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USE NOTE

This article, and the others listed above, are originals written by Rolando Pasquali. Many were published in legal journals and in newspapers of general circulation. Each article is based upon general principles of California Law in existence at the time that it was written. The law constantly changes. Therefore the articles, including this one, may contain information which is out of date. Also, even a small difference in facts can change how the law applies to any situation. No information in this article or anywhere on this website constitutes legal advice. These articles do not create an attorney-client relationship between you and this office. If you need legal advice, contact this office or an attorney in your area

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Mechanics' Liens Have Nothing to do With Cars

 

by Rolando Pasquali

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"See that” the building inspector was frowning as he looked up in my garage. “That’s a raceway.” Obviously he didn’t like what he saw. As a do-it-myself “owner-builder,” I’d gotten my own permit to re-do the home’s electrical. Now, on the day of my “rough inspection,” school was in; and I wasn’t about to pass. “Yeah, so what?” I replied, trying to sound confident in my work. “You can’t use those 90º elbows on EMT pipe because you can’t pull wire through them.” He turned his head toward me. “Don’t you know how to bend pipe ?” Now, I was the one frowning.

          His list of “necessary” corrective work would have kept me busy until Monica Lewinsky qualified for Social Security. Two realities began staring me in the face. First, this guy didn’t like dealing with owner-builders. No matter how good my work was, and I’m not saying it was all that good; he wasn’t going to sign off unless it was perfect. Second, all of my troubles would go away if I spent the money and hired a licensed electrical contractor. So I did. When the bid to do work came, I almost passed out, but I agreed and then paid it. Sometimes, people don’t pay. Landowners get into disputes with builders, artisans, engineers, surveyors or other contractors. It’s then that they find out that “Mechanics’” Liens have nothing to do with cars.

The Agreement to do Work

          Get it in writing. Always. While the law recognizes many “oral” contracts, those are always going to be more difficult to prove. “You said - they said - no I didn’t” disputes are what keep people like me employed. The more specific a written contract is, the less there is to disagree about later. If you are a builder, a written contract will set forth how much you’re supposed to be paid, and when. If you are a homeowner, you’ll know what you’re supposed to get, what kind of materials are supposed to be used, and an expected completion date. Remember, “change orders” can also be written down and signed as well.

          This isn’t to say that a dispute won’t come up. But there’s an old saying in the law of contracts: “as certainty in writing goes up, disagreements in recollection come down.” In large projects, you’ll find a construction lender requiring a signed contract, every time.

The Other Paperwork

          Just as property owners need to make certain that they’re dealing with a licensed contractor. General contractor’s should make sure that they are hiring properly licensed sub-contractors. Does everyone involved have insurance ? Does everyone involved have enough money to pay ? Do you want to obtain a payment bond, guaranteeing payment if there’s a default later ?

Mechanics’ Liens

          The law says that a properly licensed claimant (everything from materialman to builder) who actually contributed work or material to a permanent improvement of real property with the owner’s permission (directly or through the owner’s representative) can obtain a legal interest in the property in order to obtain payment. A mechanics’ lien is filed with the county where the property is situated. Notice is given to the property owner. If they still don’t pay, a lawsuit is then filed to foreclose the lien. In the end, the court can even force sale of the property in order to ensure payment. The mechanics’ lien is one of the most powerful legal swords of all, but it must be wielded with great care.

Valid Liens Only

          Exaggerated or improper liens explode in the face of the person who filed them. First, California Civil Code §3118 says that any person “who willfully includes in his claim of lien labor, services, equipment or materials not furnished for the property” forfeits his lien. Second, with a lien on it, and no “Mechanics’ Lien Release Bond” being obtained, title to the property is “clouded.” This makes sale, financing, or other beneficial use of title as security virtually impossible. While the lien proceedings are unresolved, the owner can suffer severe financial harm. An owner who loses a favorable re-financing rate will surely bring legal action against those who wrongfully filed a mechanics’ lien if interest rates suddenly increase.

What To Do

          Despite their name, there’s nothing “mechanical” about one of these liens. If you are a tradesman filing one, or a property owner served with one, get professional help. Very strict procedural as well as time limits apply. Both time limits and notice requirements change depending upon who is seeking the lien and upon whether certain other notices have also been filed. This isn’t a good area for do-it-yourself law.

- by Rolando Pasquali

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