Updated Nov 2025 | Private Projects: CA Civ § 8402, 8450 – 8458
When a property goes into foreclosure, lien priority determines who gets paid first from the sale proceeds. California’s Construction Lien Law sets out specific rules for how mechanics liens rank against mortgages, deeds of trust, and other encumbrances. The general idea is simple: mechanics liens often gain priority because they relate back to the date construction first began, not the date the lien was recorded.
This section explains California’s actual statutory rules on lien priority under Civil Code Sections 8450 through 8458.
1. General Rule: Mechanics Liens Usually Come First (Section 8450)
Under Section 8450(a), a mechanics lien (other than a site improvement lien under Section 8402) generally has priority over:
- Any mortgage, deed of trust, or encumbrance that attaches after construction has started, and
- Any mortgage or deed of trust that was unrecorded when work commenced and that the claimant did not know about.
In practical terms, mechanics liens typically gain priority over later-recorded mortgages because California uses the commencement of the work of improvement as the priority date. If work on the project started before a lender recorded its deed of trust, that lender may be behind the mechanics lien claimants even if the mechanics lien is recorded much later.
2. Exception: A Recorded Payment Bond Can Give a Mortgage Priority (Section 8452)
A mortgage or deed of trust that would normally be subordinate can move ahead of mechanics liens if the lender records a payment bond that:
- Refers specifically to the mortgage or deed of trust, and
- Is issued in an amount of at least 75 percent of the mortgage principal.
If this bond is recorded, any work furnished after the bond is recorded becomes subordinate to the mortgage, even if a mechanics lien would otherwise take priority.
3. Site Improvements Are Treated as a Separate Work of Improvement (Section 8454)
When site improvement work such as grading, demolition, or utility installation is performed under a contract that is separate from the main construction contract, it is treated as a separate project. This means the start of site work does not serve as the start date for the rest of the work. Different commencement dates may apply, and as a result, priority can differ for different portions of the project.
4. Construction Loans: Optional Advances Can Keep Priority (Section 8456)
If a construction loan already has priority over mechanics liens:
- Optional advances retain the same priority as mandatory advances
- Provided they are used for construction costs, and
- Total advances do not exceed the original loan amount.
This protects lenders from losing priority simply because they disbursed the loan in stages.
5. Special Priority Rules for Site Improvement Liens (Section 8458)
Section 8458 sets out priority rules specifically for claimants who perform site improvement work.
A lien for site improvements typically has priority over:
- Any mortgage or deed of trust recorded after the site improvement work begins
- Any unrecorded encumbrance at the time site work begins, if the claimant had no notice
- Any mortgage recorded before the site improvement work began if its primary purpose was to finance the site improvement, unless the lender strictly controls the funds so they are used to pay claimants.
There is also an exception under Section 8458(b): a mortgage that would normally be subordinate can regain priority if the lender records a payment bond of at least 50 percent of the mortgage principal before completion of the work.
This 50 percent bond rule applies only to site improvements and is more lenient than the 75 percent bond requirement in Section 8452.
6. What This Means for Contractors and Material Suppliers
Because priority is tied to the start of construction, mechanics liens in California often have a favorable position against later-recorded mortgages and other encumbrances. Site improvement claimants may receive even stronger protection under Sections 8454 and 8458. However, a properly recorded payment bond can change the order of priority if it meets statutory requirements.
Priority rules only matter if the mechanics lien itself is valid. Claimants must:
- Serve the Preliminary 20-Day Notice (when required), and
- Record the mechanics lien within the statutory deadlines.
7. Priority Still Depends on a Valid Lien
California’s priority rules apply only to valid, perfected mechanics liens. A claimant that fails to serve the Preliminary Notice on time or misses the lien filing deadline loses lien rights entirely. Without a valid mechanics lien, there is no priority position to assert.