Final/occupancy issued 4/14/09 on our new quest house & all paid in full. 5/21/09 we rec'd 20 prelim not, 9/1 mec lien?

If contractor performed no work after 4/14/09 his lien is invalid. Lien must be recorded within 90 days after completion. of work. In addition, he must file lawsuit to foreclose lien within 60 days of recording, October 31. If he does not, you cal file a Petition under Civil Code 3154 to remove lien. The other thing you can do is post a mechanics lien release bond with a licensed surety while the issue is litigated. This bond will free the property so you can refi. Check with the Contractors State License Board (link below) re his license and bonding company. If he is not licensed he cannot collect.

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A Petition to Release Property from Lien per Civil Code Section 3154, which also allows for the recovery of limited attorney's fees. You should consult with a local construction of real estate attorney.

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Some of the information from the prior posts is incorrect. A contractor has 90 days from the date of recordation of the lien in which to file a lawsuit. If a lawsuit is not filed within 90 days from the date of recordation, then you can file a petition to have the lien expunged. You are also entitled to attorney's fees associated with the petition of up to $2,000. Most of the time, the contractor will agree to release the lien after receipt of a demand letter from an attorney.
The Ventura County Bar Association can assist you in locating an attorney who can help you with this. A link appears below.
Good luck!