Insurance & LiensQuestion 1574 of 163273% of test-takers answer this correctly

A lien claimant who has been paid in full but refuses to release a recorded mechanics lien may be liable to the owner for:

a.Nothing, since a satisfied lien expires on its own schedule
b.Three times the value of the project, as a penalty
c.The owner's costs and attorney's fees to remove the lien
d.The contractor's lost profit on the delayed property sale

Explanation

A claimant that has been paid should execute and record a release, and an unreleased lien clouds the owner's title until it does. The owner's statutory remedy is the petition in Civil Code §8480: once the claimant has let the 90 days in §8460 pass without commencing an action to enforce the lien, the owner may petition for an order releasing the property, the claimant carries the burden of proving the lien's validity under §8488(a), and §8488(c) awards the prevailing party reasonable attorney's fees. §8494 then strips an expired lien of any effect as notice. (a) ignores the practical problem the statute addresses, since the cloud on title bites long before anything expires. (b) invents a treble-damages penalty this remedy does not carry. (d) names the wrong party's loss: the harm runs to the owner whose title is clouded, not to the contractor.

Law Reference: Civil Code §8480 / §8488(c) / §8494

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