Mechanics Liens in California: What Homeowners Need to Know

California's mechanics' lien law provides special protection to contractors, subcontractors, laborers, and suppliers who furnish labor or materials to repair, remodel, or build your home. If any of these people are not paid for services or materials they provided, your home may be subject to a mechanics' lien and eventual sale in a legal proceeding to enforce the lien — even where the homeowner has paid the general contractor in full.

Why can a homeowner pay twice for the same work? The California Constitution and state law hold that between two potentially blameless parties — the homeowner who ordered and paid for the work and the laborer or supplier who was never paid by the contractor — the homeowner who received the benefit of increased property value is in a better position to bear the loss. The homeowner is effectively the ultimate guarantor of full payment to all persons who contributed labor or materials.

Even if a mechanics' lien is recorded, it may not be valid if proper procedures were not followed. Each party claiming a lien must strictly adhere to well-established procedural requirements. If a lien has been recorded but no effort has been made to enforce it, a title company may decide to ignore it. However, be prepared to provide a plan to eliminate the title problem — typically through a recorded mechanics' lien release from the claimant or other measures acceptable to the title company.

For lenders, recording the deed of trust before construction starts is critical. A deed of trust recorded prior to the start of construction generally extinguishes mechanics' liens in foreclosure. If construction begins before recordation, all lien claimants' rights may be superior to the deed of trust — even those who started work after the deed was recorded. This is because all mechanics' lien rights relate back to when the first work began on the project.

The best protection is prevention: investigate the reputation of every contractor before starting work, and work out a method in advance to ensure all subcontractors and suppliers will be paid. Team Goeglein at Fidelity National Title identifies mechanics' lien risks during the title search and advises agents across the South Bay on resolution strategies.