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#2 of the Top 10 Misconceptions about Mechanic's LiensIf a claimant identifies and serves a Preliminary Notice on a party that is not the actual owner of the property, the claimant's Preliminary Notice is defective and the claimant necessarily loses his mechanic's lien rights
California Civil Code section 3097 says "Owner or Reputed Owner". Use of the word "reputed" in California Civil Code section 3097 means that the claimant need only make a reasonable inquiry into who the owner is. The key question is whether the claimant did actually make a reasonable inquiry into the owner's identity. If the claimant did, then he has served the "reputed" owner of the property, and has thereby satisfied California Civil Code section 3097. One major reason for this rule is that GC's and subs were intentionally giving out inaccurate owner information to suppliers. The suppliers lost lien rights because they didn't know the correct owner. Requesting a job information sheet from the General Contractor and serving the folks listed on that sheet likely qualifies as a "reasonable inquiry". In addition, the claimant would be smart to make a record of any conversations it has that form the basis of his understanding as to the identity of the owner. However, even though the law doesn't require it, the claimant SHOULD aggressively investigateIf the correct owner is named, there's never a need to hire an attorney to make the argument that the prelim is still valid despite not being served on the actual owner.The law protects you if you prelim the wrong person based upon a reasonable inquiry, but in case of a conflict you'll have to pay an attorney to prove that you're in the right, whereas if you name the owner correctly, there's never any issue. Revising the Preliminary NoticeOnce the Preliminary Notice has been served, the claimant need not serve a new Owner that he may learn about after having served his Preliminary Notice.If the claimant names the wrong owner then learns the true owner, in most situations it will not be smart to serve a new preliminary notice because the actual owner will argue that the date of the new prelim controls. A letter to the true owner with a copy of the original prelim might be a good idea, plus a citation to the law that only requires the reputed owner to be named, plus an explanation of the inquiry that was done. But even without the letter, the prelim is valid despite the actual owner never receiving a prelim. In a case in which new ownership information is learned, it is probably necessary to consult with a construction attorney about the best strategy. Back | Top 10 | Next Disclaimer - This article presents a discussion of general laws, rules, and strategies related to mechanic's liens and other construction issues and is intended to provide background information that will assist the reader in understanding the general laws and rules that apply. Examples and hypotheticals are described in this article for the purpose of illustrating these general rules, however no information within this article should be relied upon when analyzing a specific real-life situation. For each real-life situation that the reader experiences, it is necessary that the reader consult with an experienced construction law attorney to ensure that the reader's specific situation is evaluated. The laws and rules affecting mechanic's liens and construction are extremely complex and no attorney can provide in a writing an explanation that will empower the reader to use only the information in an article to evaluate how the law will apply to a specific real-life situation. In other words, the reader should not rely on the information in this article when addressing a particular real-life situation. David J. Barnier Esq. 619.682.4842 BarkerLawGroup.com
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