The California Legislature has recently amended the mechanic’s lien law. These new provisions modify the procedure to maintain a valid mechanic's lien. The failure to comply with these new provisions will result in the lien being declared invalid.
Commencing on January 1, 2011, a claimant will be required to serve a “Notice of Mechanic’s Lien” on the owner of the property prior to filing a mechanic’s lien. The mechanic’s lien itself must contain a proof of service attesting that the “Notice of Mechanic’s Lien” was served by registered mail prior to the recording of the lien. Finally, the claimant must record a “Notice of Lis Pendens” within twenty (20) days of the filing of a complaint seeking to enforce the mechanic’s lien.
Construction contracts between general contractors and subcontractors are often modified by change orders related to scope of work revisions during construction. If litigation ensues, the subcontractor may claim that the general contractor violated California’s various prompt-payment statutes. The California Court of Appeal recently provided some new insight in this area. In Martin Brothers Construction v. Thompson Pacific Construction, the Court of Appeal held that a general contractor who had a good faith dispute with a subcontractor could withhold 150 percent of the amount due without violating the prompt-payment statute requirements of California's Public Contract Code. The Court also ruled that parties to a construction contract could contractually "opt out" of the timing requirements for progress payments contained in California's Business and Professions Code.