Most in the construction industry are familiar with the rules of California mechanics’ liens. They know that the Preliminary Notice of Civil Code Section 8034 and 8200-8216 is often the foundational document and that the deadline to record a mechanics’ lien is generally triggered by events occurring at the end of construction, including completion of the work of improvement and the recording of the notice of completion or notice of cessation. Most of these rules are found in California Civil Code sections 8160-8494.
While architects, engineers and other design professionals are certainly entitled to pursue a mechanics’ lien at the end of a construction project when they are unpaid for their work, unless they also consider the remedy available to them under the California design professional lien, they are missing an important opportunity to preserve their right to payment.
The California design professional lien is generally available to any certified architect, registered professional engineer or licensed land surveyor who furnishes services under a written contract with a landowner for the design, engineering or planning of a work of improvement, other than a single-family, owner-occupied residence with construction costs of less than $100,000 in value. These rules are generally found in California Civil Code sections 8300-8319.
Where a building permit or other governmental approval for the work of improvement has been obtained, the recorded design professional lien will encumber the property where the work is to be preformed from the date of recording of the design professional lien notwithstanding the fact that the actual construction work on the project has not yet commenced (Civil Code sec. 8304). This differs from the California Mechanics’ lien which is generally pursued long after work has commences and in most cases been completed.
Under the design professional lien process after the landowner defaults in the payments required by the written contract with the design professional, the design professional must mail a written demand to the owner specifying that a default in payment has occurred and the amount of the default. The letter must be sent by registered or certified mail, postage prepaid, return receipt requested. Only after properly sending such a notice and waiting 10 days may the design professional record the design professional lien at the office of the County Recorder (Civil Code sec. 8304).
Among the shortcomings of the design professional lien process is that the design professional lien must be recorded 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 (Civil Code sec. 8312). In addition, the design professional’s lien automatically expires and becomes null and void and of no further force or effect on the occurrence of either of the following:
- The commencement of the work of improvement for which the design professional furnished services at the request of the landowner; or
- The expiration of 90 days after recording the notice of lien, unless the design professional files a lawsuit to enforce the lien within 90 days of recordation (Civil Code sec. 8306).
The impact of these rules is that in order to insure preservation of the right to a design professional’s lien, the design professional should draft the contract with the landowner so that to the greatest extent commercially feasible it is not possible for the landowner to commence construction of the work of improvement for which the design was created until payment from the landowner has been received. One way to do this is to contractually authorize withholding of the delivery of design documents until satisfactory payment has in fact been received. If the design documents are delivered without payment and actual construction work on the project commences, the right to an enforceable design professional lien will be lost.
Please note that the fact that the design professional has the unique right to a design professional’s lien does not mean that the design professional may not also later claim the California mechanics’ lien remedy available to contractors, subcontractors, suppliers and others under the rules of California Civil Code sections 8400-8494.
While this short article cannot fully describe all the advantages or the limitations of the design professional lien, it is important for certified architect, registered professional engineer or licensed land surveyors to realize that they have these rights and to draft their contracts and adjust their procedures to protect these rights to the extent possible. For further detail on the design professional lien please consult California Civil Code sections 8300-8319. This Civil Code section and all California Codes are currently available for reference on-line at www.leginfo.ca.gov.
Article written by William L. Porter, Esq. and revised in 2014. Mr. Porter is a principal in The Porter Law Group, Inc. in Sacramento, California. He can be reached by phone at (916) 381-7868.