For those in the construction industry, a mechanic’s lien (also known as a construction lien) is a powerful tool to ensure you get paid for the labor and/or materials you provide. However, navigating the specific lien laws of each state is crucial, and California has a particular requirement that can trip up even seasoned suppliers. Let’s explore this nuance around construction materials in California, and your lien rights will (or won’t!) include them.
Do You Have Lien Rights on Construction Materials in California?
The rule is simple but critical: in California, construction materials must be incorporated into the permanent structure of the project to be protected by lien rights.This means that lien rights are not established when materials are merely delivered to a job site. They must be physically installed in the property.This is a significant distinction from states like Arizona, where lien rights can begin the moment materials are dropped off at the property, as they represent a potential improvement.
In California, a palette of shingles sitting on the lawn – or even just resting on the roof – do not grant you the right to lien for their value. To secure your rights, the materials must be physically installed and become a permanent part of the improvement.
What Does “Incorporated” Mean?
In order to be “incorporated,” the material must be physically installed as a permanent part of the property.
Example Scenario: Let’s say a bundle of shingles is delivered and left on the job site. The project stalls, so they remain out on the site. You cannot file a construction lien for the cost of those shingles, as they are not incorporated into the permanent structure of the project.
Therefore, they could be considered “not incorporated into the improvement.”
However, once those shingles are nailed into place on the roof, they are considered “incorporated.” They have become a permanent part of the property.
What If Some Materials Are Installed, But Not All?
If only a portion of the materials are installed, the same rule applies. Only the value of the materials that are physically attached or installed is protected by your lien rights.
If you install half of those roof tiles, but the project stalls before you can install the other half, only the incorporated half can be covered by your lien rights.
For material suppliers working on projects in California, this is a vital piece of information. To protect your investment, it’s essential to be aware of when your materials are being incorporated into the job. Failure to understand this distinction could risk your lien rights on the construction materials.
Protect Your Lien Rights in California
For construction businesses in California, it’s easy to think that filing a Preliminary Notice is the only step required to protect your investment. While serving this notice is a critical and mandatory first step, it only preserves your right to file a mechanic’s lien in California. The enforceability of your lien may hinge on specific rules, such as the material incorporation requirement.
At Titan Lien Services, we ensure your work is protected by verifying and filing all required documents needed to secure your lien rights. In addition to providing resources, our one-of-a-kind platform supports you by submitting, tracking, and managing your lien documents all in one place! Sign up today and try it for yourself.