- California is a full price lien state.
- Unlicensed contractors who are not duly licensed under California’s Contractors’ License Law (Business and Professions Code Section 7031) are barred from enforcing mechanic’s liens to recover amounts due for their work. (An unlicensed contractor cannot use the mechanic’s lien remedy.)
Notice Speed Bumps
- Important Reminder: Claim amounts are required on all statutorily required NTOs.
- Civil Code section 3097(a) requires preliminary notice to the construction lender and failure to do so can be fatal to the mechanic's lien or stop notice. In addition, courts have found that the claimant is under a duty to investigate the existence of the lender, so lack of actual or constructive knowledge will not save the claimant.
Mechanic’s Lien Speed Bumps
- Beginning 1/1/11: Prior to filing a Mechanic’s Lien claimants must serve a “Notice of Mechanics’ Lien” enclosing a copy of the Mechanics’ Lien, on the owner, as an additional prerequisite to enforcing a mechanics’ lien claim.
- The lien filing time frames are from the completion (or noticed cessation) of the entire work and not from the completion of the claimant’s individual component of work.
- A lien will be released or “bonded off” upon the posting and recording of a bond for 1.5 times the amount of the claim.
- Mechanic’s liens relate back to when work commences on the whole project, even if the claimant’s own work is only a small and late element in the entire project. Civil Code § 3134.
Stop Notice Speed Bumps
- Stop Notice Considerations
- NACM recommends pursuing lien on funds remedies (Stop Notices) on all public jobs. Serving the 20 Day Preliminary Notice compels the withholding of funds. Bond Claim remedies can be simultaneously pursued by serving a timely notice to the principal and surety. All MLBS ticklers on public projects will recommend “Attorney Stop Notices” as a the “next action”.
- When a properly executed Stop Notice is served on the proper public official, that official must withhold construction funds in an amount sufficient to satisfy the amount claimed in the Stop Notice from the original contractor. (Civil Code §3186).
- The original contractor is not required to release the money to the claimant until the claimant has foreclosed on the Stop Notice in a court action.