California Mechanic’s Lien Notice Requirements to Change in 2011

The California State Legislature has amended Civil Code sections 3084 and 3146 to require two additional notices relating to mechanic’s liens: the "Notice of Mechanic's Lien" and the "Notice of Pendency of Action." The new laws become effective on January 1, 2011.

These amendments were passed in response to numerous complaints from property owners who were unaware that a mechanic's lien had been recorded against their property until after a lawsuit was filed to foreclose the lien.

Under existing law, most contractors and material suppliers on private works projects are required to serve a preliminary 20-day notice either prior to the start of work or within the first 20 days of working on the project. This preliminary notice must be served on project owners, contractors and lenders as a pre-condition to later asserting mechanic’s lien claims. Those in a direct contractual relationship with the project owner (prime contractors) are exempt from this requirement, and there are no additional requirements to notify a property owner when a mechanic's lien is recorded. The new laws will require two additional notices relating to the enforcement of mechanic's lien claims.

Notice of Mechanic's Lien

Assembly Bill 457 amended California Civil Code section 3084 to require that a “Notice of Mechanic’s Lien,” and a copy of the mechanic’s lien, be served on the property owner via registered mail, certified mail or first-class mail before a mechanic's lien is recorded. The notice and mechanic's lien must be sent to the owner’s residence or business address, the address shown on the building permit, or as provided by other statutes. The lien claimant must also prepare and sign a sworn proof of service affidavit, which must be included in the mechanic’s lien. If such service is not possible, the lien claimant may fulfill the notice requirement by serving the notice on the construction lender or the prime contractor using the same methods.

After January 1, 2011, an otherwise proper mechanic’s lien will be unenforceable as a matter of law if this "Notice of Mechanic’s Lien" was not properly served before the mechanic's lien was recorded. The purpose of this notice is to explain to the property owner the consequences of the mechanic's lien, and action the property owner must take to avoid having a lien enforced against his or her property.

The amended statute specifies the language of the notice and its type size (at least 10 point), as follows:

NOTICE OF MECHANIC’S LIEN
ATTENTION!

Upon the recording of the enclosed MECHANIC’S LIEN with the county recorder’s office of the county where the property is located, your property is subject to the filing of a legal action seeking a court-ordered foreclosure sale of the real property on which the lien has been recorded. That legal action must be filed with the court no later than 90 days after the date the mechanic’s lien is recorded.

The party identified in the mechanic’s lien may have provided labor or materials for improvements to your property and may not have been paid for these items. You are receiving this notice because it is a required step in filing a mechanic’s lien foreclosure action against your property. The foreclosure action will seek a sale of your property in order to pay for unpaid labor, materials, or improvements provided to your property. This may affect your ability to borrow against, refinance, or sell the property until the mechanic’s lien is released.

BECAUSE THE LIEN AFFECTS YOUR PROPERTY, YOU MAY WISH TO SPEAK WITH YOUR CONTRACTOR IMMEDIATELY, OR CONTACT AN ATTORNEY, OR FOR MORE INFORMATION ON MECHANIC’S LIENS GO TO THE CONTRACTORS’ STATE LICENSE BOARD WEB SITE AT http://www.cslb.ca.gov/.

Notice of Pendency of Action (Lis Pendens)

In addition, Civil Code section 3146 was amended to require the filing and recording of a Notice of Pendency of Action (also sometimes referred to as a lis pendens) within 20 days after a suit to foreclose on a mechanic’s lien is filed. Previously, a lis pendens was permitted but not required. The new section 3146 provides that subsequent purchasers and encumbrancers are deemed to have constructive notice of the mechanic’s lien foreclosure action only from the time the lis pendens is filed and recorded.