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What are my options to fight mechanic Lein , details mentioned as under.

I brought a foreclosed residential property in San Jose Ca from Auction.com . The previous owner is evicted . Now ,he text me that the Contractor is going to put $500 k mechanic Lein against the property for some unspecified jobs performed , which is NOT true , because lot of jobs need to be done before it becomes habitable. What if the contractor really files a mechanical Lein against the property what option do I have . Thanks

1 reply

Nov 18, 2019

California has some strict requirements for filing mechanics liens. And, some of these requirements should help to fend off bogus lien claims. Let's look at a few hurdles a lien claimant may face, then at how best to combat a lien claim. Before getting too far along, though, these two resources should be valuable: (1) I Just Received a Notice of Intent to Lien – What Should I Do Now? (2) A Mechanics Lien Was Filed on My Property – What Do I Do Now?

Issues that will prevent a California mechanics lien claim from being valid

First, - if there's no basis for the claim at all, that claim would be invalid. Lien claimants will only be entitled to lien to the extent that they've performed work and gone unpaid. And, if a contractor exaggerates the value of the work they've provided, their lien claim will be invalid and unenforceable. And, taking things a step further, California will actually limit the amount of a lien claim to the reasonable value of the work provided - so, a contractor cannot jack up the price of their work and obtain a lien based on the price. Of course, keep in mind there's a difference between a fraudulent lien and an honest mistake. Further, note that California mechanics lien claimants also have a short timeframe for filing a lien. A contractor must file their lien within 90 days of the completion of the job. And, if more than 90 days passes from the time the work stopped and when the lien was filed, the resulting mechanics lien would be invalid and unenforceable. Ultimately, keep in mind that the property cannot be foreclosed unless the contractor can show there's a basis for their lien claim. After a lien is filed, a contractor would need to initiate an enforcement action in order for the property to be foreclosed - and the owner will have an opportunity to discredit the lien claim, if need be.

What to do if a mechanics lien is filed?

All is not lost if a mechanics lien gets filed. For one, an owner can always try and force the lien claimant to relinquish their own claim. If the owner can show that the lien claim is obviously flawed, and can show that they're willing to pursue legal claims against the lien claimant, then it might be possible to get a claimant to release their lien before additional liability comes into play. Sending an attorney demand letter that identifies issues with the claim and pointed legal threats can go a long way there. Further, it won't make a lien claim disappear, but bonding off a mechanics lien is always an option, too. When a California mechanics lien claim is bonded off, that means the lien is removed from the property title and instead transferred to the mechanics lien bond. And, if the lien claimant wants to continue pursuing their claim, they'd need to enforce their lien (file a lawsuit) against the mechanics lien bond. Finally, an owner can always challenge a filed lien claim directly through legal action. If an owner can show deficiencies in the claim, the court may discharge or at least reduce the amount of the lien claim. Before taking any specific action, though, it may be helpful to consult with a local California construction attorney - such as one of the California Construction Payment Experts. They'll be able to review your situation and advise on how best to move forward.

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