When you hire a contractor to oversee a construction project, they might give you a preliminary notice about their right to construction liens, also called mechanic’s liens. Construction liens are powerful legal tools to protect contractors from missing out on payment. However, liens can also be invoked when the contractor’s work is of lower quality than should be delivered. In those cases, a construction attorney can help you navigate your way through them.
What are construction liens?
A contractor can place a construction lien on personal property to ensure payment for their services. This lien puts a “hold” on the property, giving the contractor a security interest in your property title. If you find yourself under a lien, you must pay the contractor a specific amount of money to regain total ownership of your property. This makes it near impossible to refinance or sell your property.
If a lien is filed on your property, you could face foreclosure and a lien recorded on your property title. You also could face double payment on the lien if you paid the general contractor, but they didn’t pay the subcontractors, suppliers, or other laborers.
What is a valid construction lien?
In California, a contractor must provide you with a preliminary notice delivered in person or through certified mail before work begins, supplies are delivered, or 20 days afterward. If the notice is given after 20 days, the lien can require payment only for work done 20 days before the notice is given and afterward.
The claim should include:
- Specific monetary amount owed
- Services/products provided
- Names of the employer and property owner
- Address where work was done or supplies delivered
- Contractor’s address
- Completed and signed Proof of Service Affidavit
The lien should also be filed within the legal time frame of 90 days after work completion, when you begin using the project, or when you accept the improvement. Anytime afterward makes the lien invalid.
How can you deal with a construction lien?
If your lien is valid, you should seek a construction attorney or general consultant with experience defending against mechanic’s liens. They can help you resist foreclosure of a lien through several methods, the three most common ones listed below.
- Negotiating with the contractor
Some contractors are willing to accept lower payment if it’s provided over a shorter amount of time. Others might include extra services if you agree to pay the full cost.
- Filing a lien bond
Provided by an insurance provider, a lien bond removes the lien from your property and attaches it to the contractor’s claim instead. You would still owe the contractor payment, however it wouldn’t be tied to your property, which you could then freely refinance or sell.
- Filing lawsuit against the contractor
To remove a construction lien and refuse any payment to the contractor, you’ll have to testify with evidence that the contractor didn’t fulfill the contract or slacked off on their work. A construction attorney will help you gather the evidence to present a compelling case at a formal trial.
If you need assistance with a construction lien, call Alves Radcliffe, LLP at 916-333-3375 or send us an email. We have over 25 years of combined experience, and serve clients throughout Greater Sacramento, Northern California, and the San Francisco Bay Area.