Your home is both your sanctuary and quite possibly your most valuable asset. The time is likely to come when you will either want to sell it or refinance it. However, what happens if you have a mechanic’s lien placed on your title? A mechanic’s lien can both block your efforts to sell or refinance, and diminish the value of your property. Here is what you need to know about mechanic’s liens in California.
What is a Mechanic’s Lien?
When a contractor files a mechanic’s lien on your property title, they are essentially claiming that they have a financial interest in your home. Why would someone make such a claim? It could be that a builder, an electrician, a plumber, or any other contractor, completes a job for you and then claims that they did not receive full payment from you. It might even be the result of your contractor not paying their subcontractor(s), and the subcontractor puts a lien on your house. The contractor may sue you for the outstanding amount. Before they do so, they will likely file a mechanic’s lien to secure their financial interests.
Once a lien is filed, your home title is subject to the contractor’s stated financial interests. This means that anyone who buys your property would be subject to owing the contractor the stated amount. This complicates your efforts to sell until you either pay off the lien or lower your asking price by the stipulated amount.
Why Negotiation is Important
What is the best way to fight a mechanic’s lien? The answer is always to avoid it being filed in the first place. Before it gets to the point where the contractor feels that their only recourse is to file a lien, open up reasonable negotiations with them. Don’t ignore invoices and other demands from the contractor. If the contractor believes they are owed money, they are unlikely to simply go away when you ignore them. Respond immediately to any demands. If you feel that you do not owe anything to the contractor, explain why you feel this is the case. If the two of you cannot reach an agreement, you may need the help of a professional mediator to resolve the matter. The point is, never just ignore the matter. Confront it directly and always aim to resolve the situation through negotiation.
Who Can File a Lien?
Under California law, any person or business that has provided services, labor, or materials to benefit a property has the right to file a lien if they do not receive payment (or are only partially paid). Lienors may only include the value of the labor and/or materials they provided in the lien. They cannot add damages such as lost profits, damages, or attorney’s fees.
Actions to Take When Dealing With a Mechanic Lien in California
When you find that there is a mechanic’s lien on your property, there are several courses of action available to you.
- You can open direct negotiations with the contractor – this is preferable if reasonable discussions are possible.
- You could obtain a lien bond. This is a bond, provided by a surety company, which guarantees payment to the contractor in the amount of the lien if the latter is successful in their claims. It also removes the lien from your property record.
- File a petition in court. You can approach the California Superior Court in your county and request that the line be removed. You would need to provide good grounds for the petition. Such reasons could include the contractor’s failure to complete the work in question, or that you have already paid in full for the project.
- You can also attack any legal deficiencies in the lien filing. If the contractor has not gone through the proper procedures in filing the lien, you can challenge the filing on that basis. Lienors must give homeowners notice before filing the lien, for example. If they have not done so within the required timelines, you have good grounds to question the legality of the filing.
When faced with a mechanic’s lien, the best way to determine the right way forward is to consult a mechanic’s lien attorney. Westover Law is a respected law firm in Murrietta, CA. We will be happy to help you resolve your mechanic’s lien situation. Contact us to book a consultation.