While a certificate of occupancy is often looked to as the date on which a project is “completed,” a fact-intensive inquiry may be required to determine the proper completion date when looking at the validity of a mechanic’s lien.
Civil Code section 8412 requires that a mechanic’s lien is recorded within (1) 90 days after “completion of the work of improvement” or (2) 60 days after a notice of completion, whichever is earlier. In Picerne Construction Corp. v. Castellino Villas, (2016) 244 Cal. App. 1201, a contractor, Picerne, constructed an 11-unit apartment complex for the owner, Castellino. A single certificate of occupancy for the project was issued in July of 2006, but roof and stair work within the applicable subcontracts was ongoing until mid-September of 2006. When Castellino failed to release retention proceeds, Picerne recorded a mechanic’s lien on November 28, 2006.
The Third District Court of Appeal held that although the mechanic’s lien was recorded nearly five months after the certificate of occupancy, the lien was enforceable because it was still recorded within 90 days “after the completion of work of improvement.” The Court noted that Picerne’s subcontractors did not complete the work required by their subcontracts and plans and Castellino did not accept the project until September of 2006. The Court noted an important distinction between work required under the tradesmen’s contracts and “corrective or repair work . . . comparable to adding a few strokes of paint or turning a screw.” (Id. at 1216-17) While the former indicates a project was not yet completed, the latter does not. (Id.)
Developers and contractors should keep in mind that the bright-line date provided by an certificate of occupancy is not always dispositive when recording mechanic’s liens. For more information about this or any mechanic’s lien issues, contact Jordan Nager in LGC’s San Diego office.