Mechanics Lien Deadlines for Contractors
1. Serve the 20-day preliminary notice when starting work.
When starting work, you must serve a 20-day preliminary notice on the property owner, direct contractor, and construction lender. However, if you have a direct contract with the property owner, you only need to serve the construction lender. (Civil Code § 8200(e).) Generally, you must serve the notice within 20 days of first performing work or supplying labor, materials, or equipment. There are exceptions to this rule; see our article: “Missing the Preliminary Notice Could Cost You- Here’s Why” for more information.
2. Serve and record the mechanics lien timely.
The deadlines vary based on several factors:
· Whether you are a direct contractor or a subcontractor/vendor;
· Whether the entire project is complete or there has been a cessation of labor; and
· Whether a Notice of Completion or Notice of Cessation has been recorded.
Each of these factors affects when you must serve and record your lien, so it's important to understand your specific situation.
a. Work is complete or there has been a 60-day period of cessation (but no notice of completion or cessation has been recorded):
Direct contractors, subcontractors, and vendors have 90 days to record and serve their mechanics liens. (Civil Code § 8412 and § 8414 (b)(1).) This 90-day period begins either:
· From the date the entire project (the work of improvement) is complete, or
· From the end of a 60-day period in which no labor has been performed on the project (a cessation of labor).
b. Work is complete or there has been a 30-day period of cessation and a notice of completion or cessation has been recorded:
· Subcontractors and Vendors: 30 days from the recordation unless the recordation is defective or not served.
· Direct contractors: 60 days from the recordation unless the recordation is defective or not served.
Understanding what “completion” means, and what qualifies as a legal completion, is essential when dealing with California mechanics liens.
Civil Code section 8180 defines “completion” for purposes of mechanics liens:
(a) For the purpose of this title, completion of a work of improvement occurs upon the occurrence of any of the following events:
(1) Actual completion of the work of improvement.
(2) Occupation or use by the owner accompanied by cessation of labor.
(3) Cessation of labor for a continuous period of 60 days.
(4) Recordation of a notice of cessation after cessation of labor for a continuous period of 30 days.
(b) Notwithstanding subdivision (a), if a work of improvement is subject to acceptance by a public entity, completion occurs on acceptance. (Civil Code section 8180.)
Also, if an owner breaches a contract in a way that excuses the direct contractor from continuing work, that breach might qualify as “completion” for recording a mechanic's lien. (See Howard S. Wright Construction Co. v. BBIC Investors, LLC (2006) 136 Cal.App.4th 228.)
3. Avoid recording a mechanics lien while still working on the project.
Be cautious about filing a mechanics lien if you're still working on the job. Continuing to perform work after recording a lien can make the lien premature and unenforceable.
- If you're a direct contractor, you cannot record a lien until the entire project is actually or legally complete. (Civil Code §8412.)
- If you're a subcontractor or supplier, you must stop providing work or materials before recording a lien. (Civil Code §8414.)
4. File a mechanics lien foreclosure action.
After recording a mechanics lien, you must promptly file a foreclosure lawsuit to enforce it.
This lawsuit, known as a mechanics lien foreclosure action, is the legal process used to enforce your lien rights. Under California Civil Code §8460(a), it must be filed within 90 days of recording your lien claim.
This deadline applies to both direct contractors and subcontractors.
Mechanics lien timing is a complex and technical area of law. To protect your rights and avoid filing an invalid lien, consult a qualified construction law attorney.
