How can a contractor, subcontractor, or supplier secure payment for its work? One solution is to file a mechanics’ lien against a project’s property.

Lien laws vary widely from state to state and time to time because contractors and subcontractors frequently seek to change them – California is no exception. One particularly significant rule is that a subcontractor must send a pre-lien notice to the property’s owner, the general contractor, and the construction lender within 20 days after commencing work. Assuming the savvy sub or contractor files its pre-lien notice, a contractor or subcontractor will want to ask its legal advisor about what can be claimed in a lien notice.

In California, a lien claimant can recover for the reasonable value of its provided labor, services, equipment, or materials or the work’s contract price. Moreover, a lien’s amount can exceed the contract price – costs based on modification are allowed, via written agreement or a person’s word (and a firm handshake).

However, a lien claimant cannot include delay damages or attorneys’ fees.

In Lambert v. Superior Court, the California Court of Appeal held that delay damages are not allowed in a mechanics’ lien, whether or not the contract describes them as extra work. It reasoned that they are a form of “consequential damages” outside of a lien’s scope and allowing them would give claimants unfair leverage in arguing over who breached the contract. You might be thinking, “Aren’t overtime costs the same ‘hour’ as regular labor costs, though they are paid at time and a half?” While that’s true, California state and federal courts have squarely held that delay damages are not allowed in a mechanics’ lien.

Similarly, California courts don’t allow attorneys’ fees in a mechanics’ lien because they don’t add to the property’s value.

Still, if a lien claimant includes impermissible items, it doesn’t forfeit the entire lien (per the California Court of Appeal in Basic Modular Facilities, Inc. v. Ehsanipour). Instead, a court will reduce the lien to its proper amount, unless a claimant willfully includes items that it didn’t actually provide.

A mechanics’ lien is a useful tool for securing payment. But a claimant must save its delay damages and attorneys’ fees claim for a breach of contract action rather than a mechanics’ lien.

*Zachary Stewart is a 2L Law Student working as a Summer Associate at Bradley. He is not a licensed attorney.

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Photo of E. Mabry Rogers E. Mabry Rogers

Mabry Rogers focuses his practice on complex construction and procurement litigation. He has been with Bradley Arant Boult Cummings since 1975 and worked on some of the most important matters in Alabama, the Southeast and around the country over the past several decades.

Mabry Rogers focuses his practice on complex construction and procurement litigation. He has been with Bradley Arant Boult Cummings since 1975 and worked on some of the most important matters in Alabama, the Southeast and around the country over the past several decades. Rogers is a member of the American College of Construction Lawyers, named a leading lawyer by Best Lawyers and Chambers USA. He holds a B.A. (cum laude) from Yale University and a J.D. (cum laude) from Harvard Law School. View articles by Mabry

Photo of Michael Knapp Michael Knapp

Michael Knapp enjoys a national practice which focuses primarily on construction, business and commercial disputes and financial services litigation. For the past several years, his focus has been on large scale public and private construction project disputes spread equally among owners, developers, engineers…

Michael Knapp enjoys a national practice which focuses primarily on construction, business and commercial disputes and financial services litigation. For the past several years, his focus has been on large scale public and private construction project disputes spread equally among owners, developers, engineers, architects, contractors and sureties. In recent years, Michael has worked on several high profile construction defect class action matters that involved claims of moisture intrusion and mold infestation. Additionally, Michael has worked with a number of clients in drafting, structuring and negotiating even handed contracts in an attempt to avoid disputes between the parties. He is also experienced in the resolution of disputes, including mediation, arbitration, and litigation in state and federal courts across the country.

Michael has given numerous in house and public lectures on topics including the construction effects of the Americans with Disabilities Act, revisions to the American Institute of Architects and Associated General Contractors form contracts, proper claims procedures and practical construction project documentation. During the summers of 2009 and 2010, Michael had the honor of teaching a construction law course to engineering students at Misr University located near Cairo, Egypt.

He is a member of the State Bars of North Carolina, District of Columbia and California.

Before joining Bradley, Michael served in the United States Navy as a Judge Advocate from 1995 to 1998 where he was the Assistant Staff Judge Advocate for the Commanding Officer of Naval Station San Diego, the home of the U.S. Navy’s Pacific fleet. In addition, Michael served as a prosecutor where he tried several felony crimes to verdict.

After his Navy service, Michael practiced law in San Diego for five years before returning to the Southeast.

Photo of Zachary Stewart Zachary Stewart

Zachary Stewart is a 2L Law Student at the University of Alabama, working as a Summer Associate at Bradley. He is not a licensed attorney.