If a contractor, subcontractor or supplier is not paid for work done on a property in California, he can file a mechanic's lien. This lien is a hold against the property that can allow a foreclosure action if unpaid.
Complete all of the contracted work. A mechanic's lien cannot be filed unless the work is completed. Although this may seem counterproductive, the person filing the lien must have completely finished his work to prove that he has held up his end of the contract. A mechanic's lien has specific deadlines that are tied to completion dates. If you cannot finish the work, consider filing a stop notice before or instead of a mechanic's lien.
Serve a California 20-day preliminary notice (view the form in the resources section). Include the owner and contractor's names, the construction lender, your name and contact information, a description of your services, applicable dates, price of work and a description of the jobsite. This notice preserves the claimant's lien rights to the project until the lien notice is served. In some cases, the contract can serve as the notice (i.e., if the claimant was hired directly by the property owner). This notice is effective for no more than 20 days prior to the date on the notice through the completion of the contract.
Assemble any records you have on the project. This will include: contract, payment records, change orders, owner's name and project address. You will also need the name of the lender (if one exists) and the amount of the lien. Check the contract to see if there is mention of interest payments on outstanding balances.
Acquire a mechanic's lien form from a construction publisher (see Resources). Make sure it is the California State form. On the form, you will supply your name and contact information, the amount you are due, applicable interest rate, date balance became due, name of owner, description of services, property address and the name of general contractor (if applicable). The form also requires a verification witness and a notary's signature.
Record the lien at the County Recorder's Office in the county in which the project is located. It is recommended to deliver the lien in person for a date stamp. Mechanic's liens are time sensitive; when there is a stated date of work completion, a lien must be filed within 60 days for those with direct contract with the owner or 30 days for other claimants. There is a fee required for recording the lien.
Contact a lawyer (if you haven't already), and file a lawsuit to foreclose on the lien within 90 days of recording the lien. After 90 days, the lien expires. There is an Extension of Credit agreement that can give you more time to file the lawsuit, if necessary.