> – Does lien amount need to be accurate?
> – Can basis of contractual payment change from fixed sum based on milestones change to open book accounting or similar?
> – What happens if no pre-lien sent on California job by subcontractor and immediately lien is recorded?
> – What happens if contractor abandons job before sending any liens? Causes damage / defects on jobsite? Diverts / misappropriates funds intended for subcontractors / material suppliers / equipment lessors?

Answered 2 weeks ago

999 Answered Questions

Matt Viator

Legal Associate zlien

These are good questions. First - it's important to take a step back and look at how mechanics liens work in practice vs. how they operate in law. So, while flaws in a lien claim could certainly derail that lien if put under the scrutiny of a court, lien claims rarely make it to that point. More typically, when a lien claim is filed, the parties to the dispute will resolve the issue before legal action becomes necessary. Of course, at the same time, when there are obvious flaws with a lien claim, an owner might be emboldened to fight the claim, and if there are actually flaws in the claim, a claimant can find themselves empty handed. With that baseline set - when notice is required and not sent, a mechanics lien filed based on work performed will be invalid if the lien is challenged or if the lien claimant pursues the enforcement of the lien. As far as consequences go - that can be tricky. On one hand, when a claimant files a flawed mechanics lien, typically, that claimant will be able to release their lien without too much issue if the lien is challenged. Often, the number 1 goal of a property owner or contractor who challenges a lien will be to have that lien released - so the release of the lien can put an end to the dispute in many situations. Further, there's a difference between fraud and an honest mistake - and it can be hard to prove fraud in a lien dispute. At the same time, when liens are considered frivolous or fraudulent, penalties could come into play, and an owner could ultimately be entitled to damages if they push the issue and if the claimant was outside the lines when they filed their lien claim. Thus, the consequences of a questionable lien filing will really depend heavily on the temperament and personality of the parties involved. As far as the lien amount goes - putting an improper amount on a lien claim is a sure fire way to anger an owner, plus exaggerating a lien amount can lead to a lot of negative outcomes. As a last notion that matter - it's important that subs and suppliers don't file fraudulent mechanics liens. Lien amounts should accurately reflect what amount is owed and unpaid to the lien claimant. As far as accounting goes - if the parties agreed to use multiple accounting methods, or if no accounting method was set out in the contract, then changing accounting methods might not have a huge effect as long as any and all charged amounts are reasonable and fair. If a party is intentionally manipulating accounting methods - then issues and liability could certainly arise. Regarding contractor abandonment, there are any number of issues that could result when a contractor abandons the job. For one, the contractor could be liable for defects and other problems at the site. For another, diverting and misappropriating funds will open a contractor up to very serious amounts of liability, and potentially, their subs, suppliers, and equipment lessors could pursue the contractor on those grounds. California takes issues like this very seriously. When there are issues of potentially improperly filed liens, questionable accounting methods, and contractor abandonment, it's likely a very wise idea to consult or hire a local construction attorney. These issues are very serious, and could result in complicated legal battles. Lastly - if you have other questions about liens and notices in California, the California Lien & Notice FAQs might be helpful.

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