How to Prevent a Mechanics Lien
Carefully Choose Your Contractor
- Hire only licensed contractors and check the contractor's license status on CSLB's website.
- Make sure your contractor hires only licensed subcontractors, and check their licenses.
- Check your direct (prime) contractor's reputation for paying subcontractors and materials suppliers, and check for lawsuits at the local courthouse.
- Get a list of all subcontractors, laborers, and material suppliers to be used by your direct contractor.
Make Sure Your Written Contract Includes:
- A payment schedule that states when specific phases of the work start and end, and the price for each segment;
- Identification of subcontractors or laborers for each segment; and
- Identification of material suppliers.
Keep Track of Paperwork
A Preliminary Notice is required from subcontractors and suppliers if there is a chance they may need to file a lien. The notice states that the subcontractor or supplier has provided, or will provide, goods and services to improve your property and could file a lien claim if they are not paid. If subcontractors and suppliers don't provide you with the notice, they lose the right to file a lien.
NOTE: This notice is not required from laborers or the direct contractor.
TIP: Save Preliminary Notices and note the date received so you can keep track of who is owed money and when they are paid. The Preliminary Notice may be delivered in person or by certified, registered, or first class mail before work begins or supplies are delivered and up to 20 days thereafter. Notice may be given after those 20 days, but payment only is required for work done 20 days before the notice is delivered and anytime thereafter.
The simplest way to prevent liens and ensure that subcontractors and suppliers are paid is to pay with joint checks. This is when both parties endorse the check.
- Compare the contractor's materials or labor bill to the schedule of payments in your contract and the Preliminary Notices.
- Make sure that work was done as described.
- Make the check payable to both the contractor and the supplier or subcontractor.
Lien releases allow property owners to track when potential lien claimants have been paid.
Before making a payment, get a signed conditional release from the possible lien claimants.
Lien release forms are available from the Conditional and Unconditional Waiver and Release Forms section. You or your contractor can download a copy of the release. The direct contractor is required to get release signatures for you from the potential lien claimants.
After you pay, the contractor should provide you with an unconditional release signed by each of the claimants paid for the portion of the work being released. Make sure that the actual claimant signs the unconditional release.
By law, you may withhold the next payment until you get the unconditional releases for the previous payment.
Notice of Completion
Filing a Notice of Completion with the county recorder's office after work is completed reduces the amount of time a contractor, subcontractor, laborer, or materials supplier has to record a claim. Homeowners have 15 days from the date of completion to do so.
This notice reduces the amount of time a contractor has to record a mechanics lien from 90 to 60 days, and reduces the time a subcontractor or materials supplier has to record a mechanics lien from 90 days to 30 days.
The Notice of Completion form may be obtained through your county recorder's office, or a stationary or office supply store that stocks legal forms. Some of these forms are available online.