Covid-19 Impact: Watch Your Mechanics Lien Deadlines

The time period for recording mechanic’s liens runs from “completion” of a project, but what exactly does that mean? Generally, contractors must record their mechanic’s liens 90 days after completion of the work of improvement. However, if the owner has recorded a notice of completion, a mechanics lien must be recorded 60 days (for general contractors) or 30 days (for subcontractors) after the owner records a notice of completion.

But, what if a project is shut down due to Covid-19 before a contractor completes its work and there is no notice of completion recorded? This is may be deemed cessation, and depending on the length of cessation, and/or recordation of a notice of cessation, this might mean the project is deemed complete and a contractor’s mechanics lien timing begins to run.

Cessation will be deemed completion if one of the following is met:

1. The owner records a notice of cessation after cessation of labor for a continuous period of 30 days.

2. There has been cessation of labor for a continuous period of 60 days. If an owner closes access to a worksite, but does not record a notice of cessation, the project is deemed complete 60 days after work has stopped.

If an owner closes access to a worksite, but does not record a notice of cessation, the project is deemed complete 60 days after work has stopped.
If either of these two factors are met, the project is deemed complete for mechanics lien purposes. Your deadline to record a mechanics lien is then the same as if a notice of completion was recorded (60 days for general contractors or 30 days for subcontractors).

What if the owner re-opens the project after either cessation of labor for 60 days or recordation of a notice of cessation? This is now a new project and a contractor needs to serve a new preliminary notice based on the scope of work to be completed, not the original scope. If the contractor does not get paid, a mechanics lien can be recorded for the unpaid amount of work on this “new project.” The net result of this is that a contractor could potentially have more than one lien on a project.