Before you hire a contractor and start a project, become familiar with the mechanics lien laws and how they affect you.
NOTE: THIS IS NOT A LEGAL DOCUMENT, BUT AN ATTEMPT TO PROVIDE YOU WITH A GENERAL UNDERSTANDING OF PRELIMINARY NOTICES AND HOW THEY AFFECT YOU WHEN YOU CONTRACT WITH SOMEONE TO IMPROVE YOUR PROPERTY.
On occasion, we receive a phone call from an agitated property owner, “Why are you liening my property?!”
This is in response to the receipt of what is called a Preliminary Notice (sometimes called a prelim or a prelien).
A Preliminary Notice is NOT a lien and we always send a cover letter that states at the top in 1” high letters “THIS IS NOT A LIEN!!!”
So, the phone call tells us that the property owner does not understand how the laws work regarding improvements to their property and payment to workers and material suppliers. It is important that property owners understand how this works in order to protect themselves. When you hire a contractor to do work on your property it is typical that the contractor will purchase materials and hire subcontractors and perhaps rent equipment in order to complete the job. Since the improvements are to your property, there are laws that make you the party responsible for payment for these goods and services. The law also says that if the contractor, subcontractor, workers or suppliers are NOT paid, they can file what is called a mechanic’s lien on your home. A mechanic’s lien is a hold on property for the benefit of someone whose work or materials improve the property. It is recorded with the County Recorder’s office by an unpaid contractor, subcontractor or supplier. It means that, until they are paid, any of these unpaid parties can claim a lien against your property. But, how can you possibly ensure everyone is paid if you do not know who the parties are? In fairness to the property owner, the law also states that the property owner must be notified by the subcontractor or supplier providing services and goods to improve your property. This notification is done by means of the Preliminary Notice. These notices allow you to track who could potentially have a claim against your property. Subcontractors and suppliers must provide you with this notice in order to maintain their right to file a lien. If they don’t provide you with the notice, they lose the right to file a lien. (Note: The primary contractor is not required to send a notice since they already have a contract with you.)
Please understand that even if a Preliminary Notice is sent, once the claimant’s bill is paid the Preliminary Notice has no further legal effect. Only if the bill is NOT paid may the claimant file a Mechanic’s lien on the owner’s property.
For more information and ways to protect yourself as a property owner, we recommend you visit:
http://www.cslb.ca.gov/Consumers/Legal_Issues_For_Consumers/Mechanics_Lien
