The new mechanics lien laws in California are nice and neat, and make a number of substantial and needed improvements. Nevertheless, I believe the new law fails in one area: empowering subcontractors and suppliers to know when a construction project ends.
Knowing when a project ends in California is a big deal, and that’s because California is one of the handful of states that starts the clock to file a mechanics lien once the entire project is completed, as opposed to when the claimant last furnishes labor or materials to the project.
The upside for claimants is that they usually get a substantial amount of time before needing to file their mechanics lien claim, but the downside is that they’re never 100% sure when the project is completed and their deadline is approaching. This is especially a challenge for material suppliers who frequently never step foot on the jobsite.
California’s old law allowed subcontractors and suppliers to file their preliminary notices with the recorders office, and thereafter, required the recorder to notify them of when a notice of completion was filed for the project. This exists in the new law as well, but there are three big problems with this:
- There’s no penalty if a recorder fails to do it, and they probably frequently fail;
- It only applies when a notice of completion is filed, which only happens on a minority of projects; and
- The filing fee is usually $30-60, which isn’t worth the service.
Unfortunately, there wasn’t a very good solution for subcontractors and suppliers under the old law, and there isn’t much different under the new law.
Louisiana has a decent tool available to folks similar to California’s new lender / property owner disclosure requirements, whereby a subcontractor or supplier can deliver a “Notice to Owner of Obligations” and mandate that the owner notify it when the project is complete. If they fail to notify the potential claimant, they could be liable for damages and attorney fees.
Wish something like this was present in California’s new laws…perhaps in the future.