California's Mechanic's Lien law provides an effective tool for contractors and material suppliers to ensure payment on projects. Although it clearly is not the only tool, it is effective because it potentially ties up the property where the work was performed and gives the owner extra incentive to pay. However, Mechanic's Liens are not appropriate for every project and a contractor filing an invalid Lien runs the risk of paying the owner's attorneys fees if the owner brings a proceeding to release the real property from the Lien. One area where care must be exercised, and our focus here, is whether work or materials were provided to a "work of improvement."
Civil Code section 3110 defines work of improvement to include "the construction … or repair … of any building, machinery, railroad, or road, the seeding, sodding, or planting of any lot or tract of land for landscaping purposes, the filling, leveling, or grading of any lot or tract of land, the demolition of buildings, and the removal of buildings." However, California case law provides more useful guidance on what constitutes a work of improvement for Mechanic's Lien law.
The crucial factor in determining whether a project qualifies as a work of improvement is whether the improvement is "permanent" in nature or a "fixture." In one case the court of appeal expressed skepticism about whether a contractor's work qualified where:
The findings affirm that none of the labor performed and materials furnished by the plaintiff and put into the building ever became a part of the said building or fixtures, or constituted or formed any improvement or alteration of or in said building, or any addition thereto, and that conduits, electric wiring, and switchboards were not so installed as to become permanently attached to said building, or to become fixtures therein. Moses v. Pacific Building Co. (1922) 58 Cal. App. 90, 94.
Although some contractors may file Mechanic's Liens where work may not have been permanent in nature to bolster their chances of timely payment, the risk of doing so is being forced to pay the owner's attorney's fees in a proceeding to release the property from a Mechanic's Lien under Civil Code section 3154. If a contractor receives a demand to release a Lien that does not actually involve a permanent improvement or fixture, the contractor should consider doing so rather than running the risk of an attorney's fees award. As was mentioned at the beginning of this note, a contractor will still have other means of attempting to recover payment.
Mike McMahon email@example.com