Legal counsel crucial if a mechanics lien clouds a California home title

Both home buyers and sellers can benefit from informed legal advice.

Particularly in California where home prices are so high, buying a house is the biggest investment most people ever make. When the decision is later made to sell a residential property, it is important that the seller recoup the equity built up in the home. To protect this investment, the title being transferred must be free and clear of mechanics liens that could potentially harm the interests of a buyer or seller.

For this reason, the seller or buyer of a California home should retain an attorney who has experience with mechanics liens and other potential clouds on residential home titles. This area of the law is extremely complicated and legal counsel can investigate the circumstances and provide guidance to resolve the matter.

A mechanics lien is a legal interest that attaches to real estate when a party such as a contractor or subcontractor adds value to real estate by providing construction services, materials, labor or similar effort, but does not get paid for its work or materials. Mechanics liens are governed by state law that every state has enacted in some form, but California’s mechanics lien laws are particularly intricate, underscoring the need to consult a lawyer when a mechanics lien shows up on a residential title search.

A valid mechanics lien on a home could give the lien holder the right to enforce the lien by forcing a sale of the home to generate proceeds from which to satisfy the lien amount, so an investment in the home would not be secure. However, securing a mechanics lien depends on careful execution of a complex combination of notice, service and filing requirements that include strict deadlines.

If a mechanics lien is clouding the title of a home, an attorney retained by the owner will carefully examine the lien and its underlying claim for money for construction services or materials to determine whether the lien is valid, including:

• Were all necessary notices, lien copies and related legal documents properly served within required deadlines?
• Were the mechanics lien and proof of service affidavit properly and timely filed in the local County Recorder’s Office?
• Were the services or materials upon which the lien is based properly provided or incorporated into the property according to the original construction contract?
• Was the entire amount due on the property improvement paid to the contractor, but the contractor did not pay the subcontractors, who then filed mechanics liens?

After the attorney has investigated the situation, he or she will seek to resolve the problem. Potential avenues to mechanics lien removal include:

• Request a lien release from the lien holder, which could include providing proof that the bill was paid, negotiating a compromise on the amount claimed or paying the lien amount if it is valid and owed.
• If the prime contractor was paid in full and did not pay its subcontractors, request that the contractor pay them, consider legal action, or weigh the pros and cons of paying the subcontractor to get the lien released even if it results in double payment.
• File a petition in state court to release the property from the mechanics lien.

If the lien holder files a lien foreclosure action to force a sale of the home, legal counsel can try to negotiate a resolution with the other party or fight the matter in court.

The lawyers of the Masatani Soroy Law serve clients facing mechanics lien issues in the sale or purchase of homes and other real estate matters throughout Los Angeles and Southern California.