.
Mechanics liens in California are only good for 90 days starting from the date the lien is officially recorded by the County Recorder. Before that 90-day deadline expires, you must either foreclose on the lien or extend it for the lien to be considered valid and enforceable.
Concerning the latter, extending a lien’s lifespan past 90 days is not a practical option in California. State law requires that the homeowner must give his/her consent to the extension in a formal written document called a “Notice of Credit.” Since the filing of a lien against a homeowner is generally met with anger, convincing that person to extend it is likely never going to happen.
To that end, if you and the contractor cannot reach an agreement about the unpaid fees, it’s time to take legal action to preserve your right to collect. This means filing a lawsuit against the homeowner to enforce the lien and to keep it valid for as long as it takes to litigate the case. Winning in court will then grant you the ability to foreclose on the property and sell it to recover the money you’re owed.
Although you may have handled the initial mechanics lien process on your own, the smart move is to hire a seasoned construction law attorney to prepare and file the lawsuit to enforce it.
As you can see, when it comes to mechanics liens, meeting your deadlines is vital to protecting your ability to get paid. Be aware of your timing and keep a calendar. Don’t let all of your hard work and effort be for nothing.
When one researches how to obtain and file a mechanic’s lien, take note that mechanics lien laws exist in all fifty states, however every state’s mechanics lien laws vary often. The mechanics lien legal process also changes from state-to-state, but one main factor that’s true in each state is that a mechanics liens can expire in keeping with a set timetable, and this timetable can vary from state-to-state. As the housing construction industry, along side everybody else within the industrial sector, continues to grapple with the fast unfolding of the novel coronavirus - COVID-19 - throughout the country, immediate considerations involve delayed performance, inaccessibility of materials and labor, and government-ordered shutdowns. Going forward, however, construction contractors, subcontractors, and suppliers ought to additionally pay sharp attention to the potential for payment disruptions that might arise as a results of negative impacts to the construction industry across the country.
Even though mechanics liens have been around in this industry as long as construction itself, there’s still a good deal of confusion within the business regarding how liens truly work. Case in point: the confusion around however long a mechanics lien pesists. We tend to hear queries all the time, such as, “Does a lien cloud a property’s title forever? Will a lien expire? Does a lien have to be satisfied to be terminated or released?” Getting a mechanic lien free will typically be as easy as paying the underlying bill that negates the need to file the lien. By satisfying the debt owed to a contractor, as an example, the contractor is left with no valid legal claim against the property, needed by law to remove the mechanic lien, by filing the suitable work or release documents with the relevant recording office.
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