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Law Pro
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Category: Real Estate Law
Satisfied Customers: 24370
Experience:  20 years extensive experience in real estate law, foreclosure, finance, and landlord tenant law.
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We hired a vendor for installing a storm drain for the new

Resolved Question:

We hired a vendor for installing a storm drain for the new construction of our business.
We haven't paid him yet as we are waiting for the business to open as we are very short on funds. How many days does he have before he files a lien on the property?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Law Pro replied 1 year ago.
Hi! My name is XXXXX XXXXX I'll be the attorney assisting you.

In CA, before a contractor can file a lien they must give you notice of their intention to file a lien. That notice must be sent to you 20 days before they can file a lien.

As to how they must send the notice:

Certified mail, return receipt requested within 20 days of the date on which you first furnished labor or materials. Service is consideredcomplete on the date of mailing, not the date signed or received by the addressee.

Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer.. I thank you in advance for taking the time to provide me a positive rating!

If you have any questions, about this or anything else, please ask for me, Law Pro, directly in the question and I will try to assist you as best I can.

For example, you would state, "This question is for Law Pro . . . (then on with your question).

I wish you the best in the future.
Customer: replied 1 year ago.

In case a lien is filed, what are the implications on


a. business credit report


b. personal credit report


 


I have signed personal guarantee to the bank for the loan, but didn't sign any collateral of my personal assets.

Expert:  Law Pro replied 1 year ago.

A lien is against the property - not you so there are no personal or business implications. The property can't be sold or refinanced with a lien on it.

However, if they filed suit and obtained a judgment - that would definitely have affect on your business and/or personal credit.

You also stated:

I have signed personal guarantee to the bank for the loan, but didn't sign any collateral of my personal assets.

 

That means that they can't just take or execute against any of your personal property UNTIL AFTER they get a judgment against you. Once they get a judgment they can execute against all your unsecured personal property, garnish bank accounts, levy on brokerage accounts, etc.

 

 

Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer.. I thank you in advance for taking the time to provide me a positive rating!

If you have any questions, about this or anything else, please ask for me, Law Pro, directly in the question and I will try to assist you as best I can.

For example, you would state, "This question is for Law Pro . . . (then on with your question).

I wish you the best in the future.

Customer: replied 1 year ago.

If we pay off the amount owed, does the vendor remove the lien immediately? Does the lien remain on the history of the property report? If so, at the time of sale/refinance, would the history adversely impact the sale/refinance?


The amount owed is much smaller than the value of the property.

Expert:  Law Pro replied 1 year ago.

If we pay off the amount owed, does the vendor remove the lien immediately?

 

You also have to pay the satisfaction costs - that runs about an additional $100.

 

Does the lien remain on the history of the property report? If so, at the time of sale/refinance, would the history adversely impact the sale/refinance?

 

Yes, the lien will be of record as against the property but, if satisfied, it's like any other mortgage or loan lien that's been satisfied and has no impact (adverse or positively) whatsoever.

 

 


The amount owed is much smaller than the value of the property.

 

 

If the lien is satisfied - then it's of no consequence.

 

If still viable - that will have to be paid off if you refinance or sell the property.

 

 

 

 

Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer.. I thank you in advance for taking the time to provide me a positive rating!

If you have any questions, about this or anything else, please ask for me, Law Pro, directly in the question and I will try to assist you as best I can.

For example, you would state, "This question is for Law Pro . . . (then on with your question).

I wish you the best in the future.

 


Customer: replied 1 year ago.

We are in the process of converting the construction loan to a regular loan (same lender+SBA) in the next few weeks. Will the escrow closing be affected if we have the lien? Will the lender insist on clearing the lien before we can close?

Expert:  Law Pro replied 1 year ago.
Will the escrow closing be affected if we have the lien? Will the lender insist on clearing the lien before we can close?


Yes, if a lien is filed - absolutely the lender will demand that it be satisfied before or at closing.

Sorry.


Good luck!!
Customer: replied 1 year ago.

At what stage can the vendor file a suit and obtain judgement? After 20 days notice, can the vendor immediately file a suit and obtain a judgement? If so, how long would it take to obtain the judgement? Will the judgement impact running of the business?

Expert:  Law Pro replied 1 year ago.
I'm going to have to move on from this question after answering this. This is getting way beyond the original question.


At what stage can the vendor file a suit and obtain judgement?

The vendor can file suit any time you don't comply with the agreement. That if not otherwise agreed - payment is due upon completion of services.

If the vendor has performed their services and you don't pay - then can file suit immediately.

After 20 days notice, can the vendor immediately file a suit and obtain a judgement?

No, they can only file a lien against the property - a civil action to obtain a judgment is different than a lien.

A lien is a matter of right for a contractor if the vendee doesn't pay them for their time and materials. They don't have to go to court and get a judgment but just file the lien instead.

If so, how long would it take to obtain the judgement?

It all depends - it can take as little as 2 months or years if you defend the civil litigation and file appeals, etc.

Will the judgement impact running of the business?

Yes, potentially because the vendor could execute against your assets, inventory, vehicles, bank accounts, etc. to satisfy the judgment.



Good luck!!
Customer: replied 1 year ago.

Sorry, one final question related to the original question. If we pay the vendor after they file the lien, do we need to pay interest on the balance due?

Expert:  Law Pro replied 1 year ago.
No.

The amount stated on the mechanic’s lien cannot include either attorneys’ fees
nor interest.

However, a mechanic’s lien may note that 10% interest is also owed
on top of the principal amount of the mechanic’s lien.

Interest can be recovered as part of a judgment on a lawsuit foreclosing on the
mechanic’s lien. At trial, the amount of the mechanic’s lien is determined, and
interest on this amount will be added to the judgment amount at the statutory
rate of 10% per year. The date from which interest starts is unclear, but is likely
the date that the claimant became owed by his customer.

Attorneys’ fees will not be included in the amount of the judgment related to the
mechanic’s lien, even if the claimant has an attorneys’ fees provision in his
contract.

Attorneys’ fees are still recoverable from the claimant’s customer via a separate
cause of action for breach of contract.

Law Pro, Lawyer
Category: Real Estate Law
Satisfied Customers: 24370
Experience: 20 years extensive experience in real estate law, foreclosure, finance, and landlord tenant law.
Law Pro and 4 other Real Estate Law Specialists are ready to help you

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