Full question:
Is there a monetary limit on a mechanics/contractors lien?
- Category: Contractors
- Subcategory: Construction Liens
- Date:
- State: California
Answer:
In California, an unpaid contractor may record a mechanic's lien on the
property upon which he or she worked. Civil Code §3123 outlines how to
determine the permissible amount of the mechanic's lien. Subdivision (a)
provides that the lien must be for the lesser of "the reasonable value of the
labor, services, equipment, or materials furnished" or the contract price.
Subdivision (b) provides an exception that allows the contractor to include
amounts due for labor, services, equipment or materials furnished as a
result of written contract modifications or as a result of rescission,
abandonment or breach of the contract. California case law provides that if
a contractor overstates the lien or includes amounts for costs other than
those specified in §3123, then the owner may obtain a court order releasing
or reducing the lien. Further, under §3118, if a contractor "willfully" includes
amounts for work not furnished for the property upon which the lien is
placed, the contractor shall "forfeit his lien."
A California appellate court has interpreted §3123 to allow a lien to include
an amount over and above the written contract price. The lien amount
included the value of additional work that the owner demanded be
performed before he would pay the original remaining contract balance. The
appellate court also held that trial courts are not required to automatically
extinguish overstated mechanic's liens and instead have the authority to
reduce them to the proper amount. Basic Modular Facilities, Inc. v.
Ehsanipour, 70 Cal.App.4th 1480, 83 Cal.Rptr.2d 462 (1999).
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
