Although the general rule is that an action to foreclose on the mechanics’ lien must be filed within 90 days after the lien has been recorded at the County Recorder’s office where the property is located, it is possible to extend this 90 day deadline. Civil Code section 8460 describes the means to do so. Section 8460 states:
8460 (a) The claimant shall commence an action to enforce a lien within 90 days after recordation of the claim of lien. If the claimant does not commence an action to enforce the lien within that time, the claim of lien expires and is unenforceable.
(b) Subdivision (a) does not apply if the claimant and owner agree to extend credit, and notice of the fact and terms of the extension of credit is recorded (1) within 90 days after recordation of the claim of lien or (2) more than 90 days after recordation of the claim of lien but before a purchaser or encumbrancer for value and in good faith acquires rights in the property. In that event the claimant shall commence an action to enforce the lien within 90 days after the expiration of the credit, but in no case later than one year after completion of the work of improvement. If the claimant does not commence an action to enforce the lien within that time, the claim of lien expires and is unenforceable.
Note: This “Notice of Credit” document must be signed by the owner before a notary and properly recorded at the office of the County Recorder where the property is located. A simple letter from the owner will not suffice. The recorded Notice of Credit also will not extend the lawsuit deadline any longer than one year from the date of actual completion of the work of improvement. It is recommended that the Notice of Credit be used extremely sparingly. In most cases it does not result in any real benefit to the claimant and only delays payment further and/or provides the owner with additional time to try to determine some means to defeat the collection efforts of the claimant
Article written by William L. Porter, Esq. and revised in 2014. Mr. Porter is a principal in The Porter Law Group, Inc. in Sacramento, California. He can be reached by phone at (916) 381-7868.
