Monday, November 8, 2010

Important Changes to California's Mechanic's Lien Laws


I recently had lunch with Dave McPherson and Mike Germain of Watt, Tieder, Hoffar & Fitzgerald LLP.  In addition to the fine company, they provided me with the letter you see below outlining some of the significant changes in the process of filing Mechanic's Liens taking effect January 1, 2011.  The changes are outlined in the letter below along with their recommendations.  They also included a sample copy of a lien which I included below their letter.  As always, please consult with legal counsel before using any of the information provided below, in part or in whole, to ensure you are in full and proper compliance with the law.  Additionally, Dave or Mike would be willing to provide legal counsel if need be.

It's always important to perfect one's lien rights and it's never been more true than in these challenging times.  It would be quite a shame if one was unaware of these changes which are right around the corner.  Please take the time to read all of this information and feel free contact Dave at dmcphers@wthf.com or Mike at mgermain@wthf.com with any questions or comments.



            IMPORTANT CHANGES TO CALIFORNIA’S MECHANIC’S LIEN LAWS

            The purpose of this communication is to inform you of important changes to the California Mechanic’s Lien laws that will take effect on January 1, 2011.  Under the old law, a mechanic’s lien claimant could record a mechanic’s lien without informing the property owner that a lien had been recorded.  Beginning on January 1, 2011, this is no longer the case, and a lien claimant must take a number of additional steps in order to properly perfect its right to pursue its lien claim.  Importantly, if these steps are not taken, the claimant’s lien will be invalid.  The steps are:

1.         The claimant must serve (by registered mail, certified mail, or first class mail) a “Notice of Mechanic’s Lien.”  This Notice must include specific wording, which is shown on the attached “Notice of Mechanic’s Lien” form.  The Notice must utilize at least 10-pt. bold faced type and the last sentence must be in upper case type, except for the website address of the Contractors’ State License Board.

2.         The claimant must serve (by the same means as the Notice of Mechanic’s Lien) the actual Mechanic’s Lien that it records in the County Recorders Office.

3.         The claimant must prepare and mail a “Proof of Service Affidavit,” which states the manner by which the Notice of Mechanic’s Lien and the Lien have been mailed.  This affidavit must be sent, along with the Notice of Mechanic’s Lien and the Lien, to the owner or reputed owner of the property on which the work was performed at the owner or reputed owner’s residence or place of business, or at the address shown on the building permit on file with the authority issuing a building permit for the work.  If the owner or reputed owner cannot be served, the notice may be sent to the general contractor or construction lender.
 
            Although the statute permits the mailing of the documents by first class mail, we strongly recommend that they be sent via registered or certified mail, so that it is easier to prove that the documents were properly mailed if there is a dispute as to whether they were received.

            After mailing, all three of the documents described above must be timely recorded in the County Recorders Office of the county where the work was performed.  Because the documents must be mailed prior to recordation, we strongly recommend that you mail the mechanic’s lien, notice of mechanic’s lien and the affidavit of proof of service 5-7 days prior to the last date in which to record your lien.  Attached hereto is a sample of the three documents.  

            If you have any questions concerning compliance with this new law, please do not hesitate to contact me.

                                    Very truly yours,

                                    Watt, Tieder, Hoffar & Fitzgerald, LLP



                                    David F. McPherson  and  Michael D. Germain

___________________________________________________________________________________
Recording Requested By                                                       
and
When Recorded Mail To:







                                                                                                                 (SPACE ABOVE THIS LINE RESERVED FOR RECORDER’S USE)
MECHANIC’S LIEN
(Claim of Lien)

The undersigned, _________________, referred to in this Claim of Lien as the Claimant, claims a mechanic’s lien for the labor, services, equipment and/or materials described below, furnished for a work of improvement upon that certain real property located in the County of ________________, State of California, and described as follows:
           

After deducting all just credits and offsets, the sum of $___________, together with interest thereon at the rate of ten percent (10%) per annum from _________________, is due Claimant for the following labor, services, equipment and/or materials furnished by Claimant: 

The name of the person or company by whom Claimant was employed, or to whom Claimant furnished the labor, services, equipment and/or materials is:

 


The name and address of the owner or reputed owner of the real property is:
 

Name of Claimant: 

By:__________________________________________________

VERIFICATION


I, the undersigned, declare: I am _____________ of __________________________, the Claimant named in the foregoing claim of mechanic’s lien; I am authorized to make this verification for the claimant; I have read the foregoing claim of mechanic’s lien and know the contents thereof, and the same is true to my own knowledge.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

Executed on _________, 2011, at ___________, California.          

                                                                              __________________________________









NOTICE OF MECHANIC'S LIEN
ATTENTION!

Upon the recording of the enclosed MECHANIC'S LIEN with the county recorder's office of the county where the property is located, your property is subject to the filing of a legal action seeking a court-ordered foreclosure sale of the real property on which the lien has been recorded. That legal action must be filed with the court no later than 90 days after the date the mechanic's lien is recorded.

The party identified in the mechanic's lien may have provided labor or materials for improvements to your property and may not have been paid for these items. You are receiving this notice because it is a required step in filing a mechanic's lien foreclosure action against your property. The foreclosure action will seek a sale of your property in order to pay for unpaid labor, materials, or improvements provided to your property. This may affect your ability to borrow against, refinance, or sell the property until the mechanic's lien is  released.

BECAUSE THE LIEN AFFECTS YOUR PROPERTY, YOU MAY WISH TO SPEAK WITH YOUR CONTRACTOR IMMEDIATELY, OR CONTACT AN ATTORNEY, OR FOR MORE INFORMATION ON MECHANIC'S LIENS GO TO THE CONTRACTORS' STATE  LICENSE BOARD WEB SITE AT www.cslb.ca.gov.



Please complete and sign at least one (1) of the following proofs of service and record it along with your Mechanic’s Lien:

PROOF OF SERVICE AFFIDAVIT
California Civil Code Section 3084 (a)(6), (c)(1)(A)

I, _____________________, declare that I served a copy of the enclosed Mechanic’s Lien and Notice of Mechanic’s Lien by:

[  ]            (BY FIRST CLASS MAIL)  I caused such envelope(s) with postage thereon fully prepaid to be placed in the United States mail at _______________, California.

[  ]            (BY CERTIFIED MAIL, Return Receipt Requested)  I caused such envelope(s) with postage thereon fully prepaid to be placed in the United States mail at __________________, California.

[  ]            (BY REGISTERED MAIL, Return Receipt Requested)  I caused such envelope(s) with postage thereon fully prepaid to be placed in the United States mail at __________________, California.

evidenced by a certificate of mailing, postage prepaid, addressed to the following owner or reputed owner of the property ______________________________________________ at the following address:
                (Name and title of person served)
                                                        ________________________________________________________________________________________________________.
       (Owner’s residence or place of business or owner’s address on building permit or otherwise as per California Civil Code Section 3097(j))
On this date:  ____________________________.  Signed at _______________________________________________________.
                                         (Month/Day/Year)                                                                (City, County of person making service)

On this date:  ____________________________.                  _______________________________________________________.
                                 (Month/Day/Year)                                                                    (Signature of person making service)
           

ALTERNATE PROOF OF SERVICE AFFIDAVIT
California Civil Code Section 3084 (a)(6), (c)(1)(B)

Use this alternative Proof of Service affidavit only if the owner or reputed owner cannot be served as specified above.

I, _________________________, declare that the owner or reputed owner of the property specified in the enclosed Mechanic’s Lien and Notice of Mechanic’s Lien could not be served by Registered Mail, Certified Mail, or First Class Mail, evidenced by a certificate of mailing, postage prepaid.  Therefore, I served a copy of the enclosed Mechanic’s Lien and Notice of Mechanic’s Lien by:

[  ]            (BY FIRST CLASS MAIL)  I caused such envelope(s) with postage thereon fully prepaid to be placed in the United States mail at _______________, California.

[  ]            (BY CERTIFIED MAIL, Return Receipt Requested)  I caused such envelope(s) with postage thereon fully prepaid to be placed in the United States mail at __________________, California.

[  ]            (BY REGISTERED MAIL, Return Receipt Requested)  I caused such envelope(s) with postage thereon fully prepaid to be placed in the United States mail at __________________, California.

evidenced by a certificate of mailing, postage prepaid, addressed to the construction lender ________________________________
                                                                                                                                                           (Name of  Construction Lender)
at the following address:  ____________________________________________________________________________________
                                                                                                    (Construction Lender Address)
or to the original contractor ___________________________________________________________________________________
                                                                                                     (Name of Original Contractor)
at the following address:  ____________________________________________________________________________________
                                                                                                    (Original Contractor Address)

On this date:  ____________________________.  Signed at _______________________________________________________.
                                         (Month/Day/Year)                                                                (City, County of person making service)
On this date:  ____________________________.                  _______________________________________________________.
                                 (Month/Day/Year)                                                                    (Signature of person making service)