Insurance & LiensQuestion 1549 of 1632

An equipment rental company rents a crane to a subcontractor on a private project. To preserve a mechanics lien for unpaid rent, it should:

a.Do nothing at all, because an equipment lessor's lien is automatic
b.Serve a notice on the subcontractor that rented the crane
c.Serve a preliminary notice on owner, contractor, and lender
d.Record a claim of lien before the crane is delivered

Explanation

Civil Code §8400(d) gives an equipment lessor a lien right, but §8410 makes enforcement depend on having given the preliminary notice, and §8200 sends that notice to the owner, the direct contractor, and the construction lender, no later than 20 days after first furnishing under §8204(a). (a) is the automatic-lien belief: the right exists and is unenforceable without the notice. (b) serves only the party upstream, which is the most common fatal error — the lessor has no contract with the owner, so the owner is exactly who must be told. (d) records too early: §8414 allows the claim of lien only after the claimant ceases to provide work, and before the earlier of 90 days after completion or 30 days after a recorded notice of completion.

Law Reference: Civ. Code §8400(d) / §8410 / §8204(a)

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