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Mechanics Lien Form, Attorney Fees, and Interest

Can attorney fees and interest be added to the amount stated, or the judgment entered, on the mechanics lien form?

Attorneys fees and interest may not be added to either:

  • A) The amount stated on a mechanic's lien form or
  • B) The amount of the judgment entered on the mechanic's lien

The amount stated on the mechanic's lien form cannot include attorneys fees and interest.

However, a mechanic's lien form may note that 10% interest is also owed on top of the principal amount of the mechanic's lien.

Interest can be recovered but it can't be added. Attorney fees can't be added but can be recovered, under a separate lawsuit.

Interest can be recovered as part of a judgment on a lawsuit foreclosing on the mechanic's lien.

At trial, the amount of the mechanic's lien is determined, and interest on this amount will be added to the judgment amount at the statutory rate of 10% per year.

The date from which interest starts is unclear, but is likely the date that the claimant became owed by his customer.

Attorney's fees not included in judgment

Attorneys' fees will not be included in the amount of the judgment related to the mechanic's lien, even if the claimant has an attorneys' fees provision in his contract.

However, attorneys' fees are still recoverable from the claimant's customer via a separate cause of action (lawsuit) for breach of contract.

There are several requirements prior to filing a lawsuit on a mechanic's lien.

Legal right to collect interest

Interest may be recovered via the judgment on the mechanic's lien form, but no legal right to interest exists until a judgment is entered.

Because of this, a claimant may have a hard time negotiating interest with an owner who stands ready to pay the principal amount of a mechanic's lien before a lawsuit is filed (or even if a lawsuit is filed but the trial has not yet been held).

A claimant may have a hard time negotiating interest with an owner if it hasn't been ordered by a judge.

--
Thank you to Dave Barnier for the above information. :) Mr. Barnier is a practicing litigation attorney in San Diego CA and can be reached at 619.682.4842.

The information in this article is based upon California law current at the time of writing and is provided for general information, only. The information provided illustrates laws and legal principals in general. Any information or analysis presented in this article is intended solely to educate the reader on general issues. A comprehensive review of facts, documents, and applicable laws is always required before any attorney can competently provide any legal advice regarding any particular situation. In short: Please do not rely on any part of this article when analyzing any specific situation affecting you or your business.

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