California Set to Make Mechanic’s Lien Law Change
- Sep 02, 2010
Dees Stribling, Contributing Editor
Sacramento, Calif.–In a move that might benefit multifamily property owners in California who hire outside contractors to do work on their properties–which would be most of them–the state of California will change the way property owners are notified of mechanic’s liens. The changes will be to California’s Civil Code section 3084 and 3146, and will take effect on Jan. 1, 2011.
Currently, the first time many property owners find out about mechanic’s liens are when a lawsuit is filed to foreclose on the lien. A common complaint among property owners is that no mechanism exists to tell them about mechanic’s liens before that point in the proceedings, and the change in the law is intended to address that situation. The change does not, however, affect the basic legal structure that governs mechanic’s liens.
After the first of next year, a mechanic’s lien claimant (contractor, subcontractor, material supplier and so forth) must serve a “notice of mechanic’s lien” to the property owner at the same time as recording a claim of lien. The notice informs the owner that the property is subject to legal action, and that the action must be filed within 90 days.
Further, the notice must be sent through registered mail, certified mail or first-class mail evidenced by a certificate of mailing, and must include a “Notice of Mechanic’s Lien” that helps explain what the lien is and recommends speaking with the contractor or an attorney immediately. The law makes it clear that if for some reason a property owner cannot be served, then the lien and notice must be served on the construction lender or the general contractor.
Another part of the change requires that the claimant record public notice of the pending lawsuit within 20 days of filing a mechanic’s lien foreclosure suit. Although many already do this as a matter of caution, the new requirement will help ensure that everyone involved is aware that the property may be sold to pay the lien debt.
The move to change these aspects of mechanic’s liens isn’t limited to the West Coast. “California is neck-and-neck with a number of other states–Michigan, New Jersey, Georgia, and Illinois come to mind–that significantly altered their statutory notice requirements for lien claims in 2009 or 2010,” John C. Pytel, Esq., an attorney specializing in mechanic’s liens, of Roseville, Calif.-based Koeller, Nebeker, Carlson & Haluck L.L.P., tells MHN.
“In fact, in addition to the relatively minor changes taking effect Jan. 1, California’s own lien statutes look like they will be subjected to a major overhaul effective July 31, 2012,” Pytel adds. “This seems to be the crest of a national trend as more and more property owners fall victim to confusing lien laws in a turbulent housing market.”