Jay-Z and Beyoncé recently purchased a Los Angeles compound, and the story made waves. The property cost around $90M, and it stands as the most expensive real estate purchase in LA this year. However, due to a payment dispute between the prior owner and a pool installation company, the couple is facing a mechanics lien on their new home.
The story broke on The Blast.
Jay-Z and Beyoncé Lien
Lien law is a pretty boring subject, so when a news story involving liens pops up, we can’t help but write about it. As it turns out, celebrities face liens pretty often. We’ve seen it happen to Bieber, Kenya Moore, and Birdman. We’ve also seen politicians deal with mechanics liens – Donald Trump has been hit with liens left and right, and West Virginia Governor Jim Justice just recently settled lien claims. But Jay-Z and Beyoncé might be the biggest names yet.
The blueprint
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First, let’s talk about the property that’s been liened. As mentioned above, the home cost right around $90M. There are 6 buildings on the property, with 30,000 square feet of interior space and plenty more outside. Included in this outside space are 4 swimming pools. The last of these pools cost just over $450,000.
The Los Angeles Times has a recent article describing the property in great detail.
The Lien
The mechanics lien was filed by a company who installed the property’s fourth pool. The company was hired by the property’s prior owner, but the owner did not pay them in full. As a result, the contractor filed a lien for just under $88,000. While Jay-Z and Beyoncé are not at fault, mechanics liens attach to the property where work is performed, not to individuals.
For more on California mechanics liens, check out our California Lien and Notice FAQ.
Wait, what is a mechanics lien?
We’ve actually got a post for that- What is a Mechanics Lien on a House? – but here’s a quick breakdown: A mechanics lien is a debt security device in the construction industry. To put it simply, when someone goes unpaid after providing construction work or materials on a project, they can file a mechanics lien on the property where work was done. By filing a mechanics lien, the debt attaches to the property.
If a mechanics lien goes unpaid, the lien claimant can enforce the lien and foreclose the property. As a result, the property is sold and the lien claimant receives their payment from the proceeds. A lien will remain even if the property is sold or leased, making it incredibly difficult to borrow against the property or to sell it. However, I suppose an $88,000 lien might not hold up a $90M sale…
We’ve got a virtual library on construction payment topics, so give our resources a look.
Takeaway
There’s reasonable doubt that this lien will result in the foreclosure of the home. In all likelihood, Jay-Z and Beyoncé will brush this lien off their shoulders – the lien represents just under 0.1% of the purchase price. Liens can be fierce, though, and we’re dealing with a luxurious compound, not sandcastles. It’s not time to ring the alarm, but if the former owner refuses to pay, the couple’s best bet may be to pay the claim and recover that amount from the prior owner. Then again, $88,000 is a lot of dead presidents. Either way, this story will be the holy grail for those interested in California real estate.
Errors on lien claims can be fatal. Make sure your lien is flawless by using our blueprint on California lien and notice laws.
