Is it legal to cancel the lien?

Question:

We are a contractor who is owed money. We placed a mechanic’s lien on the property but did not enforce it in time. Is it legal to cancel the lien? Can we pursue the debt in small claims court?

Answer:

Not only is it legal to cancel the lien, but you are required to do so. If you let a lien lapse, or if a lien is satisfied (the customer pays the balance due, for example), then you bear the responsibility of filing paperwork with the court to release the lien. You can check with the County Recorder where you filed the mechanic’s lien to ask if they have a local form that is required to use to release the lien. If not, then a simple Word document that you title “Release of Lien” that includes identification of the lien, the parties involved, and the reason for release should be recorded with the County.

If you fail to release a lien that is no longer necessary/valid, the homeowner can file legal action against you, seeking to have the lien expunged by the court. The court will then issue an order expunging the lien and, most likely, ordering you to pay the other side’s attorneys’ fees and costs incurred to bring the request to have the lien expunged.

If you do not have the ability to enforce a contractual obligation using a mechanic’s lien (for any reason – you never recorded one, it was faulty, it expired, etc.) you still have a right to pursue a remedy in the court for basic breach of contract. A mechanic’s lien is a tool to enforce an obligation, but not having one does not negate the obligation.

Depending on the amount due, you may be able to pursue a claim in small claims court. The self-help section of your County’s Superior Court website will likely have instructions on how to file a small claims action. Typically, the limit recoverable varies between $5,000-$10,000 depending on which type of entity you are. You are not allowed to have an attorney represent you in a small claims action, but it is OK to pay an attorney to give you advice and help you put the paperwork together, get the defendant served, etc.