What is a Mechanic’s Lein?
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.