Filed A Lien By Mistake?

Question:

“We filed a lien after we were paid by mistake. I released the lien right away, the client claims I have to expunge the lien. Not sure how to do this?“

Answer:

“Mechanic’s liens are recorded in the County in which the real property at issue sits. When the lien is no longer valid (because it was entered by mistake, because the invoice owed has been paid, because you reached a settlement with the property owner, or because the lien has been in place for 90 days and the lienholder has not yet filed a lawsuit to foreclose on it), the lien must be formally released with the County as well.

There is not a required California form for releasing the lien, though you may want to contact the County in question and ask about any County-specific forms for completing this. Typically, a document called “Release of Lien” can be drawn up as a simple Word document that references the claimant (that’s you – the party that entered the lien), the property owner, the property address, the lien that was Recorded, and the reason the lien is being released.

It is important to promptly release any invalid lien. If you do not, the property owner can hire an attorney and file a Petition with the court to have the lien expunged. The property owner can ask, as part of that Petition, to recover all attorneys’ fees they had to spend to have the lien expunged. While the property owner needs to request that you release the lien before they can file the Petition, if you do not respond or do not quickly respond to such a request, the property owner can proceed with the Petition. Beyond the attorneys’ fees that may be awarded, if the existence of the lien causes the property owner financial harm, you may be liable in a lawsuit to pay for that financial harm. For example, if the property owner is selling their home, but the sale falls through because title cannot clear due to the lien, you could be held liable for that loss of sale.

Many attorneys are willing to put together and record a Release of Lien for you, at a flat-rate charge.”