Homeowners remodeling their homes are often exposed to the risk of and or the contractors imminent threat of placing a mechanic lien on their property.
A mechanics lien is a "hold" against your property, filed by an unpaid contractor, subcontractor, laborer, or material supplier, and is recorded with the county recorder's office. If unpaid, it allows a foreclosure action, forcing the sale of the property in lieu of compensation.
A lien can result when the prime contractor (referred to as a "direct contractor" in mechanics lien revision statutes, effective July 1, 2012) has not paid subcontractors, laborers, or suppliers. Legally, the homeowner is ultimately responsible for payment — even if they already have paid the direct contractor.
A lien can result in a range of problems, which include:
-Foreclosure (if the homeowner doesn't pay the lien);
-Double payment for the same job (if the homeowner pays the direct or prime contractor, and he/she does not pay the subcontractor, laborer, or supplier); and/or
-A recorded lien on the property title (which can affect the owner's ability to borrow against, refinance, or sell the property).
At the Law Offices of Allen Farshi, we have nineteen years experience IN dealing with such matters. Here is how we can help.
DETERMINE IF THE LIEN IS VALID
It may not be valid if the work was not completed or supplies were not included in the plans or contracts. An attorney can help you find out if the lien is valid.
Often lien claims are invalid because the contractor, subcontractor, laborer, or material supplier has failed to meet the required timelines for filing the claim. Review the checklist below to determine if the claimant followed the required timelines.
LIEN REQUIREMENT CHECKLIST
Check to see if a Preliminary Notice was given to you within the specific time frames. (Remember: direct contractors and laborers do not have to file preliminary notices.)
A subcontractor or material supplier has 20 days after beginning work or delivering materials to serve you a Preliminary Notice. If the notice is late, the claimant loses lien rights for work done or materials delivered more than 20 days before the notice. The claim against your property is only valid for work done or supplies delivered 20 days before notice was given and anytime thereafter.
Be sure the Notice of Mechanics Lien accompanies the lien claim. The claim should include the amount owed, the service or products provided, the employer, the property owner, the address or description of where work was done or products delivered, the claimant's address, and a Proof of Service Affadivit completed and signed by the person serving the Notice and the claim.
Check to see if the potential lien claimant filed the mechanics lien within the legal time frame. If the potential lien claimant fails to record the mechanics lien within the appropriate time frame, the lien isn't valid.
The potential lien claimant must record the mechanics lien within 90 days of:
Completion of work;
When the property owner began using the improvement;* or
When the property owner accepted the improvement.
*This is sometimes hard to verify because the homeowner often occupies the residence during construction. Contact an attorney for assistance on this point.
LIEN FORECLOSURE ACTIONS
Check with your local superior court to see if the subcontractor or material supplier filed a timely lien foreclosure action.
A lien foreclosure action is a lawsuit to foreclose the mechanics lien. The lien claimant must file a lien foreclosure action within 90 days of the date that he or she recorded the mechanics lien. Often a lien claimant with a valid claim will fail to follow through, making the lien invalid.
A lien stays in the county records and on your property title until you take action to remove it. An invalid lien can make it difficult or impossible to sell, refinance, or obtain a line of credit on your property.
If the contractor, subcontractor, laborer, or material supplier fails to follow any of the specific time frames, you can petition the court to remove the lien.
Although anyone can record a mechanics lien, unlicensed contractors cannot foreclose on a mechanics lien if the work is valued at more than $500.
Steps to removing an invalid lien:
Send the lien claimant a written request by certified, registered, or express mail. Keep a copy of your letter and postage receipt as proof of your request. Include:
Deviations you've identified from the above checklist;
A request for the claimant to remove the lien; and Remind the claimant that if the lien is not removed and you have to get an attorney to remove it, the court can award you the attorney fees deemed reasonable to release the lien. The mechanics lien law changed July 1, 2012, removing the former $2,000 cap.
Send the request to the claimant's last known, verified address. Sometimes sending the letter is enough to persuade the lien claimant to release the lien.
Court Petition to Release the Property Lien
If the lien claimant doesn't remove the invalid lien, and the time has expired to record the mechanics lien and take action to foreclose, you may petition the court for a decree to release the property from the lien. This is a complicated process that may require the services of an attorney.
For more information regarding mechanics liens, see:Civil Code sections 8000—9566, or call The Law Offices of Allen Farshi, now at:
(310) 882 6500
Condominium and HOA lawyer in Sherman Oaks Real Estate Partnership Disputes in Sherman Oaks
CONDOMINIUM AND HOA LAWYER
REAL ESTATE LAW AND LITIGATION
REAL ESTATE PARTNERHIP DISPUTES
Tel: (310) 882 6500 11620 Wilshire Blvd. Suite 900
Tel: (818) 666 3183 15303 Ventura Blvd. Suite 900
Law Offices of Allen Farshi
REAL ESTATE LAW
California's ever-changing landscape, stringent environmental and coastal protection laws, pleasant year-round weather, diverse immigrant composition and booming job market have historically pushed California real estate market to the top. High consumer demand, by its very nature, entails unusual and sometimes unreasonable expectations. State law regulations from zoning to permit laws also present a myriad of challenges, affecting the homeowner's lifestyle and even the expectation of privacy.
Some of the matters most commonly litigated are homeowner association matters. Matters such as noisy neighbors, drug dealing from a tenant occupied unit, being assaulted by a neighbor, squeaky parquet wood floors, unauthorized and repeated use of guest parking. Each of the above is considered a nuisance and can result in a fine to the responsible unit owner. But what if your HOA is not proactive and the violation is not remedied. At the Law Offices of Allen Farshi, we take pride in our ability to come up with creative solutions to common real estate problems.
In California due to rapid appreciation in the multi-unit investment property, high market capitalization and significant upfront financial commitments, real estate partnerships for investment property have always been complicated.
These partnerships Typically invest in residential income property, medical buildings, office buildings, strip malls and the likes. However, by it's very nature partnerships and the interaction between the partners always entails conflict and legal challenges. Among the more common sources of conflict are the failure to provide proper, timely or accurate accounting, misappropriation of funds or embezzlement, inflated management fees, misrepresentation and even the simple decision to hold or sell the property.
At the Law Offices of Allen Farshi, we are experienced in litigating multi-million-dollar partnership disputes. Typical causes of action if the matter proceeds to litigation are declaratory relief; injunctive relief; fraud; conversion; breach of agreement; breach of implied covenant of good faith and fair dealing; accounting; partition and quiet title.
February 2016 CA Supreme Court Decision Gives Foreclosed Borrowers Power to Sue Banks Over Ownership of Mortgage Loan Debt
In February 2016, the landmark Supreme Court of California decision provided homeowner borrowers further grounds to sue their banks for wrongful foreclosures. The state Supreme Court opinion in the case of Yvanova v. New Century Mortgage Corp was filed on Thursday, February 18th, 2016, and came down unanimously in favor of borrowers over banks in that, borrowers can now challenge in court foreclosures if the assigned holder of a loan can’t prove it is the actual owner. This profoundly affects borrowers who received loans from banks which pooled mortgages into securitized trusts or other financial instruments.
The state Supreme Court stated in a 33-page ruling: “The borrower owes money not to the world at large but to a particular person or institution, and only the person or institution entitled to payment may enforce the debt by foreclosing on the security.” And further, “A homeowner who has been foreclosed on by one with no right to do so has suffered an injurious invasion of his or her legal rights at the foreclosing entity’s hands. No more is required for standing to sue.”
As in the case of SFR property, In California, the HOA may foreclose its lien judicially or nonjudicially (Cal. Civ. Code § 1367.1). Most HOA foreclosures in California are nonjudicial. However, if the property is a condominium or townhouse, California law limits the HOA’s ability to foreclosure in certain circumstances. The limitation Based on Amount and Length of Delinquency
The HOA cannot foreclose unless:
the delinquent amount is $1,800 or more (not including any accelerated assessments, late charges, fees and costs of collection, attorney's fees, or interest), or the owner has been delinquent for more than 12 months (Cal. Civ. Code § 1367.4).
Right of Redemption Following Foreclosure
If the HOA forecloses on the homeowner using a nonjudicial foreclosure, the foreclosure is subject to a 90 day right of redemption after the sale (Cal. Civ. Code § 1367.4(c)(4)). When you redeem the property, you get it back by repaying all assessments, interest, attorneys fees, and possibly costs of repair.
Water leaks: More serious situations arise in condominiums where there is a water leak from the top floor or adjacent unit. The water leak occurred on a weekend when no one knew how to turn off the water main. Your unit is flooded. Your HOA claims, the source of the water leak, was plumbing outside the common area and not covered by the HOA and its insurance policy. To make matters even worse, the unit owner responsible for the damage has an uncooperative tenant, or the owner has no or inadequate insurance. Assuming your own insurance has not denied coverage, you still have a water damage claim against the neighbor. The first step to take is to immediately cut off the water main and call an experienced plumber with a wall scanning unit to pinpoint the source of the water leak.
The plumber may need your authorization to remove the drywall and access the plumbing.
The plumber must be willing to immediately follow up with a detailed written report regarding the source of the water leak on the company letterhead. The source of the water leak, including damaged personal property must be photographed. Experienced plumbers will know what to say when the time comes to file your claim with insurance. Sudden versus gradual leak, cold water versus hot water, all have their nuances. Although you may object to the recording of your call, all insurance claims calls are typically recorded. However, the recording is noted in advance. The follow-up questions by the claims adjuster and your responses should be in writing.
Insurance coverage denial:
Denial of coverage in water leak cases is one of the more common grounds for litigation. Unless coverage is totally excluded Insurance companies will use every exception, excuse, and loophole to deny coverage. In situations like this, we can support a bad faith claim by bringing in our own independent claims adjuster to support your claim. If all else fails and assuming there are legal grounds, we will aggressively litigate a bad faith claim against your insurance company.
HOA Assessments: Special assessments are typically unanticipated and heavy. If the assessment remains unpaid, the association can move to foreclose on its lien. Once again, the Davis Sterling Act, codified under state law applies At the Law Offices of Allen Farshi, we have litigated all of the above in the past with success.
WEBSITE UPDATE IN PROGRESS
CONDOMINIUM HOA LAW
The condominium form of real estate ownership and living between common walls in close quarters present unique challenges. Problems typically are; water damage from adjacent units, neighbor nuisance, noisy parquet floors, parking issues, questionable HOA assessments, and tenant occupied units to name a few. At the Law Offices of Allen Farshi, we represent condominium owners in all matters involving HOA law. Home owners associations act as both landlords and mini-governments to their members, which means homeowners have rights that HOAs should both acknowledge and protect. This requires mutual respect from both parties: homeowners must respect the HOA's authority while the association must respect a homeowner's individual freedoms.
In California, homeowners' rights are established by the governing documents of the HOA, the Corporations Code (where it establishes guidelines for associations to govern their members), and the Davis-Stirling Act. Before a homeowner can question if they’re being treated unfairly by their HOA’s board, they must first learn their legally protected rights as part of the membership.
In the leading case of Nahrstedt v. Lakeside Village, the California Supreme Court ruled that HOA boards must put the collective rights of the community above the individual's rights when it comes to enforcing the CC&Rs. This decision meant that despite any individual expectation of the HOA’s duty, the board will always put the community’s needs first, even if it means letting the grass go weeks without being cut, so that the HOA could pay for roof maintenance.
Keep in mind that the following list of rights and entitlements, while a good reference tool, is not all-inclusive. Homeowners can do a lot of other things according to HOA policies, but boards generally have ultimate control over architectural approvals, parking assignments, and any exterior additions or modifications, use of the common areas, and conduct (accomplished commonly through rule setting).
In Summary, association members have the following rights:
Inspection of Records
Homeowners may inspect many of the financial and other records of the HOA, although they have to pay the direct costs to produce the records for inspection (costs for copying and postage). If a homeowner requests the redaction of information that is private or could lead to identity theft, they must pay for those costs as well (Civil Code Section 5205(a)(f)(g)). There are penalties in the statute including $500 fines for failure of the board to comply.
Homeowners are entitled to annual and other disclosures, which include: rules, fines, financials, budgets, reserves (including component list and funding plan), meeting minutes, assessments, insurance information, architectural procedures, and collection policies. Homeowners should also receive notices of dates, times and agendas of association meetings. (Civil Code Sections 4950(a), 5300, and 5520), and are entitled to distribution of the balance sheet and income and expenses for the prior fiscal year within 120 days of the end of the fiscal year. (Civil Code Section 5300).
Hearings for Disciplinary Action
Homeowners are entitled to notice and the opportunity to attend a fair hearing if disciplinary action is being considered against them, including fines or the suspension of privileges (pool access, etc.). All homeowners are entitled to notice of fines through circulation of a fines schedule and notice of hearings by first class mail. (Civil Code Section 5855).
Serving on the Board
Homeowners have the right to run for the board if they qualify. Qualifications should be established in the governing documents and will typically require the member to be in good standing (or having fully paid assessments and not in violation of the governing documents). Members are also entitled to a fair election with equal access to HOA resources as other candidates, including incumbents. (Civil Code Section 5105(a), 5135) There are penalties for failure to allow these rights in Civil Code Section 5145, including a potential $500 per violation fine against the association or possibly even the board.
Signs, Posters, Flags, or Banners; Exceptions
Associations must allow posting or displaying of noncommercial signs, posters, flags, or banners on or in an owner's separate interest. However, rules and limitations can be made for the protection of public health or safety or if the posting or display would violate a local, state, or federal law. (Civil Code Section 4710) The board can also restrict signs that constitute a nuisance or display obscenity, and can control the signs made for HOA elections (with reasonable restrictions).
Electric Car Charging Stations
As of January 1, 2012 homeowners are entitled to install electric car charging stations at their expense but are required to get architectural approval. Associations may control place and manner and set restrictions for safety reasons (Civil Code Section 4745).
Modifying Unit for Access for Disabled Persons
Homeowners can request to make modifications to the property in order to gain access or facilitate the use of their units at their own expense, as long as these modifications do not impair the structural integrity or mechanical systems or lessen the support of any portions of buildings. Boards may set some conditions but cannot deny these requests unless the modifications will...
1. Adversely affect the health or safety of neighbors OR
2. Are not necessary for access or use because of viable alternatives. (Civil Code Section 4760, Fair Housing Laws)
Rights of Ingress, Egress, and Support & Access
Homeowners cannot be barred from "ingress" and "egress" (which are legal terms meaning getting to and from) their units, and cannot be barred from physical access to their units, unless...
· The HOA has a court order
· The HOA has an order pursuant to a final and
binding arbitration decision
· Reconstruction is needed
· A hazardous condition exists
· The unit is uninhabitable or red tagged. (Civil
Code Sections 4505 and 4510)
Dogs, Cats, and Other Pets
No governing documents (including operating rules) passed or amended after January 1, 2010 may prohibit an owner from keeping one pet, subject to reasonable rules and regulations of the association. (Civil Code Section 4715) This does not mean a resident can keep a dangerous dog or nuisance pet on premises.
Satellite Dishes and Antennas
Homeowners are entitled to have satellite dishes. The board can set requirements relating to screening and placement. (FCC Rule 207)
Homeowners are entitled to have certain solar installations. Boards are entitled to set reasonable restrictions that do not substantially increase the cost or decrease the efficiency. This includes requiring homeowners to remove their panels if and when the HOA has to maintain the roof. (Civil Code Section 714 and 714.1)
Homeowners are entitled to know that the association can tow vehicles that violate the governing documents and must be given notice that they are in danger of being towed prior, which may be by tagging, a letter, or otherwise (Vehicle Code Section 22658.2).
ARE HOA BOARD MEMBERS PERSONALLY LIABLE
Board members are typically only personally liable for HOA matters if they breach a fiduciary duty to the HOA. There is therefore no basis for a suit against an individual board member unless the plaintiff successfully shows that the board member acted with negligence, willful misconduct, bad faith, or outside the board’s authority.
Example: An injured homeowner slips on a banana peel on the common swimming pool deck and breaks his leg. The homeowner then files a claim against the HOA and its board members asserting that his injuries were caused by the HOA failing to properly maintain the pool deck. If the court finds that the HOA knew of the problem, and ignored it, the HOA as a whole might be liable for damages. However, an individual board member will not be liable unless it’s shown that the board member caused the poor maintenance of the pool deck by acting in a manner not consistent with the best interests of the HOA — for example, if the board member maliciously threw banana peels on the pool deck, or voted to limit clean-up on the deck surface because the board member personally liked treading on filthy surfaces.
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