Legal Question in Construction Law in California

Re: Mechanic's lien and Preliminary notice

The service of a Preliminary 20-Day Notice is �a necessary prerequisite to the validity� of any mechanic's lien, stop notice or payment bond claim. Civil Code � 3097(a)-(b). See also Civil Code � 3114. If you did not servic preliminary 20-Day Notice or if the homeowner nto have actual knowledge of the subcontractor, the mechanic�s lien is invalid.

The who purpose of a 20-day notice is to put the owner on notice of your potential lien rights within 20 days of starting your work. It's too late to go back and fix that error. Check with your staff to see if they had any conversation with the project owner. That might enough for the "actual knowledge" exception to the 20-day notice requirement.

I always recommend to my clients to do a 20-day notice on every project. Failure to do so can be a violation contractor's licensing laws.

Re: Mechanic's lien and Preliminary notice

As I understand Civil Code section 3097, only a contractor in direct contract with the owner, or a person performing labor for wages, is exempt from the preliminary notice requirement. I don't see anything to the effect that "actual notice" is a substitute for direct contract.

Re: Mechanic's lien and Preliminary notice

Mr. Whipple is largely correct: You must serve a preliminary notice if your contract is with the general contractor, rather than the owner. I do not, however, agree with Mr. Starrett. If the entire job isn't yet finished, you can release your present mechanics lien, serve a preliminary notice, and all labor and materials you supplied 20 days before the notice and thereafter can be covered by a new mechanics lien. Unfortunately, you won't be able to recover under a mechanics lien theory for labor and material supplied more than 20 days before the service of your preliminary notice. You can, of course, still sue the general contractor for traditional breach of contract or other theories and recover the full amount, assuming no offset for defects, etc.

The mechanics lien that you filed, even if invalid, is nearly absolutely protected under the law. If the owner is suing you for "slander of title" then they are subject to a law called "anti-SLAPP" where you can bring a motion to get rid of this lawsuit and recover your attorney's fees for having to defend against it. A surprising number of lawyers file slander of title lawsuits against mechanics liens not realizing that they are exposing their clients to dismissal of the lawsuit and attorneys fees. The proper way to get rid of an invalid lien is through a summary proceeding specific to mechanics liens. If this is the proceeding they have brought, you may want to voluntarily release the lien, because this procedure will expose you to attorneys fees of up to $2000 if they succeed. If you were required to serve a preliminary notice, but didn't, then I suspect that they will be successful if their lawsuit is, in fact, the summary proceeding that I just referred to.

I hope all the foregoing wasn't too confusing, but construction law can be pretty detailed.