Mechanic’s Liens and Attorneys Fees

Based on California Law

Our office is commonly asked whether a contractor who files an action to foreclose on a mechanic’s lien can recover his attorneys fees against the owner of the property if he prevails at trial. There is a distinction in the type of cases where a contractor seeks to foreclose on a mechanic’s lien. Where the contractor has a direct contract with the owner, that contract may contain a provision for the recovery of attorneys fees. In that case, the contractor may obtain an award of attorneys fees for prevailing on the breach of contract action, but not on the mechanic’s lien action. It may appear that the contractor is getting his attorneys fees because it is all part of the same action, but the attorneys fees award is on the contract. A mechanic’s lien is an action against property for the value of the improvement. The claim on the contract is not secured whereas the mechanic’s lien is secured by the property.

The more common scenario where the issue arises is where a subcontractor or a material supplier files suit on a mechanic’s lien because that person or entity was not paid by the subcontractor or contractor with whom they have a contract or purchase order agreement. The supplier or subcontractor may be suing the owner because the person that they have a contract with is insolvent, has filed bankruptcy, or has nothing. That lawsuit is against the property; there is no right to attorneys fees.

The mechanic’s lien is limited to the reasonable value of the labor, services, equipment or materials furnished, or the price agreed upon by the lien claimant and the person with whom he or she contracted, whichever is less. That statutory language does not include attorneys fees.

If he or she prevails, the mechanic’s lien claimant is entitled to interest from the date of the lien being recorded, as well as certain “costs” which are nominal, and typically only include court fees, court reporter’s fees, etc., and not attorneys fees. The claimant is entitled to the interest and costs not because of the lien action but because he or she is a successful litigant. Anyone successful in a lawsuit is entitled to these nominal costs and interest if the sum was capable of being determined. For example, the interest you would be entitled to is the legal rate of interest (currently 10 percent), and not the rate of interest in your contract.

The reasoning for not allowing attorneys fees to be recovered is that the mechanic’s lien claim is against the property, and is limited to the amount that the property was improved by the lien claimant. It is not based on the contract. Therefore the only amount that can be charged against the property is the “improvement” of the property. Attorneys fees do not improve the property, but bricks and mortar do.

The presentation and/or documents are of a general nature and are intended to highlight areas of the subject matter and should not be used as a substitute for specific legal advice. You should seek the aid and advice of a competent attorney and/or accountant instead of relying on the presentation and/or documents.

About Sam K. Abdulaziz, Esq.

 
 

Law Offices of Abdulaziz & Grossbart P.O Box 15458 North Hollywood, CA 91615-5458 (818) 760-2000 (323) 877-5776 (818) 760-3908 FAX http://www.abdulaziz-grossbart.com

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