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Mechanic’s Lien – Part II

Mechanic liens is an area of law practiced by few attorneys. It is a complicated area with numerous technicalities, which the failure to follow can render a lien void. With that in mind, the blog that follows should be read as an overview to provide subcontractors with some of the basics. It is strongly suggested that you contact an attorney who does mechanic lien litigation any time you have a lien issue.

A subcontractor generally preserves its lien rights by serving a 90 day notice. Its called a 90 day notice because it must be provided within 90 days of when the subcontractor last performed work or provided materials. A 90 day notice is a written notice by the subcontractor of its claim and the amount due or to become due. The notice must state the following: the name of the owner; the name of the general contractor; notice of the contract or what was or is to be done or what the claim is for; what property is subject to the lien; and the amount due or to become due the subcontractor. It is recommended that you obtain a form and use it (better yet, hire an attorney to prepare the lien).

The notice must be sent by registered or certified mail, with return receipt requested, and delivery limited to addressee only, or personally served on the owner, or his agent, and to the lending agency. So the notice must be given to two entities: (1) the owner or to the owner’s agent, such as the architect or superintendent, and (2) the entity, usually a bank, supplying the construction loan.

There is no need to serve the 90 day notice when the original contractor’s sworn statement lists the subcontractor. The sworn statement provides the owner with notice of the subcontractor’s claim. However, the subcontractor’s lien claim is limited to the amount shown to be due the subcontractor on the sworn statement. It is never a good idea for a subcontractor to rely on the original contractor’s sworn statement to protect its lien rights.

Note that a subcontractor’s lien does not have to be recorded with the County Recorder’s Office, although it is a good idea to record it as it puts third parties, that is, someone who may buy the building, on notice of the lien. Further, to put third parties on notice the lien should be filed within 120 days of when the last work was performed.

An important point for a subcontractor to know when it is performing services or delivering materials to a single family owner occupied residence, the subcontractor must, within 60 days from the first furnishing of the labor or materials, notify the owner, either personally or by certified mail, that it is supplying materials or labor. And it must also serve the 90 day notice to preserve its lien rights. Thus, for a single family owner occupied residence, two notices are required.

Subcontractors should also be aware that the 90 day notice of lien may be served at any time after contracting with the general. The notice can be sent before any work is done or materials supplied. It must be sent within 90 days after completion of the work or the providing of the materials but there is no reason that the subcontractor has to wait until the work is complete. Serving the 90 day notice, before any work is performed, puts the owner and the lender on notice of the subcontractor’s right to payment virtually guaranteeing that the owner and lender will make sure the subcontractor gets paid.

Lastly, a lawsuit to enforce the lien must be filed within two years of the completion of the work.

We hope you found this helpful.