Unit OperationLiens

Section § 3680

Explanation

If someone owes you money for costs related to unit operations, you can put a lien on their share of the product from that unit. To do this, you need to file an affidavit with the county recorder where the property is located. The affidavit must detail the type of materials or services provided, a description of the property, the debtor’s name and their interest in the production, the amount owed, and a statement that you've given the debtor 20 days’ prior written notice about these details by registered mail. You must file the affidavit within 90 days of delivering the goods or finishing the work.

A person to whom another is indebted for expenses incurred in carrying on unit operations may, in order to secure payment of the amount due, fix a lien upon the interest of the debtor in the unit production as and when produced from the unit area by filing for record with the recorder of the county where the property or a portion thereof involved is located, an affidavit setting forth all of the following:
(a)CA Public Resources Code § 3680(a) In general terms the kind of materials, tools, equipment, or supplies furnished or labor or services performed.
(b)CA Public Resources Code § 3680(b) A description of the land involved, the name of the debtor, and his interest in the production from the unit area.
(c)CA Public Resources Code § 3680(c) The amount which is still due and unpaid.
(d)CA Public Resources Code § 3680(d) A statement that at least 20 days prior to the date of the affidavit such person gave written notice to the debtor by registered mail at his last known address, setting forth the information required under subdivisions (a), (b), and (c) of this section.
Any such affidavit shall be filed for record not later than 90 days after the delivery of the property or the completion of the labor.
lien on unit production unit operations debtor's interest ...

Section § 3681

Explanation

This law states that a lien on production, like oil or minerals, is prioritized over others and can be foreclosed similarly to mechanics’ liens. If the lien holder has the production in their possession, they can sell enough of it to cover the lien. However, a supervisor must first approve the sale and will manage the sale proceeds until any disputes over the lien are resolved.

The lien shall be a first lien on the production and otherwise shall be of the same nature and subject to foreclosure in the same manner and within the same time as mechanics’ liens. In any case where the lien claimant is in possession of the production which is subject to the lien, the supervisor may authorize the lien claimant to sell such production or so much thereof as may be necessary to satisfy such lien, provided that the supervisor shall hold or arrange for the holding of the proceeds of such sale for appropriate distribution upon a determination of the controversy.
first lien foreclosure mechanics’ liens ...