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- California is a full price lien state.
- Civil Code section 3097(a) requires preliminary notice to the construction lender and failure to do so can be fatal to the mechanic's lien or stop notice. In addition, courts have found that the claimant is under a duty to investigate the existence of the lender, so lack of actual or constructive knowledge will not save the claimant.
- Unlicensed contractors who are not duly licensed under California’s Contractors’ License Law (Business and Professions Code Section 7031) are barred from enforcing mechanic’s liens to recover amounts due for their work. (An unlicensed contractor cannot use the mechanic’s lien remedy.)
- The lien filing time frames are from the completion (or noticed cessation) of the entire work and not from the completion of the claimant’s individual component of work.
- A lien will be released or “bonded off” upon the posting and recording of a bond for 1.5 times the amount of the claim.
- Mechanic’s liens relate back to when work commences on the whole project, even if the claimant’s own work is only a small and late element in the entire project. Civil Code § 3134.
- Public Bond Claim Suit Detail: If a surety has recorded the bond before the work is completed, the claimant must file suit not later than 6 months from the date of completion. If a surety has not recorded the bond before completion, the claimant must file suit not later than 4 years from the date of completion unless the period is shortened by the terms of the bond and recorded prior to the time the work of improvement is commenced; the time shall not be shortened to less than 6 months from date of completion.
- Stop Notice Considerations
- When a properly executed Stop Notice is served on the proper public official, that official must withhold construction funds in an amount sufficient to satisfy the amount claimed in the Stop Notice from the original contractor. (Civil Code §3186).
- The original contractor is not required to release the money to the claimant until the claimant has foreclosed on the Stop Notice in a court action.
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