What is the procedure for you to do this? What costs do you incur? What documents must you produce? Respondees, please state your location.
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California:
File and Serve Preliminary Notice to Owner before starting project.
Within 90 days of "substantial completion" of project file and serve Notice of Lien
No less than 10 no more than 90 days after filing Lien, file suit to foreclose the lien; record Lis Pendens; Case has priority and must be tried within 24 months.
After trial, Order is issued to Sheriff to sell property; senior liens are paid from proceeds, then contractor filing lien; then if there is enough money to other lienholders as disclosed in title report; surplus back to owner.
Boris
"Sir, I may be drunk, but you're crazy, and I'll be sober tomorrow" -- WC Fields, "Its a Gift" 1934
I've always wondered... customer already has a 1st mortgage on the place, has already taken out a 2nd to finance the work they're having you do, and then you're in third place. I'd like to hear from a small residential contractor who has actually been paid after filing and perfecting a lien. Sheesh... and you might wait 24 months? Kids would be hungry by then, and needing shoes. My asumption is that when filed a lien usually prompts the owner to offer to settle, and the contractor to take pennies on the dollar just to get it over with.
In California, your lien is junior behind any deed of trust previously recorded. It is senior to a construction loan where the mortgage is recorded after work was done, regardless when preliminary notice is done. Common example is vacant lot is staked out for excavation and bank files mortgage after staking occurs, but before work commences, and before preliminary notice is filed--mechanics lien is senior.
On small residential jobs the mechanics lien is worthless except where there is equity that owner wants to protect. In today's market, that lien is worth gold. In the late 80's, well it was worth nothing.
I have been through the whole process a couple of times. The standard AIA contract has no attorney fees, so if you file, it is on your nickle. Try to get an addendum to the AIA contract? Good luck. Most GC's will sign only theirs. If you balk, they'll find another sub.
Private bonded or public works jobs different because there you have a bond, at least here there is an attorney fee clause in the bond. So if you sue, it is on their nickle.
Regards,
Boris
"Sir, I may be drunk, but you're crazy, and I'll be sober tomorrow" -- WC Fields, "Its a Gift" 1934
OK, here's another one.... house is in escrow, needs work done before lender will close, current owner/seller agrees to proposal and contractor does the work. Once complete the lender closes and a new deed of trust is recorded. Former owner/seller does not pay. Any recourse in a situation like that? If all you've filed is a preliminary notice, does that transfer with the deed of trust?
Let's say my deal was a $6500 roofing job, for which I was paid $7200, because there were some extras. What is to stop me from putting a lien on the job for another $1500 because I think I am due more?
Fraud!
David,
I'm in MI and to try and prevent something like that occuring here, part of the closing costs include deed insurance. Also for the title company to legally sign-off on the deal, part of their fee goes to investigate the deed for any type of outstanding liens.
I'm not an authority, this is just my understanding of it. Your mileage my vary:)We can easily forgive a child who is afraid of the dark.The real tragedy of life is when adults are afraid of the light.-Plato
You should have had you hand out at the closing.
Depending on the EXACT wording of the state laws, the wording of the title insurance, and if you if you time was exactly right the title insurance MIGHT be on the hook.
I'm talking about a hypothetical situation where the owner you contracted with sells the property before not paying you. Does the lien right 'travel' with the property itself or does it apply only to the owner you gave notice to? This would not be a situation where a lien is already filed--in that case it's obvious that your lien has to be satisfied before the title can move.
Well hypothetically I would have my hand out at the closing table.
Should not be to hard to do. It sounds like this is something that would be written into the sales contract. The real estate agents don't go knocking on the sellers door asking for their comission after the sale nor does the title company, etc.
If this work is done as part of the sale then it should be paid at closing.
As far as your question it sounds like a good research project for contract law students.
If you have recorded a Preliminary Notice, your lien rights go with the property.Regards,
Boris
"Sir, I may be drunk, but you're crazy, and I'll be sober tomorrow" -- WC Fields, "Its a Gift" 1934
California law says that in order for a mechanic's lien to be valid, it must be both verified and recorded. So who does the verification? Can any schmo just walk in to the recorder's office, fill out a form and encumber title to someone's property?
Yes. Any schmo can record a mechanics lien. They are verified which means you have to sign under penalty of perjury.
The homwowner or building owner has rights to remove the lien, called expunging the lien.Regards,
Boris
"Sir, I may be drunk, but you're crazy, and I'll be sober tomorrow" -- WC Fields, "Its a Gift" 1934
Bob-
The procedure is different in each state. In some states, you need to file an "intent to lien" prior to starting work, which allows you to file a lien later if you aren't paid. Without the pre-filed paperwork, you can't lien later. It's best to check with your local governing bodies (or your attorney) rather than rely on information from here.
Bob