Assemble your contract, payment records, and change orders. Check to make sure that you sent out a twenty-day preliminary lien notice if you are not in direct contract with the Owner of the project (i.e., a subcontractor or a material supplier to the Prime Contractor or a subcontractor). You need to get the name of the Owner, the property address where the project is, the name of the lender, if any, the amount of your contract, the amount you have been paid, and the amount of your lien. You also want to check your contract to see if there is any provision for payments of interest on any outstanding balance.
Check the Project
You can only record a mechanics' lien on private projects. You cannot record a mechanics' lien on a public works project. You also cannot record a mechanics lien until your work on the project is completed. If your work has not been completed, consider filing a stop notice. A mechanics' lien has strict recording deadlines that are tied to the date of completion of the project. Where there has been no recorded notice of completion, the deadline is 90 days from the date of completion. If a Notice of Completion is timely recorded, then the deadline is reduced to 60 days for those in direct contract with the Owner, and 30 days for all other claimants. When in doubt, go ahead and get the lien recorded. Notices of Completion are often found to be invalid because they were recorded at the wrong time.
Fill Out the Mechanics Lien Form
Get a mechanics' lien form from a construction publisher, such as BNI. Many of these forms are available on the Internet. (See link below to BNI Books.) Be sure to use a California State form. Do not use a "50 State" form. The form will have you fill out the name of the owner, the project address, the construction lender, a description of the work you contracted to perform, and the amount of your lien. Be sure to sign the form in two places. One is a signature, and the other is a verification. Someone who is an officer or manager in the Company should sign the form. Do not overstate the amount of your lien, or you may lose your right to assert a lien.
NEW FOR 2011 - GIVE NOTICE OF YOUR MECHANIC'S LIEN
As of January 1, 2011, all Mechanic's Liens must be sent by registered mail, certified mail, or first class mail with a certificate of mailing, postage prepaid, addressed to the owner at the owner's residence address, business address, or at the address shown by the building permit. Accompanying the Mechanic's Lien must be a "Notice of Mechanic's Lien" that is required by law. A link to my blog that contains the form appears below.
NEW FOR 2011 - PREPARE A PROOF OF SERVICE OF NOTICE OF MECHANIC'S LIEN
You also need to prepare a Proof of Service Affidavit completed and signed by the person serving the Notice of Mechanic's Lien and the Mechanic's Lien. You do this before you record the Mechanic's Lien. The affidavit needs to show the date, place and manner of service and facts showing that the service was made in accordance with the requirements for service. The affidavit must also show the name and address of the person or persons upon whom a copy of the mechanic's lien and Notice of Mechanic's Lien was served. If the recipient is an entity, like a Corporation, Limited Partnership, General Partnership, Limited Liability Company, or Limited Liability Partnership, then the affidavit should also note the title or capacity in which a particular person was served. A link to my blog that contains a sample affidavit appears below.
Record Your Lien
Take the Mechanic's Lien, the Notice of Mechanic's Lien and the Proof of Service Affidavit to the County Recorder's Office. The mechanics' lien needs to be recorded in the County in which the property is located. You can call a title company and ask for customer service to obtain help concerning which County the property is located by asking for a Property Profile. Because mechanics' liens are time sensitive, it is always a good idea to go to the County Recorder's office yourself to make sure the lien gets recorded. Be sure to bring your checkbook, because the Recorder will charge a fee for recording the lien. You will get a stamped copy of your lien. A copy will be sent by the Recorder to the Owner. Don't let anyone try to get you to put off recording your lien. An agreement to extend the time for recording a lien is not valid.
Keep Aware of Your Deadlines
Once you have timely recorded a mechanics' lien, you have no more than 90 days in which to file a lawsuit to foreclose on the lien. After 90 days, your lien is no good. Be sure to contact the people who have control over the money on the project, such as the Contractor, Owner and Lender to find out why you have not been paid. If you need more time before filing a lawsuit, you can record an agreement called an Extension of Credit to give you more time before you have to file a lawsuit. Usually, it is better to just get the lawsuit on file. Be sure to give your lawyer at least a couple weeks to prepare the lawsuit before the deadline. If you wait until the last minute, you increase the chances that a mistake will be made or a deadline missed.
NEW REQUIREMENT FOR 2011 - RECORD A NOTICE OF PENDING ACTION (LIS PENDENS)
After the complaint is filed, you are now required to record a "Notice of Pending Action" with the County Recorder within 20 days from the date of filing the complaint. The process of recording a "Notice of Pending Action" is complicated. If you are trying to do this yourself, it is even more complicated. If you are doing this yourself, you need to have a judge approve the Notice of Pending Action before you file it. You then need to mail the Notice to all owners of the property, and to all parties to whom the Mechanic's Lien is adverse (typically, the contractor you are in contract with and the prime contractor). You need to send this by registered or certified mail. Then, take the Notice to the Recorder's Office in the same County where you recorded the Mechanic's Lien and get it recorded. Then, you need to immediately take the recorded Notice back to the Court clerk in the County where the lawsuit was filed, and file it with the Court, with a proof of service on all parties.
Additional resources provided by the author
California Mechanics' Liens and Related Construction Remedies, Continuing Education of the Bar. Available at most law libraries.
California Lien Law & Collection Procedures, 5th Edition, available at Builders Booksource in San Francisco and Berkeley.