Mechanic's Liens and stop payment notices for plumbing contractors
California statues provide for different types of collection remedies on construction projects. Below is a comparison of the Mechanic’s Liens and Stop Payment Notices remedies, both of which are used when contractors, subcontractors and/or material suppliers remain unpaid for work performed.
- A Mechanic's Lien is an involuntary encumbrance on the chain of title and provides the lien claimant an ownership interest in the property that was improved. It binds the available value in the property, but it is not directed at an owner or an owner’s other assets.
- Available on private construction projects only.
- A valid Preliminary 20 Day Notice is a prerequisite to a Mechanic’s Lien action.
- A Mechanic’s Lien must be recorded after all work is completed.
- A Mechanic’s Lien is “perfected” by filing a lawsuit to foreclose upon the Mechanic’s Lien.
- A Mechanic’s Lien must be served on the project owner/contractor/ lender and it must also be recorded in the County Recorder’s office.
- A Mechanic’s Lien expires within 90 days from the date it was recorded. It is null and void, and unenforceable if not “perfected” within the 90 days.
- A Notice of Lis Pendens must be filed in court and recorded with the County Recorder’s office after a Mechanic’s Lien foreclosure action is filed.
- Attorney fees are not recoverable on a lawsuit foreclosing upon a Mechanic’s Lien.
Stop Payment Notices
- A Stop Payment Notice ties up a portion of the construction funds or money earmarked for the construction project. It does not attach to the property that was improved.
- Available on private and public construction projects.
- A valid Preliminary 20 Day Notice is a prerequisite to a Stop Payment Notice action. [Minor exceptions may apply to listed subcontractors on public projects.]
- A Stop Payment Notice may be served during construction, it is not necessary to wait until completion.
- A Stop Payment Notice is enforced by filing a lawsuit to “Enforce” the Stop Notice.
- A Stop Payment Notice must only be served on the necessary parties such as the owner / contractor / subcontractor / lender. It is not necessary to record it.
- A Stop Payment Notice does not expire in 90 days, but a lawsuit enforcing the Stop Payment Notice must be filed within the statutory deadline which is contingent on, and runs from the date the project is completed.
- A Notice of Commencement of Action must be filed in court after a Stop Payment Notice Action is filed. It does not need to be recorded.
- Attorney fees may be recoverable on a lawsuit enforcing a bonded Stop Payment Notice on a private job only