Article – The Coming Changes to Mechanic’s Lien Law In 2011

What All Contractors Need to Know About The Coming Changes to Mechanic’s Lien Law In 2011

By Kristen E. Green, Esq.

In response to increasing complaints and concerns by owner lobby groups that owners are often unaware that a mechanic’s lien has been recorded against their property until after a foreclosure action has already been filed, the California legislature recently enacted several significant changes to the mechanic’s lien laws. Those changes are designed to give owners notice of a lien against their property prior to the service of a lawsuit. Those changes go into effect on January 1, 2011, and have significant ramifications for mechanic’s lien claimants. If a mechanic’s lien claimant fails to follow the following new additional requirements, its mechanic’s lien will be unenforceable as a matter of law.

Mechanic’s Lien Requirements

The requirements for a valid mechanic’s lien are set forth in Civil Code ¤3084, which requires that a mechanic’s lien consist of a written statement, signed and verified by the claimant or its agent, containing all of the following:

1. The claimant’s demand after deducting all credits and offsets, i.e., the amount of the claim.
2. The name of the owner or reputed owner, if known.
3. A general statement of the kind of labor. services, equipment and materials furnished by the claimant.
4. The name of the person by whom the claimant was employed or to whom the claimant furnished the labor, services, equipment or materials.
5. A description of the site sufficient for identification.
   Beginning January 1, 2011, a mechanic’s lien must also contain the following:
6. The following notice of mechanic’s lien which must be in at least 10 point font, with the entire last sentence (excepting only the website) typed in upper case letters:
   NOTICE OF MECHANIC’S LIEN ATTENTION!Upon the recordation of the enclosed MECHANIC’S LIEN with the county recorder’s office of the county where the property is located, your property is subject to the filing of a legal action seeking a court-ordered foreclosure sale of the real property on which the lien has been recorded. That legal action must be filed with the court no later than 90 days after the date that mechanic’s lien is recorded.

   The party identified in the mechanic’s lien may have provided labor or materials for improvements to your property and may not have been paid for these items. You are receiving this notice because it is a required step in filing a mechanic’s lien foreclosure action against your property. The foreclosure action will seek a sale of your property in order to pay for unpaid labor, materials, or improvements provided to your property. This may affect your ability to borrow against, refinance, or sell the property until the mechanic’s lien is released.

   BECAUSE THE LIEN AFFECTS YOUR PROPERTY, YOU MAY WISH TO SPEAK WITH YOUR CONTRACTOR IMMEDIATELY, OR CONTACT AN ATTORNEY, OR FOR MORE INFORMATION ON MECHANIC’S LIENS GO TO THE CONTRACTORS’ STATE LICENSE BOARD WEB SITE AT www.cslb.ca.gov.

7. Proof of Service of the Mechanic’s Lien
   The mechanic’s lien claimant must now serve the owner or reputed owner with the mechanic’s lien and the mechanic’s lien must contain a proof of service affidavit completed and signed by the person serving it. The proof of service must show the date, place and manner of service and the name and address of the person or persons upon whom the lien was served. Service on the owner must be made by either registered mail, certified mail, or first class mail evidenced by a certificate of mailing, postage prepaid and addressed to the owner or reputed owner at the owner’s or reputed owner’s residence or place of business or the address for the owner that is listed on the building permit.
   CAUTION – The mechanic’s lien statute has been amended to include severe penalties for failure to comply with the new notice requirements. The failure to serve the mechanic’s lien, including the Notice of Mechanic’s lien, shall cause the mechanic’s lien to be unenforceable as a matter of law.New Requirements When Filing a Lawsuit toForeclose on a Mechanic’s Lien.

   A lawsuit to foreclose upon a mechanic’s lien still must be filed within 90 days of the recordation of the mechanic’s lien. Effective January 1, 2011, however, the law will require a plaintiff to record with the appropriate county recorder’s office a notice of pendency of action within 20 days of filing a mechanic’s lien foreclosure action. (Civil Code ¤3146)

   Please contact any of the attorneys in SMWB’s construction group (Joseph Sweeney, Christopher Olson, Dana Corey or Kristen Green) by telephone or email to discuss updating your construction forms or to review your company’s practices and procedures.

The information provided in this issue of “Legal Notice” is general in nature and is not intended to answer every question that may arise under different fact situations and should not be relied on in the place of professional advice in a given case. If you have specific questions please contact Sweeney, Mason, Wilson & Bosomworth.