What is a mechanics lien in California and when might a contractor file one?

• A. A license requirement for contractors
• B. A tax credit for energy efficiency projects
• C. A security interest in a property for unpaid work; filed when payment is not received for work performed
• D. A type of insurance policy for contractors

Answer: (C)

A mechanics lien is a security interest against real property that secures payment for work performed or materials furnished on an improvement. It protects contractors and suppliers by giving them a legal claim on the property if they aren’t paid. A contractor would file one when payment for the work isn’t received. Once recorded in the county, the lien attaches to the property and can affect the owner’s ability to sell or refinance until the debt is paid or the lien is released. California also requires steps to preserve lien rights, such as providing a preliminary notice if you didn’t contract directly with the owner, and filing the actual lien within prescribed time limits after completion or last day of work. The lien can then be enforced in court to recover what’s owed, but it is not a license, tax credit, or insurance.