What is a Mechanics Lien?
When you hire a general contractor to work on your home and that contractor hires a third party (other subcontractors, laborers, materials, and supplies from another company), if either of these third party entities hired by the general contractor doesn’t get paid, they can file a mechanics lien on the homeowner’s property.
The mechanics lien gets recorded with the local county recorder’s office. If it goes unpaid, the lien would allow a foreclosure action against the house.
Even if the homeowner has already paid in full all of the agreed price to the general contractor, legally, the homeowner is still responsible for payment for all the other parties involved.
What happens when someone files a lien against your property?
Homeowners who don’t understand the consequences that a mechanics lien can bring to them should look for the assistance of an attorney who handles mechanics lien in California, sometimes this type of situation is just a misunderstanding and it gets resolved in a matter of days but sometimes it implies a range of problems, which include:
- Foreclosure (when the homeowner ignores the lien and doesn’t pay or try to work it out with the contractors);
- Paying more than they should for the same job (when the homeowner pays in full to the general contractor who was contracted directly to do the job, but the general contractor doesn’t pay his/her subcontractors, laborers, or suppliers);
- A recorded lien on the property title (this will affect the owner’s ability to make financial decisions involving the property like borrowing money against the property, refinancing, or selling the property).
How can I Prevent a Mechanics Lien against my property?
1-Reseach the contractors you choose
- Make sure that you hire a contractor that you can trust, look him/her up and read reviews online about past work. See what past clients have to say about this person or company.
- Ask for his/her contractor’s license and check the license status on CSLB’s website. You will be able to see if there are any complaints about his/her work.
- Ask the contractor if he or she intends to use other subcontractors, laborers, and material suppliers for your job and get to know them as well.
2-Get a solid written contract which includes:
- A timeline of when the specific phases of the work are to begin and to be finished, and the price and form of payment for each phase;
- Identification of subcontractors or laborers for each segment and material suppliers.
3-Pay close attention to your paperwork for any Preliminary Notice
All subcontractors and material suppliers are required to provide you with a Preliminary Notice in case they consider the possibility to file a mechanics lien. This type of notice will include information about the goods and services that the subcontractor or supplier provided, or will provide, for the improvement of your property, and their ability to file a lien claim if they are not paid for such goods or services. Keep in mind that this notice is not required from laborers or the general contractor that you hired directly.