Apr 32015

How is the Amount of a Mechanics Lien Calculated?

(This is Part 3 of our Mechanics Lien Series) The amount of a mechancis lien is limited to the reasonable value of the work provided by the claimant, or the price agreed to by the claimant and the person that contracted for the work, whichever is less. Moreover, a direct contractor or subcontractor may enforce a lien only for the amount due pursuant to that claimant’s contract after deducting all lien claims of other claimants for work provided and embraced within that contract. In other words, the direct contractor or subcontractor’s claim is limited to the value of the labor equipment, materials and services actually supplied by the claimant, minus the value of all liens filed by the claimant’s subcontractors, laborers and material suppliers.

A claimant is entitled to include in its mechanics lien work per-formed under a written modification of a contract, or as a result of the rescission abandonment, or breach of a contract. A claimant is also able to include in its mechanics lien the reasonable value of labor, materials, equipment and services furnished in connection with an oral modification to a contract as long as the claimant is able to establish that the owner rescinded, abandoned or breached the contract. Typically an owner is deemed to have breached a contract if the owner refuses to pay for extra work the owner orally  requested or caused.

There is little reported law concerning “impact claims” such as delay, disruption, and acceleration. However, since a claimant is able to include costs resulting from a rescission, abandonment or breach of a contract, presumably a claimant could include costs relating to extended jobsite overhead, but only to the extent of the reasonable value of the labor, equipment, materials or services actually furnished. Costs relating to extended or unabsorbed home office overhead would likely not be allowed.

If a claimant is entitled to interest by contract or law, a claimant may recover interest on the principal amount owing in a foreclosure action. However, a claimant is not entitled to attorney’s fees.

The information provided herein is not intended as legal advice and should not be acted upon. If you have additional questions about this subject matter or would like to consult with an attorney about this or related subject matters, please call or email Josef Cowan at the Cowan Law Group (949) 333-0919 or at jcowan@cowanlawgroup.com.

Filed by Joe Cowan, April 3, 2015