July 2014
Did you know that there are four different types of mechanic lien releases in California? Property owners and managers should be familiar with the different types, so they can require the appropriate release to match the situation.
Conditional v. Unconditional Lien Releases
- Unconditional lien releases are effective immediately, once signed and delivered. Contractors, subcontractors and material suppliers provide them only when they’ve been paid and the payment checks have cleared the bank.
- Conditional lien releases are effective only once payment is received (and the check has cleared).
Progress v. Final Lien Releases
- Progress lien releases are provided when a contractor, subcontractor or material supplier has provided some (but not all) of its work or materials.
- Final lien releases are provided when a contractor, subcontractor or material supplier has finished providing all of its services or materials for the project.
There are four different possible types of lien releases:
- Conditional progress lien releases;
- Unconditional progress lien releases;
- Conditional final lien releases; and
- Unconditional final lien releases.
The legislature has established the form for each of these four statutorily prescribed lien releases. The form of these lien releases changed on July 1, 2012. Users should use the current versions. The four different lien release forms are available in the attached pdf version of this article.
The property owner’s goal should be to ultimately receive a final lien release from each contractor, subcontractor and material supplier, and to receive progress lien releases to match the progress payments that are made.
Helpful Suggestions for Property Owners:
- Don’t make payments that exceed the value of the work completed.
- Before or at the time you make a payment, require lien releases for the work completed from each of the contractors, subcontractors and material suppliers.
Failing to obtain the proper lien release can have serious consequences. Unless a property owner receives proper releases, the property owner may have to pay twice for the same materials or services. Property owners who are not completely familiar with mechanic’s lien laws should consult with a knowledgeable attorney.
Kimball, Tirey & St. John LLP is a full service real estate law firm representing residential and commercial property owners and managers. This article is for general information purposes only. While KTS provides clients with information on legislative changes, our courtesy notifications are not meant to be exhaustive and do not take the place of legislative services or membership in trade associations. Our legal alerts are provided on selected topics and should not be relied upon as a complete report of all new changes of local, state, and federal laws affecting property owners and managers. Laws may have changed since this article was published. Before acting, be sure to receive legal advice from our office. For contact information, please visit our website: www.kts-law.com. For past Legal Alerts, Questions & Answers and Legal Articles, please consult the resource section of our website.
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