Esoteric Rulings re Mechanics Liens and Inheritance Rights

   There were two cases decided today which are relevant and important to my areas of practice. They are esoteric for a blog post which is not directed to experts. Nonetheless, one holding is important to my clients who are contractors. The other for my clients whose inheritance in uncertain due to a change in the Probate code between the making of a Will and the death of the decedent who takes under a power of appointment. Continue reading

Significant Changes to Mechanics Lien Law Effective July 1, 2012

   Effective July 1, 2012 all of the existing statutes governing mechanics liens, stop notices and payment bonds in California will be repealed and replaced by new statutes contained at Civil Code sections 8000-8848 (private works) and 9000-9566 (public works). Continue reading

Subs and Materialmen: Serve Your 20-Day Notice on Lender

   A recent case highlights the necessity to serve a preliminary 20-day notice on the construction lender. In Shady Tree Farm v. Omni Financial, Shady Tree delivered mature trees for the landscaping of a development known as Granite Park. Omni had provided an $18 million construction loan secured by a deed of trust on the property. Omni’s DOT was recorded in January 2006.  Omni recorded a modification to this DOT March 2007.

   On August 11, 2008, Shady entered into a contract with a third-party to sell trees to the owners of Granite Park. Shady agreed to deliver 1,879 trees for a price of approximately $3.2 million. Between August 2008 and November 2008, Shady delivered 959 trees to the Granite Park development.

   Except for a $25,000 deposit, Shady was not paid for the trees. In February 2009, Shady recorded a materialman’s lien against the property. In April 2009, Shady filed suit to foreclose the materialman’s lien. Shady further requested a declaration that its lien had priority over Omni’s DOT.

   Unfortunately for Shady, its materialman’s lien was dead out of the gate because Shady did not serve a preliminary 20-day notice upon Omni, the construction lender. Continue reading