An Introduction To Mechanic's Liens

Mechanic's Liens are intended to give people who contribute to a work of improvement on real property a security interest in that real property for the value of their improvement. That means that if you contribute to a work of improvement and are not paid, you can record a Mechanic's Lien and file suit. If you are successful in that suit, you can have the property sold to recover your damages from the proceeds of the sale. That recovery is from the proceeds obtained from the sale of the real property.

 In addition, Mechanic's Liens give people who do not have a direct contract with the owner an additional person to sue. Remember you can always sue your customer if you are not paid, but if your customer is not the owner, you cannot sue the owner if you are not paid by your customer. This is because you do not have a contract with the owner. In theory, when you sue the owner based on a Mechanic's Lien complaint, you are in actuality suing the owner's property. Mechanic's Liens are not intended to be blackmail in order to force someone to pay you, but the effect of the lien gives you something that is not available to others.

 The right to a Mechanic's Lien has its roots in the California Constitution, which states,

 "Mechanics, persons furnishing materials, artisans, and laborers of every class, shall have a lien upon the property upon which they have bestowed labor or furnished material for the value of such labor done and material furnished..." California Constitution, Article XIV, Section 3 

When our state Constitution was drawn up in 1879, it was decided that special provisions should be made to protect the interests of workers or suppliers who help improve real property and await payment. Therefore, a section was included which provided for a Mechanic's Lien -- a claim against the real property on which the claimant has bestowed labor or furnished material for the value of the labor done or material furnished. Subsequently, statutes were written to refine the notion, create a lien process, and specify the exact categories of persons entitled to the lien remedy. And, of course, the Legislature has enacted procedures to provide protection to owners.

There was a great deal of discussion about legislation and the court decisions, indicating how the law is intended to protect those who improve real property. While this is true, many times in a Mechanic's Lien lawsuit you have two innocent parties competing against each other. In order for you to be successful in collecting your money from the owner, you must make sure that you have done everything necessary for you to recover.

Because of the need to protect parties better, the Legislature assigned the Law Revision Commission the task of reviewing the entire Mechanic's Lien process, including the Constitutional right to a lien.

The Law Revision Commission's task ended up making the law easier to understand and more consistent without any substantive changes in law.

While the California Law Revision Commission was working on the global change to all of the Mechanic's Lien, Stop Notice, and payment bond statutes, there were some interim changes that were enacted into law, which became effective sooner than the global changes.

AB 457, which became effective January 1, 2011, made some changes to the Mechanic's Lien form itself, including the requirements on the lien. SB 189 was also passed in 2010, but does not go into effect until July 1, 2012. This gave the powers that be the time to review SB 189 and make slight changes with SB 190 in the 2011 Legislative session. SB 190 will also become effective July 1, 2012. Lastly, AB 456 of the 2011 Legislative session also made some minor changes that are effective January 1, 2012.

To find out more about the changes brought on by the California Law Revisions Commissions study, please visit our "New Mechanic's Lien Law" page.

If you are interested in what other legislation has passed that affects the construction industry, view the excerpt from our California Construction Law book.