July 2012 Changes to Mechanics' Liens

New Mechanics’ Lien Laws have changed starting July 1 2012.

Revisions were made to the state’s mechanics lien laws and became active on July 1, 2012. Many of the revisions have changed the wording, the numbering of the statutes and the format of the mechanics lien notice.

Thanks to the CSLB, they have provided updated release forms to reflect the new language. The forms are available on the CSLB website (www.cslb.ca.gov), or can be accessed right here.

From the CSLB: The 20-Day Preliminary Notice is now simply called Preliminary Notice. In addition, the wording of the Notice to Property Owner statement, required as part of the Preliminary Notice, has changed. Subcontractors and suppliers should use the newly worded Notice for private home improvement projects. The Preliminary Notice should be delivered to the homeowner in person or by certified, registered, or express mail, or overnight delivery, with a receipt of the mailing as proof. You may give notice any time before work starts or products are delivered, and up to 20 days after. If you give notice more than 20 days after work or delivery, your lien rights only apply to the work or products provided 20 days before the notice was given, and anytime thereafter.

The Notice of Mechanics Lien wording also changed in the new law. This notice must accompany the lien claim and be sent via certified, registered, or first class mail, with a certificate of mailing as proof. Failure to send the properly worded Notice with the lien claim could result in the lien being unenforceable.

The conditional and unconditional lien release forms also have changed. Make sure subcontractors and suppliers sign the new conditional forms as progress payments are owed, and when the project is finished before they are given final payment. Have them sign the new unconditional release forms after they receive progress payments and their final payment. The new law gives homeowners 15 days instead of 10 to file a Notice of Completion with the County Recorder. If a notice is filed, the contractor has 60 days and subcontractors have 30 days to record a lien. If no notice is filed, all parties have 90 days to record a lien.

The forms listed below are provided as a courtesy only and are yours to copy. We take no responsibility for any errors in these forms, nor do we provide any assistance or legal advice to you when you copy these forms.

California Mechanics' Lien laws as of July 1, 2012 - From the State of California

or (same information), but on this website California Mechanics Lien Laws as of July 1, 2012

Preliminary Notice 2012

Conditional Waiver and Release on Progress Payment 2012

Unconditional Waiver and Release on Progress Payment 2012

Conditional Waiver and Release on Final Payment 2012

Unconditional Waiver and Release on Final Payment 2012

Notice of Mechanics Lien 2012

As any well informed contractor or supplier already knows, the California Constitution gives you the right to a mechanic’s lien for the value of labor and materials provided for the improvement of real property. Legislature is authorized to provide for the speedy and efficient enforcement of these liens, which leads to the laws regulating notices (such as the requirement for a preliminary notice) and timing to enforce your rights.

Let’s quickly look at the mechanics’ lien process. In a nutshell, this is how it works:

1. You are hired to provide work or services on a project;
2. You didn’t get paid for that work;
3. You record a mechanic’s lien against the property to act as security for the work you provided;
4. You have to file suit to “foreclose” on the mechanic’s lien, which can ultimately lead to a forced sale of the property to obtain payment for your work.

Now for some critical procedural details:

First, what hasn’t changed in the mechanic’s lien procedures:

• You must have the right to use a mechanic’s lien. If the work you did was not consumed in the improvement, or used to improve the property you won’t have a right to a mechanic’s lien. If your contractor’s license is not in strict compliance with the Contractors State License Law, your rights to a mechanic’s lien may be impacted.

• You still need to provide a preliminary notice to the owner, the lender and the general contractor within 20 days of first providing labor, services or materials to the site.

• Once you have completed your work on the project and you are owed payment, you still have to record the mechanic’s lien at the county recorder’s office in the county in which the work was performed within the strict time frames required. There are specific procedures and documents required to be submitted. If you don't understand what is needed, you may impact your rights.

• The necessary information required on the recorded lien has not changed, and is as follows:

1. A statement of the claimant's demand after deducting all just credits and offsets.
2. The name of the owner or reputed owner, if known.
3. A general statement of the kind of labor, services, equipment, or materials furnished by the claimant.
4. The name of the person by whom the claimant was employed or to whom the claimant furnished the labor, services, equipment, or materials.
5. A description of the site sufficient for identification.

We cannot emphasize enough that the procedure has become more complicated, and there are more ways to run the risk of losing your mechanics' lien rights if not done correctly. Your best advice is to use one of the companies that provide these services to contractors rather than attempting to do it yourself.

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