There is a Mechanic's Lien filed on my property, what can I do about it?
Can an unlicensed contractor file a lien on my property? What can be done to remove it?
QUESTION: Hi, I live in California. I had some remodeling done to my bathroom and my brother (unlicensed contractor) offered to do the work.
I supplied all of the materials.
We never discussed a price and no contract what so ever was ever made or signed.
We had a falling out after a while because he is an alcoholic and he made my life miserable for three months- anyways, he was paid for his services including room and board, food, etc.
After our falling out he decided to blackmail me by giving me a bill for his services, which were outrageous.
I told him he was paid for his services and that he wasn't getting a cent from me.
Well, first he decided to contact a collection agency on me. But that was illegal because California law states that an unlicensed contractor cannot sue. So he decided to place a mechanic's lien on my property.
Isn't true the lien is invalid because he is an unlicensed contractor? How do I get this lien off my property?
ANSWER: Your reader is correct in recognizing the license issue, but let's first quickly address the situation if the contractor WAS licensed.
A licensed contractor doing home improvement work must use a signed written contract that includes the many terms listed at Business & Professions Code section 7159. A home improvement contract without those terms is illegal and unenforceable.
The contractor can often still recover payment for work performed under the legal doctrine of "unjust enrichment," which involves an argument that it would be unfair to allow the homeowner to receive the improvement work without paying.
However, when the lack of a written contract creates confusion, the homeowner may be able to avoid payment because had the contractor complied with the requirements, there would be no confusion regarding price, scope of work, etc.
As an alternate example, a contractor who fails to comply with the requirement that all print be at least 10-point in size will probably still recover payment under the unjust enrichment doctrine unless the homeowner can show that they could not read the contract.
It's a "no harm, no foul" rule. In this case, there was "harm" because the lack of a written contract created uncertainty regarding total cost and the scope of work.
So, this is one argument the homeowner has.
As for the license issue, the contracter/brother not only cannot recover payment, he must return all moneys received pursuant to Business & Professions Code section 7031. The contractor can argue that he was an employee (and thus not subject to the license requirement) but this argument does not appear to be too strong. The issue of "employee versus contractor" is a detailed discussion in and unto itself.
As for the lien, a lien is not valid unless there is a valid right to payment under a contract. There is no such valid basis here for two reasons:
1) No written contract per B&P 7159 and
2) No license.
What can be done to remove the lien?
Well, a few things. An abuse of process lawsuit seeking to have the lien expunged (removed) is a possibility. That abuse of process claim could also seek punitive damages.
The theory of that lawsuit would be that the contractor knowingly recorded a lien without a license and without a written contract.
The first step, however, should be a letter noting the problems described above (and any other problems--it's always hard to give concrete legal advice on only limited facts) and threatening an abuse of process lawsuit. The right to recover all moneys paid is a useful threat to try to reach a resolution involving a "walkaway" settlement where each side waives all claims and moves on with their lives. And a lien release would be a part of that settlement.
This is a common situation, but still each situation can be different, especially with regards to licensing issues. The above information is useful as a general discussion, but your reader (and all other readers) should just use the above information to help them understand the basic rules. There are always exceptions to rules and, again, each situation can be different and deserves unique attention.
Thank you to Dave Barnier for the above response. :) Mr. Barnier is a practicing litigation attorney in San Diego CA and can be reached at 619.682.4842.