Articles Posted in Litigation and Disputes

mechanics-lien-california-300x200

Author: Staff

Investing in California real estate often involves renovations or new construction. Unless a real estate investor plans on taking a very do-it-yourself approach, this will require the assistance of contractors, suppliers, and design professionals like architects or structural engineers. You may even want to find a real estate agent with experience in renovations. In the event that someone who worked on a real estate project believes they have not received the contracted payment, California law allows them to file a mechanics lien on the property.

Mechanics liens can be troublesome for California real estate investors. They take priority over other liens, and state law sets a very short timeline for enforcement. Perhaps the most concerning feature for real estate investors is the ability of subcontractors to file a lien when the general contractor does not pay them. In that situation, the property owner is not at fault, but must still deal with the lien.

What Is a Mechanics Lien?

A lien is a legal claim that places a hold on real property, affecting any attempt to sell the property or obtain financing. Perhaps the most common type of lien is the one held by a mortgage lender on the property purchased with the lender’s money. If the property owner defaults on the loan, the lender can foreclose on the property. Foreclosure of a mechanics lien seeks to recover money owed to a person who worked on a real estate project.
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Construction-Contractors-300x183

Author: Staff

Investing in California real estate often requires repairs or renovations. Some real estate investors have the expertise to perform the work themselves. But everybody else must rely on contractors to renovate existing improvements on real property, or build new improvements from the ground up. California real estate investors must carefully research prospective contractors, and the should maintain close communication throughout the project.

Requirements for California Contractors

California law defines the term “contractor” as any individual or business that is able to “construct, alter, repair, add to, subtract from, improve, move, wreck or demolish” any improvement to real property. A license is required for any project valued at $500 or more.

The Contractors State License Board (CLSB) licenses contractors in three main categories: general engineering, general building, and specialty. Real estate investors commonly use contractors licensed in the latter two categories. The CLSB licenses specialty contractors in dozens of subcategories, such as insulation, framing, drywall, HVAC, landscaping, plumbing, and welding. Investors can research the status of a contractor’s license on the CLSB’s website.
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