Extending Your Mechanic's Lien Deadlines To Sue To Enforce Your Mechanic's Liens:
The Law, The Traps, And Strategies To Maximize Your Leverage While Limiting Your Expenses
By David J. Barnier
Lien Lawsuit Deadline Extensions — Understand The Risks And Limitations
Let's first discuss the ramifications of an extension by the owner to the lien lawsuit deadline. Civil Code section 3144 allows a lien claimant to extend the lien lawsuit deadline if the owner of the property signs an agreement extending the lien lawsuit deadline and such agreement is recorded before the 90-day deadline to file the lien lawsuit has passed. There are restrictions to the extent of any extension but an extension is possible if the owner signs an extension agreement (often called a "tolling agreement" and referred to as a "credit" in section 3144). However, what can a lien claimant do if the owner will not agree to extend the deadline?
A Lien Claimant May Record A Second Lien If The Lien Recording Deadline Has Not Passed
There are two deadlines related to mechanic's liens: the recording deadline and the lawsuit deadline. The lawsuit deadline for any lien is 90 days after the lien is recorded. The recording deadline is determined by the date of completion of the work of improvement and will never be earlier than 30 days after such completion.
If a lien is recorded after the claimant has finished its work but long before completion of the entire work of improvement, it is perfectly legal for the claimant to release that particular lien and to record a new lien. The underlying right to record a lien is not lost when 90 days pass after the lien recording date.
Only the rights related to that particular lien are waived. Lien rights can be waived only via one of four specific written waiver forms that are set forth in Civil Code section 3262. If no such form is signed by the claimant, then no lien rights are waived.
A lien claimant is entitled to give up rights related to one particular lien and to pursue a new lien by recording a new lien. So long as lien rights have not been waived via the section 3262 form and the new lien is timely recorded, a new lien will be valid. There is no limit to the number of liens that might be recorded. The only limit comes from the time deadline to record a lien, which arises shortly after the completion of the work of improvement.
The strategy of releasing one lien and recording a new lien is especially useful for a contractor that does not want to commit to a lawsuit.
The reality is that even if invoices are not timely paid, payment might eventually come voluntarily. If payment is likely to come, investing the costs of a lawsuit might not be the best decision, if lien rights may be preserved via a new lien that will extend the claimants deadline to decide whether to file a lawsuit.
The leverage of a lien can be maintained for 90 more days with the only cost being the cost of releasing the prior lien (which must be done —- two liens should never be on title simultaneously) and recording the new lien.
As always, it is important to understand that individual circumstances should be analyzed on a case-by-case basis. While the general rules and strategies described above are useful to educate a contractor with a soon-to-expire lien of the potential to record a new lien, these rules and strategies should not be relied upon in any situation without specific guidance from an attorney with experience in this area.
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