What Do You Do If There's A Mechanic's Lien Recorded Against Your Property But You've Paid The General Contractor In Full?
Posted by: Kenny Tan
July 24, 2011
Topic: Mechanic's Liens
In any home improvement project, you'll hire a general contractor handles the entire project for you. You typically a fixed sum to perform certain tasks. The general contractor rarely does all the work by himself. His quote to you typiclly includes work that he'd subcontract out and materials that he would purchase from his suppliers.
Many homeowners are surprised to receive either during or after the work of improvement has been completed notice in the mails that liens have been recorded against their property, sometimes after the general contractor has been paid in full, other times after there's been a dispute with the general contractor. These are mechanic's liens.
The origiin of the right to record mechanic's liens against property for which contractors, suppliers, or designers like architects or engineers, have furnished labor, materials, or services can be found in the California Constitution.
What does it mean when there's a recorded mechanic's lien against your property? It means there's a cloud against the title to your property. You'll not be able to close escrow if you're selling the property due to the recorded liens.
Why Do You Still See Mechanic's Liens Recorded Against Your Property Even After You've Paid The General Contractor In Full?
There are several reasons, they can be:
- You may think that you've paid the general contractor in full but the general contractor didn't think so and there is an actual dispute.
- Your general contractor received the money but has not paid off his subcontractors or material suppliers.
- Sometimes there's simply a collusion between your bad general contractor and his subcontractors to extort more money from you.
Wbat Can You Do To Get Rid Of It?
The quickest, easiest, and least expensive way to remove it is to wait 90 days after the liens have been recorded and see whether the lien holder files a lawsuit to enforce the lien. The lien holder can't just sit on their rights. The law requires them to file a court action to pursue their liens in 90 days or it loses its legal effect. However, despite of that, unless the lien holder records a release of mechanic's lien, title companies still insist that you have it removed as they won't do it for you. You ask, "If it has no legal effect, why does title company still insists that it be removed?" Good question. I can only say that title company simply doesn't want to assume the risks that somehow it can come back and haunt them.
So you'll need to hire a lawyer to have it removed. Removal is by simply filing a petiton to release mechanic's lien. But the law requires you to make a demand on the lien holder to record the release. If he refuses, then you're now free to go ahead and file the petition. One more thing. If he files for bankruptcy, you'll need to first go the bankruptcy court and get a relief from automatic stay. It's probably an automatic grant but it delays things. Typically it takes a month to get the order but if the attorney is willing to put a rush for you, you can probably get it in 15 days.
That may cost you around $1,000.
But if he decides to foreclose on his lien in 90 days, it gets more costly. Now you can't get remove it by a simply petition. You may have to go through the entire civil litigation to get it removed which may take a year or longer. And of course, it can get expensive to litigate. You should seek help from an attorney immediately.
