What A Property Owner Needs to Know About Mechanic's Liens
Generally speaking, a Mechanic’s Lien is a procedural mechanism available for obtaining payment of a debt owed by a property owner to a person that has performed work or supplied materials at the request of the property owner for a work of improvement on the property.
If a contractor, subcontractor, laborer, material supplier, architect, engineer, or anyone who supplies work or materials to a building project does not get paid for their work, California state law allows that person or entity to record a lien against the property in the County Records in the amount of the unpaid debt. This is called a Mechanic’s Lien. The purpose of the Mechanic’s Lien law is to prevent the unjust enrichment of the property owner at the expense of the party who performed the work or supplied the materials.
For example, if a homeowner hired a contractor to construct an addition on their home and the contractor performed the work, but the homeowner only paid $50,000 of the $80,000 owed, then the contractor could record a Mechanic’s Lien in the amount of $30,000 in the County files against the homeowner’s property title. This can affect the property owner’s ability to transfer, sell, borrow against, obtain a line of credit, refinance, or otherwise dispose of the property until the Mechanic’s Lien is removed from title.
After the Mechanic’s Lien is recorded in the County records, if the property owner still refuses to pay the debt owed, the contractor can file a court lawsuit to foreclose on the Mechanic’s Lien. If the lawsuit is successful, it could result in a judgment against a property owner ordering the property to be sold at a public auction.
Enforcing a Mechanic’s Lien can be a complicated process. There are several legal requirements, notices, steps, and timeframes involved in the Mechanic’s lien process for the party recording the Mechanic’s Lien. Additionally, there are several defenses to Mechanic’s Liens available to a property owner. Therefore, it is essential to contact an experienced attorney when faced with a Mechanic’s Lien situation.