California Design Professional Liens: An Overview
California Design Professional Liens:
By William C. Last, Jr.
Attorney at Law
As most design professionals are aware, after the design work is completed many projects do not go forward. The question then arises as to whether or not the mechanic lien remedies are available. In response to this question, the California enacted legislation that provides an exclusive lien remedy for design professionals. Specifically, a design professional can record a lien where no actual construction of the planned work of improvement is commenced prior to recordation of the notice of lien.
The design professional mechanic lien statutes are codified at Civil Code section 3081.1 et. Seq. The remainder of this article will discuss that exclusive remedy.
1. Who is eligible to record the design professional mechanic lien ?
For the purposes of the design professional liens, a “design professional” means any certificated architect, registered professional engineer, or licensed land surveyor who furnishes services pursuant to a written contract with a landowner for the design, engineering, or planning of a work of improvement.
It should be noted that a design professional lien will not apply to design work on a single-family owner occupied residence where the construction costs are less than one hundred thousand dollars in value.
2. What are the prerequisites to recording a lien ?
The prerequisites to recording a design professional lien are as follows: (a) the landowner defaults in any payment required pursuant to the terms of the written contract or refuses to pay upon the demand of the design professional made in accordance with the written contract.
(b) Not less than 10 days prior to recordation pursuant to subdivision (c), the design professional mails by first-class registered or certified mail, postage prepaid, addressed to the landowner, a written demand for payment specifying that a default has occurred pursuant to the contract or agreement and the amount of the default.
(c) The design professional records, in the office of the county recorder in the county in which the real property or some portion thereof is located, a notice of lien which specifies that a lien is created in favor of the named design professional, specifies the amount thereof, identifies the current owner of record of the real property, provides a legal description of the real property to be improved, and specifies the building permit or other governmental approval for the work of improvement required as a condition of recording the notice of lien by Section 3081.2.
3. What can be included in the lien?
A design professional shall, from the date of recordation pursuant to Section 3081.3, have a lien upon the real property for which the work of improvement is planned to be constructed, notwithstanding the absence of commencement of actual construction of the planned work of improvement, if the landowner contracted for the design professional’s services and is also the owner of the real property at the time of recordation of the lien. The lien of the design professional shall be for the amount of the design professional’s fee for any services rendered prior to commencement of the work of improvement or the reasonable value of those services, whichever is less. The amount of the lien shall be reduced by the amount of any deposit or prior payments, as specified by a written contract entered into by the design professional and by the landowner or his or her agent. However, no lien shall arise pursuant to this chapter, and a design professional may not record a notice of lien pursuant to subdivision (c) of Section 3081.3, unless a building permit or other governmental approval in furtherance of the work of improvement has been obtained in connection with or utilizing the services rendered by the design professional.
4. When must the lien be recorded ?
A design professional shall record a notice of lien pursuant to subdivision (c) of Section 3081.3 no later than 90 days after the design professional knows or has reason to know that the landowner is not commencing the work of improvement.
5. How long is the lien effective and what must be done must be done to perfect it ?
(b) The lien created pursuant to subdivision (a) shall automatically expire and be null and void and of no further force or effect on the occurrence of either of the following:
(1) The commencement of the work of improvement for which the design professional furnished services at the request of the landowner.
(2) The expiration of 90 days after recording the notice of lien, unless the design professional files suit to enforce the lien within 90 days of recordation.
(c) In the event the landowner partially or fully satisfies the lien of the design professional, the design professional shall execute and record a document which evidences a partial or full satisfaction and release of the lien, as the case may be.
Any design professionals’ lien perfected pursuant to this chapter shall be enforced pursuant to the provisions contained in Article 7 (commencing with Section 3143) of Chapter 2 of Title 15.
6. What are remedies are available ?
This chapter does not affect the ability of a design professional to obtain a mechanic’s lien pursuant to Title 15 (commencing with Section 3082) of this part.
The lien of a design professional perfected pursuant to this chapter shall not affect the ability of the design professional to pursue other remedies.
Priority of liens
(a) No lien created by this chapter shall affect or take priority over the interest of record of a purchaser, lessee, or encumbrancer, if the interest of the purchaser, lessee, or encumbrancer in the real property was duly recorded before recordation of the design professionals’ lien.
(b) No lien created by this chapter shall affect or take priority over an encumbrance of a construction lender which funds the loan to commence the work of improvement for which the design professional furnished services at the request of the landowner.