Bond or Lien Claim-Private Work

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Note: This information is limited in scope and applies only to this document. Please see the general information, all forms memo, and the general information memo for this type of document, for additional information.


Description: Mechanic's Lien (Private Work)

Scope: State of California, Private Works.

Time Constraints: Claims must be filed depending on the type of business your represent- contractor, subcontractor or supplier:

Prohibitions: There are several prohibitions on seeking protection under the California Mechanic’s Lien statutes:

  1. What construction project participants are not protected by the lien law? An unlicensed contractor cannot use the mechanic’s lien remedy.  A person not in contractual relations with any of the major parties (owner, prime contractor, subcontractor) or their agents cannot use the mechanic’s lien remedy.  Participants in construction projects for public entities, including the United States, must use other remedies, as public property is not subject to lien.
  2. What costs or damages are typically not allowed in a lien claim?  Delay damages and attorney fees.  Also, a mechanic's lien claim cannot be for more than the contract price or the fair value of the work or materials (whichever is less).

All Cases, Preliminary Notice: You must have served a Preliminary Notice on all required parties before you can establish lien rights in the State of California. Failure to do so negates your lien and stop notice rights. See the State of California memo on Preliminary Notices, Private Works, for more information.

However, even if you cannot make a lien claim for failure to serve a Preliminary Notice, you may make claim against the Payment Bond under certain conditions (see below).

Sub-Contractor or Supplier, Mechanic's Lien Claim: If you have not been paid in full, you must record your Mechanic's Lien with the county recorder's office, and serve Stop Notices of the completion, or cessation, of your work of improvement or supplying of material or services for improvement if no Notice of Completion, or Notice of Cessation, has been filed, up to 90 days after the cessation or completion of the entire work.. Serve a copy of said notice on the owners and, if they exist, the general contractors, lenders and sureties. If a Notice of Completion, or Notice of Cessation, has been filed, you must file your documents within 30 days of the recording of the Notice of Completion.

Contractor, Mechanic's Lien Claim: Same as above, but you must record your Mechanic's Lien with the county recorder's office, and serve Stop Notices, if needed, within 60 days, inclusive, of the notice of completion, or notice of cessation, of your work of improvement.

Mail Service Requirements: California Civil Code Section 3084(c)(1)(A) requires that a copy of the Mechanic’s Lien must be served on the owner(s) or reputed owner(s) by registered mail, certified mail, or First Class Mail, evidenced by a certified of mailing first class, postage prepaid, addressed to the owners(s) or reputed owner(s).  The mailing of this copy must include the NOTICE OF MECHANIC’S LIEN declaration, and the fact of mailing must be recorded in the PROOF OF SERVICE AFFIDAVIT TO OWNER OR REPUTED OWNER.   The program will print out all known owners, and each has to be served.  This copy must be mailed before you file your Mechanic’s Lien, so give yourself some time.

Further, the law is a bit gray on the service requirements, whether the owner must actually be served (what if they refuse the certified letter?) or it if the mailing itself constitutes service, as with preliminary notices in California.   Because of this, we strongly urge, as before, that a copy of the Mechanic’s Lien also be mailed in the same manner to all General Contractors and all Lenders of the job, as California Civil Code Section 3084(c)(1)(B) provides for this service as an alternative.  Take no chances.

Prior to this law change notice was not specifically required to the legal parties of a job, although we have always encouraged it.  The law is also not clear if you have to file a copy of the NOTICE OF MECHANIC’S LIEN with the Mechanic’s Lien and Mail Service Affidavit.  Again, we encourage you to do so to prevent allegations you did not do so.  We are sorry this will increase the cost of filing, but we see no alternative.

We smell attorney challenges in these law changes.   Maybe that was the point all the time.

All Cases, Service of Stop Notice: A Stop Notice may be served at any time within the period for recording your Mechanic's Lien, as noted above.

Important: For a Stop Notice to be enforceable, it must be accompanied by a Bond for 1.25 times the amount of your claim.

All Cases, Perfection: Mechanic's Lien: To perfect your Mechanic's Lien, you must file suit to foreclose the lien within 90 days of recording, and record a lis pendens.

All Cases, Suit to Enforce Stop Notice: Assuming that you are not immediately paid, to enforce your Stop Notice and to force collection of any fees held in trust for your customer, file suit anytime from 10 days after the date of the service of your Stop Notice on the required parties, but not later then 90 days after the expiration of the time for recording your Mechanic's Lien. Recovery is limited to undisbursed load proceeds.

All Cases, Payment Bond: Where a Payment Bond has been provided by a surety, you may file a claim against the payment bond to demand payment. Whether you have served a preliminary notice ont he required parties or not you may still make demand upon the surety providing the payment bond either within 15 days of the filing of the Notice of

Completion or within 75 days after the work of improvement has been completed but no Notice of Completion filed. Remember, however, a payment bond may be insufficient to settle your claim, and not all private work projects will have them.

Lien Bond: Your Mechanic's Lien may be "bonded around" the claim for a bond 1.5 times the amount of your claim.

The usual remedy is to file to enforce all claims in one suit (see below, Procedures). In any case, we strongly recommend that your attorney hanlde the enforment actions to perfect you lien claims.

Information Requirements: Program information and information for Exhibits A-D, any additional costs as to legal fees, court costs and interest charges (don't pass these up. Estimate if necessary. In the case of Stop Notices and Bond Claims, the lenders or sureties will reserve only the amount for which you make claim), and the county of the state where the recording will be made.

Form Types: Mechanic's Lien (Private Work), Exhibit's A-D, if needed, Stop Notice, if needed, Claim Against Payment Bond and Claim Against Funds Held in Trust, if needed, and Recorder's Letter.

Procedures: Prepare your documents using the required information. While you can file your Mechanic's Lien immediately, if there is a lender or surety, serve copies of the Mechanic's Lien and Stop Notice on the owners, general contractors, lenders and sureties first. Often this is enough to get immediate payment. If not, after 10 days file your Mechanic's Lien and serve upon the owners and general contractors (your customer is optional). At this point you are ready to file suit to enforce all of your claims in one action.

Special Requirements, Stop Notices: A California Stop Notice must be bonded for 1.25 times the amount of your claim, or it may be disregarded by the lenders. Talk to your own commercial insurance agent about Stop Payment Bonds.

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