Is there a monetary limit on a mechanics or contractors lien?
Full Question:
Answer:
In California, an unpaid contractor may record a mechanic's lien on the
property upon which he or she worked. Civil Code §3123 outlines how to
determine the permissible amount of the mechanic's lien. Subdivision (a)
provides that the lien must be for the lesser of "the reasonable value of the
labor, services, equipment, or materials furnished" or the contract price.
Subdivision (b) provides an exception that allows the contractor to include
amounts due for labor, services, equipment or materials furnished as a
result of written contract modifications or as a result of rescission,
abandonment or breach of the contract. California case law provides that if
a contractor overstates the lien or includes amounts for costs other than
those specified in §3123, then the owner may obtain a court order releasing
or reducing the lien. Further, under §3118, if a contractor "willfully" includes
amounts for work not furnished for the property upon which the lien is
placed, the contractor shall "forfeit his lien."
A California appellate court has interpreted §3123 to allow a lien to include
an amount over and above the written contract price. The lien amount
included the value of additional work that the owner demanded be
performed before he would pay the original remaining contract balance. The
appellate court also held that trial courts are not required to automatically
extinguish overstated mechanic's liens and instead have the authority to
reduce them to the proper amount. Basic Modular Facilities, Inc. v.
Ehsanipour, 70 Cal.App.4th 1480, 83 Cal.Rptr.2d 462 (1999).
