When construction work is taking place, the person who is ultimately responsible for the payment of all the workers in the site owner. A mechanic’s lien is raised as security for payment of the parties to a construction. It is a hold on property that is raised by unpaid contractors in the construction work.
The people who can raise a lien in California include sub-contractors, materials’ suppliers, laborers, design professionals, equipment leasers or any other person who offers services for the improvement of a construction site. The mechanic’s lien is recorded at the county recorder’s office. A lien remain effective as long as service providers remain unpaid even if the home-owner has already paid the main contractor.
Consequences of a Mechanic’s Lien
When a lien is raised against a property, there are a number of things that could happen.
a) Foreclosure of the property – the property can be foreclosed and a sold so that the recovered amount is used to pay the unpaid service providers.
b) Double payment – According to Californian law, the homeowner is ultimately responsible for the payment of all workers and service givers. As such, even if he has paid the main contractor, he might have to pay again if the sub-contractors still remain unpaid.
c) Can Affect the Value of Property – Having a mechanic’s lien recorded on your property can affect one’s ability to borrow, refinance, sell, or take credit against it.
How to Avoid a Mechanic’s Lien in California
To avoid all these from happening, there are a number of steps that one can take.
a) Carefully Set Out Any New Contracts
The contract that you set out should have a clearly set out payment schedule. It should indicate the dates of completion of work, payment of service providers, and the amount that should be paid. The contractor should also identify who the sub-contractors are, the materials that will be used, and the people who will supply them.
b) Choose Your Main Contractor Well
The contractor you hire should be licensed and he too should only hire licensed sub-contractors. He should also have a good reputation in paying his workers and sub-contractors. Avoid contractors who have pending court cases on non-payment.
c) Keep track of all paperwork.
Having proper documentation can be crucial when a lien is raised. It can save a home-owner from fore-closure by petitioning a court to lift the lien.
For a mechanic’s lien to be considered viable in California, a direct contractor should file it after the work is complete but before the lapse of 90 days or 60 days after the owner gives a notice of completion or cessation of work.