FAQ: If I’m Unlicensed, Can I File A Mechanic’s Lien?

FAQ: If Im Unlicensed, Can I File A Mechanics Lien?Short Answer:  It depends.  In some states, unlicensed contractors are forbidden from filing a lien.  In other states, it is allowed.  You must consult your state’s particular lien laws.

Long Answer: The first thing to say about this subject is that if you’re doing work that requires a license without having that license, you’re treading in dangerous water regardless of your state’s laws.  While some state are more liberal and allow unlicensed parties to collect amounts owed to them, it is very rare when the unlicensed contractor isn’t penalized in some way. Therefore, if you’re unlicensed and doing construction work that requires a license….get licensed!  You can read more about Contractor Licensing laws on my other blog, Construction Law Monitor.

The question here is whether you can file a mechanics lien if you’re unlicensed.  Unfortunately for unlicensed contractors, this question may be just the tip of the iceberg.  In reality, unlicensed construction participants must ask a more significant question: can they recover for their work at all?

I’ll discuss the laws in California and Washington, and then in Louisiana, to compare how the answer to this question may vary by state.

In California and Washington, the laws against unlicensed contractors are very strict — unlicensed contractors have no recovery whatsoever.  This means they cannot file a lien, or a lawsuit, or anything at all.  If they did $1,000,000 of work, and a party refuses to pay them, they are completely without a remedy and basically donated their time and money to the construction project.  (See previously written post: Can Unlicensed Contractors Lien in California?)

Is this fair?

There are two schools of thought on this.  In Washington and California, the legislature considers it more important to regulate the unlicensed constructor market than it is to ensure unlicensed contractors get paid.   States like Louisiana take a different approach.  In Louisiana, the unlicensed contractor is still penalized (i.e. he can get penalized by the licensing board, and his contract is declared null and void and the unlicensed contractor can only recover the “minimum value” of his work), but he is still allowed to recover some sort of compensation for the work he performed…and that means, he can file a mechanic’s lien.

If you’re doing work in California or Washington and are unlicensed, you’re really out of luck.  If you’re in Louisiana, you have some legal ground.  Elsewhere, it’s really important to examine that state’s liens laws to determine if you can file or recovery for your work.

FAQ: If Im Unlicensed, Can I File A Mechanics Lien?

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  • Beck

    Hi I am a real estate stager in California. There is no licensing required for the trade. We are contracted to visually and cosmetically improve the sellers property for sale. Most sellers pay without issue. However, we’ve had a few that have tried to squirrel out of it. Can we file a mechanics lien?

    • http://www.zlien.com/ Scott Wolfe Jr

      Hi Beck, thanks for this question, which is a very good one about California’s lien law. I think it’s an interesting one.

      First, if you are entitled to file a lien, you would still need to have followed all of the preliminary notice requirements. Those who contract directly with the owner, however, will be exempt from the notice requirement (unless there was a construction lender). Seeing as this is not a traditional construction project, there would likely not be a lender.

      Second, and the more important question, is whether you would qualify for lien rights. This is answered on our California Mechanics Lien Law Resources page here, under the question: Who Can File A California Mechanics Lien..

      The answer provided there is:
      The following parties are entitled to mechanics lien rights in California: direct contractors, subcontractors, material suppliers, equipment lessors, laborers, design professionals, and any person providing work authorized for a site improvement. For all parties, of course, it is required that the party provided work authorized for a work of improvement.

      Would your work be considered a “site improvement” or a “work improvement?”

      Cal Civ Code § 8042 defines this: “Site improvement” means any of the following work on real property: (a) Demolition or removal of improvements, trees, or other vegetation. (b) Drilling test holes. (c) Grading, filling, or otherwise improving the real property or a street, highway, or sidewalk in front of or adjoining the real property. (d) Construction or installation of sewers or other public utilities. (e) Construction of areas, vaults, cellars, or rooms under
      sidewalks. (f) Any other work or improvements in preparation of the site for a work of improvement.

      Cal Civil Code § 8050. (a) “Work of improvement” includes, but is not limited to: (1) Construction, alteration, repair, demolition, or removal, in whole or in part, of, or addition to, a building, wharf, bridge, ditch, flume, aqueduct, well, tunnel, fence, machinery, railroad, or road. (2) Seeding, sodding, or planting of real property for landscaping purposes. (3) Filling, leveling, or grading of real property. (b) Except as otherwise provided in this part, “work of improvement” means the entire structure or scheme of improvement as a whole, and includes site improvement.

      See definition here:
      http://www.zlien.com/mechanics-lien/california-lien-statute/#-80008050-Definitions

      Is your work “alteration”?

      You will probably find some…but not much…gray area there to benefit you. It may depend on the details of your work. You may need to consult with an attorney about this to get an opinion…

  • Wondering

    I am an unlicensed contractor who was knowingly hired by a residential builder to install hardwood flooring. They have not paid 50% of the job although the job was completed in its entirety on time. If I cannot file a mechanics lien, what are my other options to recover the money owed to my laborers and i? Can we file a claim against the bond? Can we litigate in small claims court for breach of contract? There was a contract drawn up, but the construction manager said, “we can’t sign it; you’re not licensed.” However, there is plenty of email evidence to show intent to hire, physical progress made on the property, and discussions from them about invoicing them in order to pay us. All of this shows proof of a job performed under their wishes. Any advice is sincerely appreciated.

    • http://www.zlien.com/ Scott Wolfe Jr

      This is a good question, and the answer will depend upon where the project is located. Every state handles these issues differently.

      First, you may have a mechanics lien right. Only some states restrict unlicensed contractors from filing liens. However, in many states, this is a restriction.

      Second, those states who are strict about whether unlicensed parties can file liens are usually also strict about whether they can recover at all. In California and Washington, for example, you are completely without any remedy to collect whatsoever. You are – in other words – working for free. We wrote about this here:
      http://www.zlien.com/articles/unlicensed-contractor-depending-on-the-state-you-may-be-working-for-free/

      Third, your best bet — if you are a in a strict state — is to try to get around the licensing requirement. Otherwise, you may be out of luck. Does the work you did require a license? That is the question you’ll want to drill into.

      Concluding thoughts:

      - May need to consult an attorney, but may not be worth it;

      - Get a license to avoid this problem in the future;

      - Try to find an exception to licensing requirement that lets you do the work you did without a license;

      - Verify that you’re in a state with licensing regulations prohibiting you from liening and/or otherwise recovering.

      Good luck.