Key points about real estate and a mechanics lien in California

On Behalf of | Aug 12, 2020 | Firm News |

When California contractors and property owners have an agreement for work to be performed, each side will want the project to go as smoothly as possible. That generally entails the contractor completing the work as requested and being paid for it. There are, however, issues that may arise that result in problems between the homeowner, the construction company and any contractors or subcontractors involved. This can spark a mechanics lien. From the perspectives of all parties involved, it is important to understand basic points about a mechanics lien.

Why a mechanics lien might be filed

Payment for services rendered is a fundamental part of business. If a payment is not made or received, the provider of services – in this case a contractor or construction company – must have some form of recourse. In this specific instance, it is a mechanics lien. Should the case reach its conclusion without some form of settlement, the property owner could face foreclosure so the debts can be paid.

A property owner who has a mechanics lien filed could, as mentioned, have the property foreclosed upon. It can also negatively impact attempts to borrow money using the property as collateral, refinance the property, or to sell it. The property owner could also need to pay twice what is owed for the same project. The contractor and subcontractors might be paid based on a mechanics lien. Workers and suppliers will also need to be compensated for work they did and items they purchased to complete the job.

Legal advice can be beneficial with construction disputes

The property owner and the contractor will not want a project to reach the point where a mechanics lien is necessary. Still, it happens quite frequently and costs time and money for both parties. In extreme instances, the person could even lose a home to foreclosure. From the start of a project, a comprehensive contract and a full understanding of its requirements and the consequences for failing to live up to it is integral. Many of these disagreements are based on a misunderstanding or there is a negotiable way to fix any concerns to fulfill the terms. Regardless, it is wise to have legal advice from those experienced in real estate and construction cases. Calling for a consultation can help.