What is a Mechanic’s Lien?

A Mechanics’ Lien is a statutory remedy most often used by contractors and subcontractors.  Nearly anyone who contributes labor or materials to a real estate improvement project can use a mechanics lien as a mechanism to resolve issues with receiving payment.

 

What is a Mechanic’s Lien?

Specifically, California law allows the use of a Mechanics’ Lien to exact payment by placing a lien on the property.  The existence of the lien on the property inhibits the property owner’s ability to sell or refinance his or her property, at least while any debts secured by a lien are unpaid.  If debt payments continue to go unpaid, the lienholder could potentially go to court to have the property sold at auction to pay the debt and/or lien.

 

Removing a Mechanics Lien

Once a Mechanics’ Lien has been recorded, a claimant has 90 days to file a court action to enforce it. If this step is not taken in a timely fashion, the lien will not be valid for most purposes. That said, even if the lien is not timely enforced in court, a title company will likely still require that the lien be removed before passing clear title.

 

A lien can be removed if the lienholder files a Release of Lien. The property owner usually pays the lienholder what is owed and makes this request. If the Release of Lien is not filed, a property owner can petition the court to release the property from the Mechanics’ Lien.

 

Whenever there is a Mechanics’ Lien on property, there is a risk that the property could be sold to pay the lien. This is a motivating factor for property owners to pay off debts, or at least fight the lien. If a property owner chooses to fight a lien, both sides should be prepared for a technical and potentially lengthy legal battle.

Residential vs. Commercial Leases

California law treats residential and commercial leases very differently. Generally, commercial tenants receive less legal protections than residential tenants. It is therefore critical for both landlords and tenants to be very familiar with the terms of a commercial lease, and not just assume that the same standard provisions are provided in each agreement.

Residential Lease Agreement

For starters, a residential lease agreement is a contract between a tenant and a landlord to use property for living. The agreement is usually a standard form, and the rental property is generally a house, townhouse, apartment, or condominium. Residential leases generally contain a provision that the tenant may not use the property for commercial purposes, or for the purpose of earning a profit. The rent is usually a set amount every month, and the term of the lease is generally a year.

Since a residential lease involves somebody’s future home, federal, state, and local laws provide specific tenant protections to ensure safe and secure housing. Most importantly, a landlord is required to provide safe and habitable housing. To further ensure that tenants are protected, California law allows a tenant’s attorney to collect fees for habitability violations of a residential unit.

Commercial Lease Agreement

A commercial lease, on the other hand, is a contract between a business tenant and a landlord for use of commercial property. Commercial leases are usually uniquely designed for the particular commercial tenant, unlike standard residential lease agreements. The property is intended to be used in a way that will generate a profit, and there is no right of habitability. The property is generally a business space such as a warehouse or office space. The rent is usually based on the amount of square footage occupied by the tenant, and may require the tenant to pay a percentage of their profit earned on the property. Commercial lease agreement terms are usually a set number of years, which sometimes include option rights that must be exercised within a certain period of time before the expiration of the lease.

A commercial tenant, usually a business entity, is presumed to be on equal footing with his or her or its landlord in negotiating a commercial contract, which means that there are fewer laws that specifically protect commercial tenants.

Landlord and Tenant Issues: Mandatory Disclosures

California law requires landlords to make certain mandatory disclosures to tenants, most of which are usually found in the lease or an addendum to the lease, and generally concern the health and safety of potential building inhabitants. It is important for both landlords and tenants to be aware of the mandatory disclosures. If a landlord does not make a required disclosure, or fails to disclose dangerous conditions on the property, the landlord can later be found liable for damages the tenant suffers.

MANDATORY LANDLORD DISCLOSURES IN CALIFORNIA

  1. Registered Sexual Offender Database

    The California Civil Code provides the exact language landlords must put in a lease about the online registered sexual offender database. (Cal. Civ. Code § 2079.10a)

  2. Paying for Utilities of Others

    Before a tenant signs a rental agreement, the landlord needs to let the tenant know if gas or electric service to the tenant’s unit also serves other areas that are not used by the tenant. If it does, the landlord must disclose how costs will be allocated. (Cal. Civ. Code § 1940.9)

  3. Toxic Mold

    The landlord needs to let the tenant know in writing if there is toxic mold that exceeds permissible exposure limits or poses a health threat in the residence. (Cal. Health & Safety Code §§ 26147, 26148)

  4. Ordinance Locations

    If there is a former federal or state ordinance within one (1) mile of the rental property, the landlord must inform the tenant. (Cal. Civ. Code § 1940.7)

  5. Pest Control Service

    If the rental property is serviced for pest control, the landlord needs to tell the tenant about any disclosures the landlord received from the pest control company. This could include what kind of pest is being controlled, what pesticides are used and their active ingredients, whether the pesticides are toxic, and how often the property will be treated. (Cal. Civ. Code § 1940.8, Cal. Bus. & Prof. Code § 8538)

  6. Intent to Demolish

    If a landlord has applied for a permit to demolish a rental unit, he or she must give prospective tenants written notice before accepting any deposits or screening fees. (Cal. Civ. Code § 1940.6)

  7. No Smoking Policy 

    If a landlord prohibits or limits smoking on the rental property, the lease needs to specifically describe the areas where smoking is limited or prohibited. (Cal. Civ. Code § 1947.5)

OTHER MANDATORY DISCLOSURES

On top of California’s mandatory disclosures, there may be additional mandatory disclosures outlined by federal law and local ordinances. For example, federal law requires that landlords disclose if they know about any lead-based paint hazards in the rental premises.

Landlord and Tenant Disputes: Normal Wear and Tear

One of the most dreaded parts of renting a place to live is moving. Tenants generally bank on the fact that they will not see their security deposit again. This does not necessarily have to be the case, and tenants as well as landlords should stay informed about their rights to know how much of their deposit they are entitled to receive back from the tenant’s perspective, and how much can be held back from the landlord’s perspective. For one thing, damages for “normal wear and tear” cannot be deducted from a tenant’s deposit. Naturally, this raises the question of what exactly normal wear and tear actually is.  A landlord may legally only use a tenant’s security deposit for unpaid rent, cleaning the rented premises, repairing damages other than normal wear and tear, and replacing or restoring furniture, furnishings, or other items of personal property.

Naturally, this raises the question of what exactly normal wear and tear actually is.  The can be law vague in addressing head-on what constitutes “normal wear and tear,” but a fair and good faith approach can establish what is and what is not normal wear and tear. For example, simple wearing down of carpet and drapes because of normal use or aging would constitute normal wear and tear. A few spots and moderate dirt are also probably normal wear and tear. However, massive rips or permanent stains will likely exceed a reasonable definition of the term, and would justify a deduction from the tenant’s security deposit.

When it comes to walls, minor marks or nicks are normal wear and tear, and are the landlord’s responsibility to fix. On the other hand, several holes that require filling, patching, and repainting could justify withholding the cost of repair from the tenant’s security deposit.

Deciding whether something constitutes normal wear and tear generally involves subjective discretion. If you think you have been charged for normal wear and tear though, you should fight to have that portion of your security deposit returned.