CONSTRUCTION LIENS 101 Presented by Shaaron A. Bangs, Esq. Crawford & Bangs, LLP Sponsored by CMA Business Credit Services

Mechanics’ Liens Stop Notices Payment Bonds Miller Act Bond

Mechanics’ Liens

Stop Notices

Payment Bonds

Miller Act Bond

MECHANICS’ LIEN LAW The essence of the “Mechanics’ Lien Law” is clearly stated in Section 3 of Article XIV of the California Constitution: “ Mechanics, persons furnishing materials, artisans, and laborers of every class, shall have a lien upon the property upon which they bestowed labor or furnished materials for the value of such labor done and materials furnished; and the Legislature shall provide, by law, for the speedy and efficient enforcement of such liens.”

The essence of the “Mechanics’ Lien Law” is clearly stated in Section 3 of Article XIV of the California Constitution:

“ Mechanics, persons furnishing materials, artisans, and laborers of every class, shall have a lien upon the property upon which they bestowed labor or furnished materials for the value of such labor done and materials furnished; and the Legislature shall provide, by law, for the speedy and efficient enforcement of such liens.”

MECHANICS’ LIEN Private Works Only Attached to work of improvement and the land upon which it is situated. Priority of Claims Relates back to time of commencement of work of improvement

Private Works Only

Attached to work of improvement and the land upon which it is situated.

Priority of Claims

Relates back to time of commencement of work of improvement

Stop Notices Private Works Public Works

Private Works

Public Works

Stop Notices – Private Works Owner – Anyone entitled to claim of lien except original contractor Lender – Anyone entitled to claim of lien including original contractor Must be bonded Attached to unexpended funds Attorney’s fees recoverable to prevailing party on Bonded Stop Notice Pro Rata Distribution

Owner – Anyone entitled to claim of lien except original contractor

Lender – Anyone entitled to claim of lien including original contractor

Must be bonded

Attached to unexpended funds

Attorney’s fees recoverable to prevailing party on Bonded Stop Notice

Pro Rata Distribution

Stop Notice – Public Works Anyone entitled to file claim of lien except original contractor Attaches to construction funds Public entity must withhold amount of claim plus “Reasonable Cost of Litigation” Pro Rata Distribution

Anyone entitled to file claim of lien except original contractor

Attaches to construction funds

Public entity must withhold amount of claim plus “Reasonable Cost of Litigation”

Pro Rata Distribution

Payment Bond Private Works Public Works All projects $25,000 or more For the benefit of all persons entitled to serve a Stop Notice

Private Works

Public Works

All projects $25,000 or more

For the benefit of all persons entitled to serve a Stop Notice

Miller Act Bonds Federal Projects Any claimant who has dealt directly with contractor or with subcontractor to the contractor Contract price or reasonable value of labor or materials furnished to the project

Federal Projects

Any claimant who has dealt directly with contractor or with subcontractor to the contractor

Contract price or reasonable value of labor or materials furnished to the project

Miscellaneous Bonds Mechanics’ Lien Release Bond Stop Notice Release Bond Contractor’s License Bond

Mechanics’ Lien Release Bond

Stop Notice Release Bond

Contractor’s License Bond