Mechanics Liens Might Not Require Strict Statutory Compliance To Be Enforced

CATEGORY: Private Education Matters
CLIENT TYPE: Private Education
DATE: May 29, 2024

If a person is not paid for work they provide on a property, they have the right to make a claim for unpaid amounts by filing a mechanics lien against that property.  For a mechanics lien to be enforceable, the claimant must follow statutorily required notice and other requirements.  In an unpublished case, however, a California court of appeal upheld a subcontractor’s mechanics lien claim even though the subcontractor failed to strictly follow those procedural requirements.

In Ram Concrete Construction, Inc. v. Montecito Realty Group L.P., Ram Concrete Construction (Ram) had a contract with a general contractor, Everspring, to perform concrete foundational work for a project on property owned by Montecito Realty Group (Montecito).  Ram alleged that Everspring failed to pay it over half a million dollars for its work on the project, and filed a mechanics lien on the property.  Ram proceeded to file a complaint to foreclose on that mechanics lien on Montecito’s property.

At trial, the court found that Everspring had breached the contract and Ram could foreclose on its mechanics lien, even though Ram had failed to serve the construction lender for the project with a preliminary notice of mechanics lien as required in the Civil Code.

On appeal, Montecito argued that Ram was required to strictly comply with the mechanics lien statutory requirements and that Ram could not foreclose on the mechanics because it did not serve the preliminary notice on the construction lender.

The court found that, although Ram did not strictly comply with the mechanics lien requirements, the project owner Montecito was not prejudiced by Ram’s failure to send the construction letter a preliminary notice.  Strictly construing the mechanics lien notice requirements would require the court to invalidate an otherwise valid lien against an owner who did receive notice simply because a third party did not receive this notice.

This case is significant because the court upheld the mechanics lien even though the claimant failed to strictly comply with statutory requirements.  Project owners may therefore lose legal support for arguments that a mechanics lien is invalid because the claimant failed to comply with the statutory filing and notice requirements.

Schools should take caution when engaging in construction projects to ensure their contractors act in a manner to avoid filing and foreclosures of mechanics liens on the school’s property.  Ways to avoid mechanics liens include selecting trusted contractors, utilizing construction contracts with clear payment terms and schedules, and paying close attention to the project.  If a claimant does file a mechanics lien, in addition to asking the contractor to have the lien released, schools should still confirm if the claimant complied with the statutory filing and notice requirements for mechanics’ liens, as other courts might still find that strict compliance is required.

Ram Concrete Construction, Inc. v. Montecito Realty Group L.P., 2024 WL 1879352 (Cal. Ct. Appeal).

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