Legal Question in Construction Law in California

Re: Mechanics Lien info

I want to add a bit to the comments of Mssrs. Starret and Guerini. I agree with them both that you really must timely record your lien claim to protect your interest. But, as a negotiation tool, you might discuss giving what's called an extension of credit (Cal. Civil Code Sec 3144). Under an extension of credit, you and the owner can agree to extend the 90-day period in which you must file suit to foreclose. However, the extension can't go beyond 1 year from the date you completed your work.

Notice of the extension of credit is recorded just like your lien, but after you record your lien. It must be recorded before expiration of the 90 days in which you must file suit to foreclose. You're protected because your lien is now of record, but the owners have some breathing room to get their finances in order.

For example, if you record your lien 12/15/06, you'd have to file suit not later than 3/15/07. If the refi won't close until, e.g., 4/15/2007, you must incur the cost of filing suit. Further, your lien claim and the suit may very well kill their loan. However, under an extension of credit, you can record your lien on 12/15/2007, and then agree with the owner you'll "extend" credit until, say, 4/30/2007. You and the owner record the notice of extension of credit, and then you wait to see how their refi works out. You don't have to worry about filing your lawsuit to foreclose until 90 days after the expiration of the credit, i.e. 90 days after 4/30/07, or 7/30/07. They have time to structure their refi so that you can get paid.

If you want to try this approach, you should start discussions with the owners ASAP, and make sure they involve their refi lender. Remember, your lien will appear as a cloud on title, and the lender will be concerned about the security for its loan. However, if the lender is willing to be involved, your lien claim can be paid though escrow when the loan funds. This may be the kind of bargaining chip that keeps you secured through your lien, but helps the owners make good on their promise to pay out of the refi funds. It can actually be a win - win situation, if you'll forgive the cliche.

Although you've now got the basics, there will always be a lot more to consider before you actually extend the credit. Anything you agree to, such as payment through escrow will have to be carefully spelled out in the notice of extension of credit. You'll want to consult with an attorney in your area that understands the mechanics lien law, as well as real property loans and trust deeds.

Now my inevitable caveat: The foregoing information is provided as an accommodation only and is not intended to constitute legal advice based on a comprehensive review of documents and facts related to your matter. Provision of the foregoing information can not be construed to create an attorney-client relationship.

Best of luck, and feel free to get in touch if you have additional questions.

Re: Mechanics Lien info

If you are the original contractor, then you should record your lien withing 60 days after recording date of notice of completion or cessation or within 90 day after completion (or 60 days cessation of work) whichever period

expires first. Once the lien is filed, you only have 90 days to file a lien foreclosure lawsuit.

Re: Mechanics Lien info

I presume you are a licensed contractor.

With that assumption, then the following is true: In general, you record your mechanics lien within 60 days of completion (or last day of work - but note there are many, many exceptions to this rule, too many to go into here). In general, you must file suit to foreclose on the lien within 90 days of recording the lien (again, there are some limited exceptions).

Don't trust anyone, regardless of what they say. If you don't record your lien, then who is to say that they won't sell the house from under you? Then you will probably never get paid.

Have no mercy. Record the lien.

We regularly file suits to foreclose on mechanics liens. Call or email if you need help.

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