What is a Mechanic’s Lien? 

Under a mechanic’s lien, a homeowner is legally bound to pay for construction work that has already been carried out at his premises. It ensures that contractors and subcontractors are paid in full for their services once a project is completed. Since this lien is recorded, you may not be able to sell your property. Further, if the general contractor (GC)  does not pay its subcontractors, then these persons have a right to place a lien on your real estate to obtain their dues. 

As a homeowner, you need to be aware of the required steps in filing a mechanic’s lien: 

  • Before the construction project commences, a sub-contractor sends a preliminary notice to the GC and the property owner, communicating each one’s rights and responsibilities.
  • A notice of intent to lien or NOI  advises all persons or firms working on the project that a mechanic’s lien will be filed if payment is not made within the agreed time. This usually results in timely payments. 
  • In the recorder’s office, corresponding to the location of the property, a lien claim form is submitted. This has all the details about the property, the project completed, the amount due, etc.  
  • The lien needs to be freed once it’s completed. Then the contractor gives you an unrestricted release signed by all the concerned persons that have been paid.

As a property owner, you approach a GC who then gets workers and raw materials to complete a project. You regularly pay the general contractor as required so that he can pay subcontractors and other vendors on time. You expect that things are on track until you get a legal document that mentions: ‘Notice of Intention to Claim Mechanic’s Lien’ for an amount of money that one of the subcontractors did not receive. You are shocked to find out that the GC has not paid the subcontractors!

To avoid such pitfalls, we believe that ‘prevention is better than cure.’

  • Hire only licensed contractors and validate the contractor’s license status on the Contractors State License Board’s (CSLB) website. Check where they have worked earlier to remove any doubts about their reputation as bad pay-masters.
  • Make payments using joint checks; that is, both parties endorse the check. This ensures that subcontractors will pay suppliers and other parties. 
  • Get your GC to make sure that all those on the project sign preliminary notices before starting construction work. 
  • Protecting your rights, including the cost of legal actions are part of mechanic’s lien coverage under title insurance, so get one before commencing any repairs.

You must take legal advice from an attorney or approach a public adjuster as they are better equipped to interpret the various clauses in the contracts that contractors may ask you to sign. In the course of a  project, a GC may hire a plethora of subcontractors like mold experts, remediation contractors, roofing contractors, etc, but your contract should not make you liable for their payments, nor should they attempt to obtain the payments directly from your insurance company.

A public adjuster is not an attorney but he or she is licensed by the state Department of Insurance and is the only one who can lawfully represent you during the claims process. So if there is any move made by subcontractors to claim their payment from your insurance company, then a public adjuster would be the appropriate person to have on your side. 

For the right guidance about handling a mechanic’s lien, reach out to Experienced Public Adjuster!