“Mechanics Lien” the Right Option for Your Contracting Business?
In a recent short video, a building contractor was recorded damaging his work when the business owner refused to pay him. Many contractors and construction workers find themselves in a similar situation. After purchasing material, they install it into the business owner’s building but do not receive payment. This happens particularly when there is a disagreement over the quality of the work done and the quality that was expected. Let’s explore the legal aspects of mechanics liens.
Can the Contractor Take Back His Material?
Only when the material can be removed from the property without altering it can the contractor repossess it. The chances of this are near zero because the material is now considered a fixture. A fixture can be any personal or real property or previously movable chattel passed on from one owner to another along with the real property. A fixture is considered a part of the real property and belongs to the current owner.
If you want to know about new California laws regarding minimum wages, click here.
Vandalism as Defined By Law
Vandalism doesn’t only define the rebellious and mischievous acts made by neighborhood kids. If a contractor violates the property he worked on, his act could be considered illegal vandalism. To be precise, vandalism is defined under California Penal Code 594PC as a crime committed by a person violating property that is not his own by damaging, destroying, or defacing it. This is done with malicious intent.
Penalty for Vandalism
Anytime someone damages real estate, motor vehicles, signs, fittings, furniture, or other public property under Section 811.2 of the Code, they could suffer hefty fines and jail time. If the damage done is worth $400 or more, the person can be charged with either a misdemeanor or a felony. The penalty for felony vandalism is a jail sentence of 1- 3 years, a fine of $10,000, or both. If the damage is worth $10,000 or more, the implemented fine would be $50,000. The penalty for misdemeanor vandalism is less severe.
Legal Support
So, the question arises: What can a contractor do if they aren’t getting paid? They can file a mechanics lien against the property. If a mechanic lien is not paid, the business could be forced to shut down, and the property could be sold. Subcontractors can also file a lien if the general contractor fails to pay the subcontractors. In that case, the homeowner or business owner will be legally obliged to pay, even if they have initially paid the prime contractor.
Who Can File a Mechanics Lien and Facts to Consider?
Anybody who supplies goods and provides services can file a mechanics lien. A contractor, subcontractor, laborer, handyperson, or material supplier can file a lien. However, the rules of filing a lien may vary with each. If you decide to give the owner more time to make your payment, or for any other reason you do not wish to foreclose on the lien, it is still advisable to follow the complete process. This will keep you in a solid position to face your adversaries even if the circumstances change.
How to File a Mechanics Lien?
The steps of filing a lien are as follows:
- Sending a Preliminary 20-Day Notice of Rights to liens
- Preparing the lien
- Filing and serving the mechanics lien
Preliminary 20-Day Notice
Safeguarding your lien rights should be your first step. For this purpose, a preliminary 20-day notice must be served on the owner no later than 20 days after the work begins. You must also serve the construction lender if the owner used a loan to finance the project. You must mention a breakdown of the services or materials you will supply in the Notice and an estimated total cost.
Preparing the Lien
To prepare a lien, you should provide basic details such as the owner’s name, the hiring party’s name, and the property’s location. We should also add:
- An overall property description,
- A description of the work or service provided
- And the total sum of money that we must receive
The lien must also include the statutorily required statement of California Civil Code Section 8416 Chapter 4.
Filing and Serving the Lien
The lien must be filed at the county record office in the same area where the property is located. The lien must be individually served to each party. It can also be mailed with a request for a return slip. California’s mechanics’ lien statute states that you have 90 days from the final day you completed work or delivered supplies for the project to file a mechanics lien. Furthermore, you only have 60 days from the date the owner files a notice of completion or cessation to show that the project has ended.
Final Thoughts
Receiving your own hard-earned money can be a battle at times. To protect your rights, most states have laws related to mechanics lien. These laws aid in paying suppliers and construction workers. Therefore, to successfully file a mechanics lien and safeguard your right to payment, you must be fully aware of how the law operates. Don’t forget to document everything. Thorough documentation is crucial to substantiate your claim in a dispute. Keep detailed records of all communications, contracts, invoices, receipts, and other relevant project documents. This awareness will protect you and discourage those around you from withholding payments unfairly.