Laws on Mechanic's Liens & Preliminary Notices in California

California Constitution

Article XIV, Section 3 of the California Constitution provides the authority for laborers to obtain a lien on property that they have worked on or for which they have furnished materials for. The lien amount depends on the potential lien holder's involvement with the property. If the lien holder only provided materials, he can obtain a lien in the amount of the value of the provided materials. If the lien holder also provided labor to the property, he can obtain a lien in the amount of the value of the labor and the value of the materials he provided.

The California Civil Code provides that some contractors have to provide a preliminary notice of a potential mechanic's lien 20 days from first furnishing labor or materials. The preliminary notice must be given by either a subcontractor or a material supplier if they feel that there is a chance that they will need to obtain a mechanic's lien. The notice must inform the owner, the general contractor and the construction lender that they could file a mechanic's lien if they are not paid. Alternatively, the potential lien holder can file the notice with the county recorder where the property is located. Failure to file the preliminary notice will prevent a subcontractor or materials supplier from obtaining a lien. The preliminary notice is not required to be filed by prime, or general, contractors.

The California Civil Code also provides the procedures that must be followed to perfect a mechanic's lien after work has been completed or stopped. If the owner files a Notice of Cessation, which requires the subcontractor to cease work on the project, or a Notice of Completion, then the subcontractor must file a Claim of Lien within 30 days. This must be filed with the Office of the County Recorder where the property is located. Within 90 days after the recording of the Claim of Lien, the subcontractor must then file a lien foreclosure action. If no Notice of Cessation or Notice of Completion is filed, then the subcontractor has 90 days after work stops or the owner of the property accepts the work to file the Claim of lien, and 90 days after that to file a Lien Foreclosure Action.

The California Civil Code establishes a slightly different procedure for prime, or general, contractors. If the owner files a Notice of Cessation or a Notice of Completion, then the general contractor must file a Claim of Lien within 60 days, and a Lien Foreclosure Action 90 days after that. If the owner does not file a Notice of Completion or Cessation, then the owner has 90 days to file a Claim of Lien and 90 days after the Claim of Lien is filed to file a Lien Foreclosure action. Essentially, the process is the same for general and subcontractors, but the California legislature has provided general contractors additional time to perfect their mechanic's liens.