OVERVIEW OF HANDLING A MECHANIC’S LIEN FOR A CLAIMANT
Please note the incorrect use of a mechanic's lien may result in a fine, license and criminal penalties. This is an overview of the Mechanic's Lien process and is not intended to be used without the assistance of a licensed attorney.
PRIOR TO WORK ON THE PROJECT1. Include in your construction contract an attachment titled *Notice to Owner*. Use the form supplied by the CSLB which will include (i) Owners rights, remedies, obligations, (ii) Right of Cancellation, and (iii) Steps owner can take to protect themselves
***2. Verify you are entitled to proceed on a mechanics lien claim with an attorney, incorrect use of the mechanic's lien process can cause you to face criminal, financial, and licensing penalties***
DURING WORK ON THE PROJECT3. YOU ARE REQUIRED TO GIVE PRELIMINARY NOTICE OF YOUR LIEN
Hire an Attorney to Draft the Preliminary Notice.
Most entities are required to give the Preliminary Notice within 20 days after first day of work.
Consult an attorney for exceptions, such as if there is a Direct Contract with Owner (California Civil Code section 8018, 8020).
If you miss the this deadline, you can serve a *late preliminary notice* but it will only cover work performed 20 days before the late preliminary notice was served, and all work after that date.
* Start work on 8-1-2015
* Must give preliminary notice by 8-21-2015
* If you miss the window, you can serve a *late preliminary notice*.
o Therefore, if you serve a late preliminary notice on 8-30-2015: the late notice would only cover work from 8-10-2015 and beyond.
4. Serve Preliminary Notice
a. Must either personally serve OR send via method which is TRACKED
b. Must be given to Recipients residence, business, or address in contract
c. Retain EVIDENCE of the mailing, tracking, and service
5. File Preliminary Notice with County Recorder
a. Extra step to ensure evidence of service
ONCE WORK ON PROJECT HAS STOPPED6. Consider getting a *STOP PAYMENT NOTICE* and sending it to the construction lender to stop payment of construction funds to owner. This is a different process than filing a mechanic's lien which can be equally effective.
7. WHEN WORK ON PROJECT STOPS * time starts to run on deadlines
a. 90 days to Record Mechanic*s Lien if no Direct Contract with Owner
b. 60 days to Record if Direct Contract with Owner
c. If Owner files and serves *cessation of work notice* to claimant * moves all dates up 30 days. (ie, 60 days if no direct contract, 30 days if direct contract)
8. Prepare Mechanic*s Lien
Hire a licensed attorney to draft and execute a valid Mechanic's Lien.
9. Serve Mechanic*s Lien
a. Evidence of mailing
b. To Residence, Business, or address on Contract
c. Must serve the lien before you file it (CC 8416)
10. Record Mechanic*s Lien at the County Recorders office with Notary service.
DO STEP 11 AND 12 AT THE SAME TIME
11. Prepare, File, and Serve Civil Lawsuit for Foreclosure of the Mechanic*s Lien
a. 90 day deadline from date of recording to File civil foreclosure action
12. Record a Lis Pendens (Notice of Pendency of Action) with the county recorder
a. Best practice is to file Lis Pendens with the Lien at the recorders on same day
b. DOUBLE CHECK at a later date to guarantee the Lis Pendens was INDEXED by the county recorder, you can do this by:
i. Obtain a Title Company *Mechanic Lien Guaranty*
ii. Review the index records yourself at the recorder*s office
13. Trial to foreclose the lien