Priorities - Mechanics Lien - CA Civil Law

Section § 8450

This rule says that a construction lien generally takes priority over other claims like mortgages or deeds of trust on a property if those claims attach after the construction work starts, or if they were not officially recorded and unnoticed by the lien claimant when the work began. However, there's an exception noted in a different law, Section 8452, which might change this priority rule.

(a) A lien under this chapter, other than a lien provided for in Section 8402, has priority over a lien, mortgage, deed of trust, or other encumbrance on the work of improvement or the real property on which the work of improvement is situated, that (1) attaches after commencement of the work of improvement or (2) was unrecorded at the commencement of the work of improvement and of which the claimant had no notice.

(b) Subdivision (a) is subject to the exception provided for in Section 8452.

construction lien priority work of improvement mortgage deed of trust unrecorded encumbrance claimant notice real property lien attachment Section 8452 exception priority rule property claims lien hierarchy real estate encumbrance commencement of work property lien rules

(Added by Stats. 2010, Ch. 697, Sec. 20. (SB 189) Effective January 1, 2011. Operative July 1, 2012, by Sec. 105 of Ch. 697 and by Section 8052.)

Section § 8452

If someone loans you money through a mortgage or deed of trust and there's a lien on your property because of work done, the loan can take priority over the lien for work done after a payment bond is recorded. This only happens if the bond mentions the mortgage or deed and covers at least 75% of what you owe on it.

A mortgage or deed of trust, otherwise subordinate to a lien under Section 8450, has priority over a lien for work provided after recordation of a payment bond that satisfies all of the following requirements:

(a) The bond refers to the mortgage or deed of trust.

(b) The bond is in an amount not less than 75 percent of the principal amount of the mortgage or deed of trust.

mortgage priority deed of trust lien payment bond property lien subordinate lien work provided recordation principal amount 75 percent requirement

(Added by Stats. 2010, Ch. 697, Sec. 20. (SB 189) Effective January 1, 2011. Operative July 1, 2012, by Sec. 105 of Ch. 697 and by Section 8052.)

Section § 8454

This law says that if there's a separate contract specifically for site improvements apart from the main construction contract, the site work is considered its own separate project. Starting the site improvements doesn't mean you've started the entire construction project.

If a site improvement is provided for in a direct contract separate from the direct contract for the remainder of the work of improvement, the site improvement is deemed a separate work of improvement and commencement of the site improvement is not commencement of the remainder of the work of improvement.

site improvement direct contract separate work construction project commencement main construction project distinction contract separation construction phases project management site contract work commencement construction site independent project

(Added by Stats. 2010, Ch. 697, Sec. 20. (SB 189) Effective January 1, 2011. Operative July 1, 2012, by Sec. 105 of Ch. 697 and by Section 8052.)

Section § 8456

This law is about construction loans in California. It says if a lender gives extra money (optional) for construction costs, it will have the same priority as the required funds, as long as the total amount given doesn't go over the original loan amount. Also, this rule applies when the loan is secured by a mortgage or deed of trust that is higher in priority than other liens.

(a) This section applies to a construction loan secured by a mortgage or deed of trust that has priority over a lien under this chapter.

(b) An optional advance of funds by the construction lender that is used for construction costs has the same priority as a mandatory advance of funds by the construction lender, provided that the total of all advances does not exceed the amount of the original construction loan.

construction loan mortgage deed of trust construction lender optional advance mandatory advance construction costs loan priority secured loan lien priority original loan amount

(Added by Stats. 2010, Ch. 697, Sec. 20. (SB 189) Effective January 1, 2011. Operative July 1, 2012, by Sec. 105 of Ch. 697 and by Section 8052.)

Section § 8458

This law section explains that certain liens, which are claims made against a property to secure payment of a debt, have priority over most mortgages or similar financial agreements if the lien is established before or without notice of those agreements. However, if a mortgage or similar agreement funds a property improvement and includes safeguards to ensure contractors are paid, it might maintain priority over the lien. Additionally, if a mortgage records a payment bond worth at least half the loan amount before the project's completion, it can have priority over the lien.

(a) Except as provided in subdivision (b), a lien provided for in Section 8402 has priority over:

(1) A mortgage, deed of trust, or other encumbrance that attaches after commencement of the site improvement.

(2) A mortgage, deed of trust, or other encumbrance that was unrecorded at the commencement of the site improvement and of which the claimant had no notice.

(3) A mortgage, deed of trust, or other encumbrance that was recorded before commencement of the site improvement, if given for the sole or primary purpose of financing the site improvement. This subdivision does not apply if the loan proceeds are, in good faith, placed in the control of the lender pursuant to a binding agreement with the borrower to the effect that (A) the proceeds are to be applied to the payment of claimants and (B) no portion of the proceeds will be paid to the borrower in the absence of satisfactory evidence that all claims have been paid or that the time for recording a claim of lien has expired and no claim of lien has been recorded.

(b) A mortgage or deed of trust, otherwise subordinate under subdivision (a), has priority over a lien provided for in Section 8402 if a payment bond in an amount not less than 50 percent of the principal amount of the mortgage or deed of trust is recorded before completion of the work of improvement.

lien priority mortgage deed of trust site improvement property encumbrance unrecorded encumbrance financing payment bond contractor payment binding agreement claimant borrower security interest claims for payment recording a lien

(Added by Stats. 2010, Ch. 697, Sec. 20. (SB 189) Effective January 1, 2011. Operative July 1, 2012, by Sec. 105 of Ch. 697 and by Section 8052.)