Legal Question in Business Law in California

No. The concept of "filing a lien" is much misunderstood. Ordinary citizens cannot "file" liens any more than they can write judgments. Liens originate in several ways (see a few below), but not from breach of a contract. If, however, your written contract includes a "security agreement" of some kind, pledging something as collateral, you may have had the right (and may still have) to file a UCC-1 perfecting your security interest (which is a kind of lien).

1. A "mechanic" (person providing labor, materials or equipment to a work of improvement on real property) can record a short-lived lien for payment against the real property;

2. A repairman has a possessory lien for payment on the thing being repaired. This is a fairly broad category and includes laundries, etc. Essentially, this kind of lien allows the repairer to insist upon being paid before relinquishing possession of the repaired article.

3. A seller of real property has a vendor's lien for any part of the purchase price not paid by the buyer as down-payment or supplied through mortgage financing.

4. The tax collector (or other governmental agencies) can place a lien on your property for unpaid taxes and assessments.

5. A person can consent to a lien on his, her or its property........the most common kinds of consensual liens are mortgages and deeds of trust. Liens by consent can also be given (or obtained, depending upon your point of view as debtor or creditor) on personal property by means of a security agreement. Consensual liens on real property are "perfected" by recording with the county recorder, and those on personal property are perfected by filling out and filing a Form UCC-1 with the Secretary of State.

6. An abstract of a money judgment obtained after a court proceeding can also be recorded and when so done, becomes a lien on the real property of the debtor in that county.

These are the main ways by which liens arise.......some voluntary, some involuntary, but none that fits the situation you're in. You have, however, at least two possible ways to tie up the assets of the debtor here - but both require filing a lawsuit. The first way is to sue, win, and record an abstract of judgment. The other way is to sue, and then before trial - in fact, soon after you file and serve the suit - apply to the court of a prejudgment writ of attachment. If the judge is persuaded that you are likely to prevail at trial, and that the defendants are untrustworthy and may fritter away or hide the money or property needed to pay you, the judge MIGHT grant you the writ and thus order the defendants not to touch those assets until judgment. You'll have to post a bond to protect the defendants from losses if you ultimately lose the case.

As Mr. Whipple explained, a lien is not applicable in your case. However, do you actually have a written contract with his signature? If so, you should consider filing a breach of contract action,asap. In addition to the aforementioned prejudgment attachment, you can also ask the Court for an injunction to prevent the defendant from attempting to liquidate any remaining assets of the business. Because of the economy, I have encouraged our clients to be very vigilant in situations like these. The longer you wait to take legal action the less chance any money will be left to recover. If you would to discuss this further, please do not hesitate to cotnact me.

Regards,

Bryan

Bryan Becker

www.bbeckerlaw.com

Becker Attorneys

Your Business. Your Family. Your Lawyer for Life.

If you can't resolve this yourself, you may be compelled to file suit. It would help if you had a detailed written agreement and contract, but not mandatory if you have evidence of what you claim. You and your attorney may attempt to mediate it, first, to avoid the expense of litigation. If serious about getting legal help, feel free to contact me.