The mechanics lien is a very powerful tool in the construction sector, but not all payment disputes have to lead to it. Construction parties can leverage their lien rights during payment negotiations, and doing so may result in successfully getting paid without going to the trouble of filing a mechanics lien.
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In California, construction participants may send a Notice of Intent to Lien to the property owner before it becomes necessary to file a mechanics lien. Serving this pre-lien notice can effectively prompt property owners to produce payment, which will save you time and effort because there’s no longer a need to file a California mechanics lien.
This guide lays out the details of serving a California Notice of Intent to Lien, including its benefits, the specific steps in filing, and some best practices.
What is a California Notice of Intent to Lien?
A Notice of Intent to Lien in California is a document that warns a property owner about a mechanics lien that is about to be filed against their property. It is a pre-lien notice, which means that it is sent before a mechanics lien is formally recorded in California.
Note that the Notice of Intent to Lien is not a required pre-lien notice in California. It is an entirely optional notice that you can serve on the property owner before you record your mechanics lien. Aside from informing a property owner about your plan to file a mechanics lien, a California Notice of Intent to Lien also gives the owner some time to settle the debt before a mechanics lien is officially recorded.
Who can serve a California Notice of Intent to Lien?
All parties with lien rights in California may serve a California Notice of Intent to Lien. These parties include general contractors, subcontractors, sub-subcontractors, material suppliers, equipment lessors, laborers, and even design professionals.
When must you serve a California Notice of Intent to Lien?
Because the Notice of Intent to Lien is an optional pre-lien notice in California, there is no hard-and-fast deadline by which you must serve it. The general rule is to give the property owner enough time to settle the outstanding debt, usually between 10 and 30 days before you record a mechanics lien.
It is fairly standard in California to set a 10-day time frame for the property owner, which means that you can serve the Notice of Intent to Lien on the owner at least 10 days before the mechanics lien is recorded.
Note that the deadline for filing a California mechanics lien does not get extended even if you serve the owner a Notice of Intent to File a Lien. Make sure that you serve the Notice of Intent to Lien way before the California mechanics lien deadline to avoid complications with meeting the statutory lien requirements.
Why serve a California Notice of Intent to Lien?
Serving the California Notice of Intent to Lien has benefits, even if it is not a mandatory pre-lien notice in the state. One such benefit is that it can prompt a property owner to settle the payment, especially since property owners are generally wary about having a mechanics lien filed against their properties.
If you serve a Notice of Intent to Lien on the property owner, you will most likely catch their attention. Sometimes property owners can also lose track of which parties are still awaiting payment, and by giving them a warning about your mechanics lien, you are able to open the communication lines and inform them about the payment issue.
Serving a California Notice of Intent to Lien is also a fairly easy process that will not take a lot of your time. It can potentially get you paid without your resorting to filing an actual mechanics lien, so you can gain a lot for simply filling out and signing a basic form.
How to serve a California Notice of Intent to Lien
1. Prepare the California Notice of Intent to Lien form
The following information must be included in your California Notice of Intent to Lien:
- The name and address of the property owner
- The name and address of the general contractor (if applicable)
- The name and address of the party who hired you (if different from the general contractor or the property owner)
- A brief description of the services you furnished to the project
- A description of the property location that is sufficient for identification
- The payment amount that you are yet to receive
- A statement saying that you are about to file a mechanics lien if the claimed amount does not get settled within the next 10 to 30 days
Note that there are no specific rules for filing this notice. It is, however, fairly standard in California to give property owners at least 10 days before filing a mechanics lien.
2. Deliver the California Notice of Intent to Lien
There are no right or wrong methods for delivering the California Notice of Intent to Lien. You may hand the notice in person, or you may send it via certified mail with return receipt requested.
You may serve the California Notice of Intent to Lien on the property owner, as well as the general contractor and the party who hired you, if applicable.
Best practices when serving a California Notice of Intent to Lien
1. Serve a Notice of Intent to Lien even if it is not required
The Notice of Intent to Lien is optional in California, but it can be enough to get you the payment that you have worked hard to earn. If you are in doubt whether serving this pre-lien notice is beneficial or not, just remember that property owners always want to keep their properties lien-free.
A mechanics lien is a record of debt to construction participants. As long as you have a reasonable payment claim, property owners would rather settle the payment and not have mechanics lien filed under their property’s public records.
2. Prepare the Notice of Intent to Lien early
The Notice of Intent to Lien is a fairly simple form, and the pieces of information that you need to include in the document are just about the same information that you write on a California mechanics lien form. If you are in the middle of a payment dispute, you should already have all the important details.
It is best business practice to be proactive and prepare forms early to avoid complications with meeting deadlines. Keep in mind that serving a Notice of Intent to Lien does not extend the California mechanics lien deadline. Failing to serve a Notice of Intent to Lien will have no bearing on your lien rights, but failing to file a mechanics lien altogether could cost you the compensation for your services.
3. Do not forget to record the actual California mechanics lien
The Notice of Intent to Lien is simply a notification of your intention to file a California mechanics lien. It is not the same as a mechanics lien, so if you do not receive full payment, you will still have to record the actual lien.
Recording a mechanics lien in California can be tedious, but as long as you follow all the rules and requirements, you should be able to successfully exercise your lien rights and recover your full payment.