Effective January 1, 2011 (yes, about 40 days ago), the requirements for a mechanic’s lien changed. One practical consequence of these recent changes is that use of prior forms may result in an unenforceable mechanic’s lien. Of course, we’ve implemented these changes in the mechanic’s liens we’ve prepared or reviewed this year for our clients. However, I thought it would be useful to summarize these changes here, not just for our clients, but also for other friends of our firm who receive this newsletter.
As before, you need to record a “Claim of Mechanic’s Lien” (sometimes instead just titled “Mechanic’s Lien”) with the recorder of the county where the real property being liened is located.
However, the Claim of Mechanic’s Lien now must include, in addition to the previously-required content:
1. A “Notice of Mechanic’s Lien.” The statutory provisions regarding the content of this Notice are set forth below in the section “Notice of Mechanic’s Lien – Statutory Provisions.”
2. A proof of service affidavit showing service by mail of the Claim of Mechanic’s Lien (including the Notice) on the owner, or if the owner cannot be served, the general contractor or the construction lender. The statutory provisions regarding this proof of service are set forth below in the section “Proof of Service – Statutory Provisions.”
Of course, you also need to do what you say you did in the proof of service, actually serve by mail. Thus, now you need to record and serve, not just record.
The penalty for non-compliance can be severe, an unenforceable mechanic’s lien. Civil Code § 3084(d) provides:
(d) Failure to serve the mechanic’s lien, including the Notice of Mechanic’s Lien, as prescribed by this section, shall cause the mechanic’s lien to be unenforceable as a matter of law.
I suggest next a process to follow. But since these requirements are new and not entirely clearly written, I strongly suggest that you have your attorney review your new form of Claim of Mechanic’s Lien and your process for serving it to make sure you are in compliance with these new statutory requirements.
1. Prepare a Claim of Mechanic’s Lien.
2. Prepare a Notice of Mechanic’s Lien.
3. Prepare a Proof of Service Affidavit for the Claim of Mechanic’s Lien and the Notice of Mechanic’s Lien.
4. Attach the Proof of Service Affidavit to the Claim of Mechanic’s Lien and the Notice of Mechanic’s Lien.
5. Mail, by registered, certified, or first-class mail (I recommend registered or certified vs. first class) unrecorded copies of the Claim of Mechanic’s Lien and the Notice of Mechanic’s Lien and a copy of the signed Proof of Service Affidavit to the property owner, and also (as a matter of belt and suspenders) to the general contractor and to the construction lender (if any).
6. Record the Claim of Mechanic’s Lien, Notice of Mechanic’s Lien and Proof of Service Affidavit with the County Recorder in the same county where the real property is located.
The process doesn’t end with the recording and service of the mechanic’s lien. A lawsuit needs to be filed within 90 days of recording. Additionally, and another new statutory requirement, a lis pendens (also known as notice of pending action) must be filed and recorded (previously it mostly was optional) within 20 days after the lawsuit was filed. However, these steps likely will be done by your attorney, not by you directly.
Notice of Mechanic’s Lien – Statutory Provisions
Civil Code § 3084(a)(7) provides that the contents of a Claim of Mechanic’s Lien must include:
(7) The following statement, printed in at least 10-point boldface type. The letters of the last sentence shall be printed in uppercase type, excepting the Internet Web site address of the Contractors’ State License Board, which shall be printed in lowercase type:
NOTICE OF MECHANIC’S LIEN
Upon the recording of the enclosed MECHANIC’S LIEN with the county recorder’s office of the county where the property is located, your property is subject to the filing of a legal action seeking a court-ordered foreclosure sale of the real property on which the lien has been recorded. That legal action must be filed with the court no later than 90 days after the date the mechanic’s lien is recorded.
The party identified in the mechanic’s lien may have provided labor or materials for improvements to your property and may not have been paid for these items. You are receiving this notice because it is a required step in filing a mechanic’s lien foreclosure action against your property. The foreclosure action will seek a sale of your property in order to pay for unpaid labor, materials, or improvements provided to your property. This may affect your ability to borrow against, refinance, or sell the property until the mechanic’s lien is released.
BECAUSE THE LIEN AFFECTS YOUR PROPERTY, YOU MAY WISH TO SPEAK WITH YOUR CONTRACTOR IMMEDIATELY, OR CONTACT AN ATTORNEY, OR FOR MORE INFORMATION ON MECHANIC’S LIENS GO TO THE CONTRACTORS’ STATE LICENSE BOARD WEB SITE ATwww.cslb.ca.gov.
Proof of Service – Statutory Provisions
Civil Code § 3084(c) provides:
(c) (1) The mechanic’s lien and the Notice of Mechanic’s Lien described in this section shall be served on the owner or reputed owner. Service shall be made as follows:
(A) For an owner or reputed owner to be notified who resides in or outside this state, by registered mail, certified mail, or first-class mail, evidenced by a certificate of mailing, postage prepaid, addressed to the owner or reputed owner at the owner’s or reputed owner’s residence or place of business address or at the address shown by the building permit on file with the authority issuing a building permit for the work, or as otherwise provided in subdivision (j) of Section 3097.
(B) If the owner or reputed owner cannot be served by this method, then the notice may be given by registered mail, certified mail, or first-class mail, evidenced by a certificate of mailing, postage prepaid, addressed to the construction lender or to the original contractor.