Business Collections: The Power of the Mechanic's Lien

All businesses have the right to "their day in court" to enforce a contract, demand payment of delinquent accounts and hopefully collect on a money judgment.  However, some business industries and service providers have additional remedies available to them.  This article discusses the power of the mechanic's lien in California.

When someone furnishes labor, services, equipment or materials to a work of improvement of construction project and is not fully paid, he or she can of course file suit against the person or entity who failed to pay based on breach of contract or other similar claim.  However, the concern always exists that the claim is successful but the claimant is unable to collect on the money judgment.  This is the all-too-common difficulty in our civil court system (see Griswold Law's recent article on enforcement and collection of California money judgments).  In an effort to bypass and/or lessen these hurdles for the construction industry, California implemented the mechanic's lien remedy.

A mechanic's lien in California can have the effect of granting the claimant a security interest in the property that benefited from the claimant's furnishing of labor, services, materials or equipment.  If the claimant prevails in court, a sale of the property will be ordered and the proceeds will be used to pay off the claimant in the amount of the recorded lien.

There are crucial, time-sensitive steps that must be followed in order for the claimant to successfully foreclose on its mechanic's lien.  These steps will likely involve the serving and recording of a Preliminary 20-Day Notice within a certain time period, the serving and recording of the Mechanic's Lien within a certain time period, among other strict requirements.  Griswold Law has purposely not stated the specific requirements because each claimant's factual circumstances may differ and in turn the requirements differ as well.  In light of that, it is best that you consult an attorney to discuss your particular situation.

For assistance and consultation regarding mechanic's liens in California, please contact Richardson "Red" Griswold at Griswold Law.

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