June 2018 – Law and Civil Engineering
THE LAW AND CIVIL ENGINEERING – JUNE 2018 NEWSLETTER
More on the Mechanic’s Liens and the Importance of Timing
by Eugene Bass
In prior articles, the timing considerations relating to mechanic’s liens were discussed in reference to the preliminary notice. Lien rights can be lost unless the correct steps are taken within the time limits set forth in the statutes.
If one who has contributed to the improvement of real property has not been paid for the work of improvement, a mechanic’s lien may be recorded and foreclosed. The earliest date that a lien can be recorded is after completion, termination or breach of your contract. Be aware that work on the same project may have been performed under more than one contract and that the lien requirements apply to each contract and not the entire project. For example, site improvement work may have been under a separate contract than later works of improvement. The lien timing for the site improvement work will be tied to the site improvement contract. If the continuation of the project is performed under another contract and if the site improvement work is not paid, care must be taken to record the mechanic’s lien within the statutory time periods following completion, termination or breach of the site improvement contract.
If you have a direct contractual relationship with the owner, you are an “original contractor” for purposes of the mechanic’s lien laws. Each original contractor, in order to enforce a lien, must record his claim of lien after he completes his contract and before the expiration of 90 days after the completion of the work of improvement if no notice of completion or notice of cessation has been recorded, or 60 days after recordation of a notice of completion or notice of cessation.
Each claimant other than an original contractor, in order to enforce a lien, must record his claim of lien after he has ceased furnishing labor, services, equipment, or materials, and before the expiration of 90 days after completion of the work of improvement, if no notice of completion or cessation has been recorded, or 30 days after recordation of a notice of completion or notice of cessation.
Failure to record the claim of lien within the applicable 30, 60 or 90 day time limit will be fatal to the foreclosure of the lien. In addition, if a lien is recorded late and a foreclosure action ensues, the lien claimant will be exposed to a lawsuit for malicious prosecution.
Knowing when a notice of completion or notice of cessation has been recorded can be problematic, however. As noted in a prior article, although the law provides that the County Recorder must notify anyone recording a preliminary notice of when a notice of completion or notice of cessation has been recorded, this does not always happen and the failure does not affect the requirements for the lien claimant. While the application of the law is not perfect, it would still be good practice to record the preliminary notice. Just don’t rely on the notice from the Recorder’s office being timely.
Time limits are critical with regard to the various steps required to enforce a mechanics lien and the courts have consistently held the lien claimant to those limits. The lien claimant should be fully aware of the requirements and should not hesitate to consult with a knowledgable attorney to avoid loss of the valuable lien rights.