Mechanic’s lien essentially acts like deed of trust or mortgage because it’s a claim against property. It can be compared to a hook or cloud on the title of property.
A lien is an extremely powerful device. Are you aware that it can prevent a property owner from re-financing or disposing the property?
The doctrine dates back to the time when the Roman Empire still existed. Construction lenders would typically obtain lien on land as well as the constructed structures. It didn’t exist under the Common Law of England.
In Ancient America, Mechanic’s lien existed to give contractors priority over other creditors.
Amount Of Lien
According to the California Civil-Code, in case of unpaid labor, supplied equipment or furnished materials, amount of lien ought to be commensurate to the contract price, or equal to the realistic value of materials/ labor, whichever is lower.
Which Type Of Property Is Subject To The Lien?
In California, public property cannot be subjected to mechanic’s lien. The doctrine is only applicable to private property.
Difference Between A Notarized And Verified Lien
A notarized lien refers to a document that is signed in the presence of a Notary Public, whereas a verified document is one that states that information contained therein is accurate and true. In California, Mechanic’s lien must be verified. It’s not mandatory of for it to be notarized.
Mechanics lien in California gives all suppliers and subcontractors similar priority among themselves in case more than one lien is foreclosed against that particular property.
Each party’s lien is effective on the date when the project officially commenced. Therefore, it doesn‘t matter who files first or last because every party is accorded equal treatment.
Notice Of Completion
A Completion Notice is an important document that is recorded by the owner of property. It officially announces full completion of the construction project.
The notice shortens the time used to record mechanics lien in California. It speeds up the closing-out process of the project by paying-off loans and/or selling the property.
People who file mechanics lien ultimately discover that a Completion Notice is an extremely dangerous device.
In case you have a single contract for the whole subdivision, the law requires you to record only one lien for the whole subdivision. However, your lien should realistically apportion the amount unpaid to the individual sections, depending on the value of materials and labor spent on each section.
Even though a condominium project typically comprises of separate units, courts of law in California consider it as a single piece of realty. Unlike the case is with subdivisions, your time to record a Mechanics lien starts running when the whole project is complete, not when individual units are completed.