The Construction Industry, and Design Professionals in particular are given a unique advantage by the California Constitution and Legislature, namely, the right to record an involuntary lien against a private property. While some design professionals utilize mechanic’s liens to collect their unpaid fees, the Design Professional’s Lien (DPL) is seldom ever used. However, under appropriate circumstances, a DPL can be a powerful tool for collection of fees, and can help avoid litigation.
The California Civil Code sets out the procedure for recording and perfecting a DPL. In summary, a DPL can be recorded by any design professional (defined as a person licensed as an architect, a landscape architect, registered as a professional engineer, or licensed as a land surveyor) and “who provides services pursuant to a written contract with a landowner for the design, engineering, or planning of a work of improvement.”
In order to successfully record a DPL, the following conditions must apply: 1) Not less than 10 days before recording , the design professional must give the landowner notice demanding payment, stating that a default has occurred under the contract and the amount of the default; 2) The landowner who contracted for the design professional’s services is also the owner of the site at the time of recording of the DPL; 3) The DPL is for the balance of the fee for services provided under a contract or the reasonable value whichever is less; 4) A building permit or other governmental approval in furtherance of the work of improvement has been obtained in connection with or utilizing the services provided by the design professional.
If construction has commenced on the site, then the design professional is not entitled to record a DPL. A mechanic’s lien is the appropriate remedy.
Once recorded, the lien is created but automatically expires upon the expiration of 90 days after recording, or upon commencement of the work of improvement for which the design professional provided services. In order to perfect the DPL (i.e., keep it from expiring), a lawsuit must be filed within 90 days after recording. If construction commences (and as a result the DPL expires), the DPL may be converted to a mechanic’s lien within 30 days. In that case, the design professional can record a mechanic’s lien for the amount of the unpaid DPL.
A couple of caveats are in order: 1) A design professional must record a claim of lien no later than 90 days after he or she knows or has reason to know that the work of improvement will not be commenced, and 2) A DPL may not be recorded for services relating to a single-family, owner-occupied residence for which the expected construction cost is less than one hundred thousand dollars ($100,000).
The information contained in this post is for informational purposes only, does not constitute legal advice or create an attorney-client relationship. Any comments and responses to this post are not considered confidential under the attorney-client privilege. No representations are made as to the completeness of the information contained in this post or its applicability to any given set of facts and there are no guarantees of any results.