We posted an article yesterday about a California case published last month where a mechanics lien’s validity was in dispute because of the way the lien claimant identified itself on the lien. That case - Montgomery Sansome LP v. Rezai - was very similar to a California case we wrote about a few months ago – Ball v. Steadfast-BLK.
Those cases presented tiny differences between the identified names of the companies and the companies’ official names. Tiny differences. Trivial differences, some may say.
You may look at these situations and think it’s a stupid mistake that can’t happen to you, but beware. Typographical errors happen, as do misunderstandings. Here are some common mistakes companies make when identifying themselves in a mechanics lien claim.
Not Understanding DBAs and Sole Proprietorships
Are you a company or are you a person? Are you human or are you a dancer?
If you are a sole proprietor, that means you do not have a company. You are an individual doing business as some type of tradename. Oftentimes, your state requires you to file a record of your trade name with the county recorder or with the secretary of state’s office. [pullquote style="right" quote="dark"]Most importantly, however, you want to be consistent between filings, as discussed below.[/pullquote]
Nevertheless, if your name is John Doe, and your operate “Kitchen Specialists,” and this company is not incorporated or organized as any specific business entity, the formal and legal name of your company would be “John Doe doing business as Kitchen Specialists,” or “John Doe d/b/a Kitchen Specialists.”
You want to be careful about identifying yourself as simply “John Doe” on legal documents, or as simply “Kitchen Specialists.” Most importantly, however, you want to be consistent between filings, as discussed below.
Not Putting Your Correct Business Type In Your Name
If you business is an organized entity, and not a sole proprietor, you must know what type of entity you are.
Generally speaking, you are either a Limited Liability Company, a Corporation, a General Partnership, a Limited Partnership, or a Limited Corporation. The name of your company includes this designation or an abbreviation of the designation.
Apple’s legal name is not “Apple.” It is “Apple, Inc.”
If you are a business entity, it can be a fatal mistake to not include your business entity’s designation within your business name.
Not Being Consistent
Where most companies get in trouble with company names is being consistent. Those two California cases analyzed in prior blog posts are a perfect example of this. In those cases, the contractors had identified themselves one way with the California Board of Contractors, but identified themselves slightly differently in the mechanics lien claims.
You can avoid almost all of the problems with misidentifying your company by identifying your company the same way every time. So, be consistent, or be in trouble!