Real Estate and Construction Law Blog

By Scott Hennigh

In California and most states, a contractor can get some security to assure that it will be paid for its work on a project. An unpaid contractor on a private project can go to the county recorder and record a mechanic's lien against the property to which it provided labor, service, materials or equipment. The mechanic's lien makes the property security for the debt owed to the contractor. Then, if the project owner still does not pay, the contractor can file a complaint requesting that a court enter judgment and order a foreclosure sale of the property so that the debt can be paid from the sale proceeds.

When The Owner Anticipatorily Breaches The Contract, And Therefore A Lien Recorded One Day After The Breach Is Not Premature

Howard S. Wright Construction Co. v. BBIC Investors, LLC, California Court of Appeal, First Appellate District, 2006 DJDAR 1339

By Robert T. Sturgeon

Cases concerning the timeliness of recording a mechanic's lien generally concern the latest time a party may record its lien. In Howard S. Wright Construction Co. v. BBIC Investors, LLC, 2006 DJDAR 1339, the California Court of Appeal considered the reverse issue, i.e., when is the earliest time an original contractor may timely record a mechanic's lien under California Civil Code Section 3115? Section 3115 provides that an original contractor may record a claim of lien "after he completes his contract . . . ." In Howard S. Wright, the California Court of Appeal held that a contractor "completes its contract" within the meaning of section 3115 not only when it substantially performs its obligations under the contract, but also when the contract is terminated prematurely by the owner, or the contractor is discharged from any further obligations under the contract by the owner's material or anticipatory breach.

Liens and Waivers

D'Orsay International Partners v. Superior Court (Jeffrey C. Stone, Inc.)
123 Cal. App. 4th 836 (2d Dist. Oct. 29, 2004)

Where general contractor provided design and planning services for a construction project, but no actual visible work was commenced at the project and no materials were delivered to the site, owner was entitled to an outright release of contractor's mechanics' lien. Because contractor recorded a mechanics' lien - not a design professionals' lien - provisions of the design professionals' lien law authorizing filing of a design lien despite lack of commencement of construction do not apply.

The general rule is that a mechanics' lien (in contrast to a design professional's lien) does not attach unless and until actual visible work on the land has begun. In cases where no actual construction has commenced prior to recordation of the lien, the design professionals' lien law provides the exclusive remedy and the prior exception to mechanics' lien law requirements where owner prevents construction is no longer operative.