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Mechanic's Liens-Some Helpful Information

This article was edited and reviewed by FindLaw Attorney Writers | Last reviewed March 26, 2008

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TO SUPPLIERS AND SUBCONTRACTORS!

If you supply materials to a project or if you enter into a contract with the General Contractor or property owner on a project, you have Mechanic's Lien Rights.

FIRST STEP TO TAKE BEFORE SUPPLYING MATERIALS AND/OR LABOR TO A PROJECT:

  1. WHAT IS THE PROJECT? Obtain the street address and legal description of the property. Obtain the name and address of the owner of the property, whether the owner is a public or private entity, the name and address of the lender, if any, on the project, and the name and address, if any, of the Surety on any Payment Bond. (Note: All Federal and State projects over $25,000.00 usually require a Payment Bond).
  2. WITH WHOM ARE YOU CONTRACTING? If you are a supplier, are you contracting with another supplier? If so, you may not have your own lien rights.

    If you are a supplier, is your customer a licensed contractor? Obtain the license number, Surety Bond number, as well as the name and address of the Surety Company.

    Consider a obtaining an Application for Credit and a Personal Guarantee from your customer, which includes an Attorney's fees paragraph.

  3. WITHIN 20 DAYS OF PROVIDING MATERIALS AND/OR LABOR TO THE PROJECT - MAIL THE CALIFORNIA PRELIMINARY 20-DAY NOTICE!

    Mail by certified mail-return receipt requested to the owner, general contractor and construction lender. Be sure you are using the latest form, and retain a copy for your file. Attach all green slips as they are received.

  4. All deliveries should be signed for. You must prove your materials were used and consumed on the project. A signature will help you, but it is not dispositive.
  5. Each invoice and delivery receipt should reference the project.

WHILE THE PROJECT IS ONGOING - YOU NEED TO DO THE FOLLOWING:

  1. Keep the original green receipt returned from the post office with your California Preliminary 20-Day Notice.
  2. Monitor the project as to completion.
  3. If the account becomes delinquent, you must act timely to pursue your lien rights.
  4. Do not issue Unconditional Releases unless you are paid.
  5. Consider a Joint Check Agreement.

AFTER YOU HAVE COMPLETED WORK ON THE PROJECT OR LAST FURNISHED MATERIALS TO THE PROJECT

  1. What is the last date that labor and/or materials were furnished to the project?
  2. Was a Notice of Completion recorded for the project? If so, obtain a copy of the Notice. What was the actual date of completion of the project?
  3. If you are not paid, you must act quickly to preserve your lien rights; different rules apply depending on whether the project was private, state or federal.

MECHANIC'S LIENS - PRIVATE PROJECT

  1. A 20-day Preliminary Notice is required.
  2. You must record your lien at the County Recorder's Office of the county where the property was located.
  3. You must record within 30 days after the date the Notice of Completion was recorded, or within 90 days of last supplying materials or labor to the project, if no Notice of Completion.

STOP NOTICES - PRIVATE PROJECT

  1. A 20-day Preliminary Notice is required to be served on the Construction Lender.
  2. A Bond is required.
  3. Must be served by Certified Mail, return receipt requested, on the property owner and construction lender within the same time limit required for Mechanic's Liens.

PAYMENT BOND - PRIVATE PROJECT

  1. Send demand directly to the Insurer who issued the bond.
  2. You rights are cumulative, i.e., you can proceed with all three remedies simultaneously: Mechanic's Lien Claim, Bonded Stop Notice and Payment Bond.

CALIFORNIA PUBLIC PROJECT - STOP NOTICE CLAIM

  1. A 20-day Preliminary Notice is required.
  2. No Bond is required.
  3. Serve by certified mail-return receipt requested on the proper state entity within the same time limit as a Mechanic's Lien, i.e. 30 days or 90 days from date of completion.

CALIFORNIA PUBLIC PROJECT - PAYMENT BOND CLAIM

  1. A 20-day Preliminary Notice is required.
  2. Send demand letter to the Insurer on the Payment Bond and to the General Contractor.
  3. You rights are cumulative, i.e., you may proceed with the Stop Notice and Payment Bond Claim.
  4. You can not lien State projects.

FEDERAL PROJECT - CLAIM UNDER THE MILLER ACT

  1. Must give notice, within 90 days after the date of last furnishing materials and/or labor to the project.
  2. Notice must be given to the Prime Contractor and to the Insurer who issued the Federal Payment Bond, by certified mail, return receipt requested.
  3. Suit must be brought in Federal Court no later than one year after the last labor and/or materials were furnished to the project.
  4. You can not lien Federal Projects or serve Stop Notices.


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