California Mechanic’s Lien Law Amendments

The California Legislature recently amended California Civil Code Sections 3084 and 3146 relating to mechanic's liens. In particular, Assembly Bill ("AB") 457 requires additional notices in order to preserve a lien claimant's rights to enforce a mechanic's lien. The amendments to Sections 3084 and 3146 will become operative on January 1, 2011.

Under current statutory provisions, most persons who furnish labor, service, equipment, or materials for private projects are required to serve a written preliminary notice within 20 days after the first date of furnishing labor, service, equipment, or materials to the jobsite to the owner or reputed owner; to the original contractor, or reputed contractor; and to the construction lender, if any, or to the reputed construction lender, if any, prior to asserting a claim on a mechanic's lien. (Civil Code Section 3097.) Those who are under direct contract with the owner are not required to serve a 20-day preliminary written notice. The existing provisions do not require a lien claimant to provide notice or serve the owner, contractor or lender the mechanic's lien when it is recorded in the office of the county recorder of the county in which the property is located. In response to complaints by property owners, AB 457 was proposed and ratified in order to provide property owners with notice that a mechanic's lien was recorded against their property, prior to an action to foreclose on the lien being initiated by a lien claimant.

California Civil Code Section 3084

First, AB 457 amended California Civil Code Section 3084, to require that a Notice of Mechanic's Lien and mechanic's lien be served on the owner or reputed owner of the property by registered mail, certified mail, or first-class mail before the mechanic's lien is recorded. The Notice of Mechanic's Lien and mechanic's lien must be mailed 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. If the owner or reputed owner of the property cannot be served the Notice of Mechanic's Lien and mechanic's lien, these can be served on the construction lender or the original contractor.

The amendments to Section 3084 also require a proof of service affidavit to be completed and signed by the person serving the Notice of Mechanical's Lien (lien claimant). The failure to serve a copy of the mechanic's lien and the Notice of Mechanic's lien would cause the mechanic's lien to be unenforceable as a matter of law.

Amended Section 3084 specifies the language of the Notice of Mechanic's lien and the type and required font size of at least 10 point. The specific language is set forth below.

NOTICE OF MECHANIC'S LIEN

ATTENTION!

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 AT www.cslb.ca.gov.

California Civil Code Section 3146

Second, AB 457 amends Section 3146 of the California Civil Code. Under the current statute, the language is permissive and does not require a lien claimant to record a lis pendens (a notice of the pendency of the proceedings) in the office of the county recorder of the county in which the property is located after filing an action to foreclose on a mechanic's lien in the proper court. In contrast, the amendments to Section 3146 require a lien claimant to record a lis pendens in the office of the county recorder of the county in which the property is located. The lis pendens must be recorded within 20 days after the filing of an action to foreclosure on a mechanic's lien in the proper court. Section 3146 provides that after the time of the recording of the lis pendens, a purchaser or encumbrancer of the property are deemed to have constructive notice of the pendency of the action.

The attorneys at Kring and Chung can ensure that you are complying with these important new requirements. For more information on California mechanic's lien law, please call us or stop by to discuss.