A Quick Guide for Beginners

What the heck is a Mechanic’s Lien?

Let’s start with the definition of a “lien”. A lien is a “claim on a piece of collateral that has been pledged, usually to obtain a loan.” This collateral can usually be obtained by the lender if the borrower fails to fulfil their end of an agreement.

A Mechanic’s Lien involves property titles as the collateral. Additionally, this specific kind of lien is used to secure interest of those who have supplied labor or materials that improve the property.

Stated simply, a Mechanic Lien tries to guarantee that contractors (or subcontractors), material suppliers, laborers, tradesmen and design professionals/architects who work on a property are paid, using the property as collateral. It is a way to protect against property owners who hire others to do work on a property but fail to pay for those improvements.

The Mechanic Lien as a legal mechanism has existed in Europe for a few hundred years, and made its way to America when Thomas Jefferson promoted Mechanic Liens in order to spur construction in Washington D.C. Since then, many states have their own laws on Mechanic’s Liens, some of them stranger than others.

California Mechanic Liens

In California, we take them seriously. The California State Constitution spell out that Mechanic Liens are a guaranteed right to contractors. The laws regarding California Mechanic Liens are very specific. Any party on either side who does not follow the letter of the law in procedure may risk negative repercussions. As always, it is an invaluable asset to have an experienced attorney with Construction experience who has regularly dealt with Mechanic Liens. Ideally, you will find a firm or lawyer that holds a passion for Construction Law. (When I’ve met accountants who are passionate about taxes, I can’t help but wonder what is going on in their head. Is everything okay with them? It’s easy to forget, that as lawyers, we are passionate about law in the same way. If you are working with a lawyer who finds this kind of law as drudgery, it’s time to start asking around for other construction lawyers. Passionate lawyers who are also passionate about their client’s goals may just have a better outcomes.)

For contractors or subcontractors, failure to follow procedure laid out by the statues can result in liens that are either unenforceable or invalid.

Common Stages of the Mechanic Liens

Pre Lein Notice

At this stage, Contractors or Sub Contractors would give a property owner a pre-lien notice, as a matter of practice. This is done to let property owners know that should there be a failure in compensation, you plan to use this mechanism. Again, there are very specific rules (in California and in other states) where it would be better to receive advice from a Construction Lawyer on how to proceed.

Lien Waivers

Should Property owners seek to avoid liens, they can talk to their Contractors before contracts are signed. You can also insist on paying subcontractors directly. It is highly advised to work with an Attorney before a project is being discussed so that goals are identified, and pursued appropriately and effectively.

Mechanic’s Lien Statement

At this stage, there has been a cause for the Contractor or Subcontractor to seek to use the Mechanic’s Lien as a form of resolution for a disagreement of failure of compensation.

Foreclosure Action

Summons and Complaints are usually issued at this stage.