A Powerful Tool to Deal with a Mechanic’s Lien Foreclosure Lawsuit in California

Author: Candice N. Hamant

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February 11, 2019 4:00pm

Contractors and material suppliers are entitled to foreclose on a mechanic’s lien if they comply with the preliminary notice (“prelien”) requirements. California Civil Code sections 8200 and 8204 require notice to the owner, direct contractor and construction lender, if any, not later than 20 days after the contractor or material supplier has first furnished work on the work of improvement. If the contractor or material supplier fails to do this, they are not precluded from giving preliminary notice, but their claim is limited to the value of work and materials provided within 20 days prior to the service of the preliminary notice and any time thereafter.

Grounds to Invalidate a Lien

When a prelien is served a significant period of time after the completion of the work or supply of material, there is no basis for recording a mechanic’s lien on the property. This, and other defects in the mechanic’s lien process or fraudulent claims are grounds to invalidate the lien. Civil Code section 8480 allows an owner of the property subject to the claim of lien to ask for an order to release the property from the claim of lien. While the mechanic’s lien foreclosure statute affords only costs to the prevailing party, attorney fees and costs are awarded to the prevailing party on the petition for a release order under Civil Code section 8488. This is a powerful tool to deal with a mechanic’s lien foreclosure lawsuit.

Application in Practice

While it might not dispose of a claim based on a breach of contract or quantum meruit, it remains an effective bargaining chip and pressure point. We have had success obtaining a release order and expunging a lis pendens and getting an award of attorney fees and costs. In one instance, we were able to convince the judge the lien claimant willfully included in a claim of lien labor and materials it did not provide for the property with intent to defraud, thus invalidating the lien under Civil Code section 8422, subsections (b)(1) and (c). Not only were we able to invalidate the lien and lis pendens, we were able to recoup over $10,000 in attorney fees and costs for our client.

Takeaway

When faced with a mechanic’s lien foreclosure lawsuit, examine whether the prelien requirements have been met and whether there are grounds to invalidate the lien. An attorney well-versed in mechanic’s lien law can help explore cost-effective ways to resolve the foreclosure lawsuit, including a motion under Civil Code section 8480 .

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