As contractors know, mechanic’s liens can be very helpful with collections. However, many contractors hamper their ability to use mechanic’s liens by failing to abide by the strict time constraints of the California Code of Civil Procedure.
The first requirement is to serve a Preliminary 20-Day Notice. All contractors not in direct contract with a property owner are required to serve a Preliminary 20-Day Notice. This Notice should be served prior to beginning work and provides notice to the property owner that a subcontractor relationship exists.
Second, the recording of a Notice of Completion (or Cessation) triggers additional mechanic’s lien time constraints. Where a Notice of Completion (or Cessation) has been recorded, subcontractors have just 30 days to record their mechanic’s liens. Prime contractors, however, can record their mechanic’s liens up to 60 days after a Notice of Completion (or Cessation) has been recorded. Where a Notice of Completion (or Cessation) has not been recorded, all contractors have 90 days from substantial completion of the project to record their mechanic’s lien.
The mechanic’s lien must contain specific information regarding the project, work performed, and amount due. The following must be included in all mechanic’s liens: the amount due; the name of the property owner; a general statement of the kind of labor and/or material furnished; the name of the entity/person with whom the claimant contracted with; a description of the site sufficient for identification purposes; and the verified signature of the claimant. Then, the mechanic’s lien must be timely recorded with the County Recorder.
The last time constraint relates to foreclosure. The last day to foreclose a mechanic’s lien is 90 days after recordation. Foreclosure of a mechanic’s lien is done by filing a civil lawsuit; so keep your attorney’s telephone number handy.
Remember, the law is strict when it comes to recording and enforcing mechanic’s lien claims. Special attention to time constraints is key to utilizing this collection tool. By following these tips, your accounts receivable should become accounts received.
Amir H. Afsar, Esq. is an attorney and founder of Afsar Law Group, A.P.C. which represents clients in business, real estate, construction, and estate planning matters throughout the Coachella Valley including Indio, La Quinta, Bermuda Dunes, Indian Wells, Palm Desert, Rancho Mirage, Cathedral City, Palm Springs, Banning, Joshua Tree, and other cities located within Riverside and San Bernardino County. Mr. Afsar can be reached at Afsar Law Group, A.P.C. at 760.345.3110.
This article was originally published in The Desert Contractor, July 2007