A mechanics lien is a lien, or a hold, against property that, if left unpaid, can allow a foreclosure action to force the sale of the property.  

A mechanics lien generally occurs when the general contractor on a project on the property does not pay subcontractors or suppliers.  Legally, the property owner is ultimately responsible for the payment of the subcontractors and suppliers, even if the property owner has already paid the general contractor.  The unpaid subcontractors or suppliers will often file a mechanics lien with the County Recorder's office to preserve their right to payment.  

A mechanics lien can result in a number of issues for a property owner: 

1. Double payment for the same job -- the homeowner can first pay the general contractor and then be forced to pay the same amount to subcontractors or suppliers in order to have a mechanics lien released from the property
2. Cloud the title of the property, affecting the homeowner's ability to refinance or sell the property 
3. Foreclosure of the property if the homeowner cannot pay to release the mechanics lien on the property 

1. Make sure you are appropriately licensed by the California State Licensing Board.  If you are not licensed, you are not entitled for compensation above $500 for any construction work performed on a project.  
2. Make sure you have a written contract with the property owner (if you are the prime contractor) or a written contract with the prime contractor (if you are a subcontractor or supplier). Make sure the contract includes a payment schedule that states a specific start and stop date for work segments, a specific price for each segment, the cost of supplies and materials for each segment and a clause for cost and labor overages.  This contract will help determine the amount of your mechanics lien.   
3. Keep a project file with all of your project documentation. Keep all your paperwork for a project, including invoices, material/supply receipts, work orders, hours sheets and other job related expenses.  This paperwork will help you determine the amount of your mechanics lien.      
4. Timely record all required documents to preserve your lien rights.   
• Preliminary 20 Day Notice:  A preliminary 20 day notice is not a lien, but is intended to alert or notify the owner that you are on their property and may record a lien against the property if your contract/bills are not paid.  It is required by subcontractors, material suppliers and equipment suppliers within 20 days after first furnishing labor, service, equipment or material to the job site.  It can be served at any time during the work, but only covers payments for work done 20 days prior to its service and the work done thereafter.    
• NOTE:  Failure to record this notice by a subcontractor or supplier results in loss of right to record a mechanics lien! 
• The prime contractor is not required to file a preliminary notice because, presumably, the property owner is aware of their presence on their property because the property owner directly contracted with the prime contractor.  However, it is good practice to file a 20 day preliminary notice in any case to preserve your rights.   
5. Timely record your lien 
• If the owner does not file a Notice of Completion and either labor ceases and owner usees the work of improvement, or the owner accepts the improvements, then the subcontractor/supplier/prime contractor has 90 days to record their mechanics lien 
• If the owner files a Notice of Completion: 
• Prime contractor must record a mechanics lien within 60 days 
• Subcontractor/supplier must record a mechanics lien within 30 days
6. Timely file a lien foreclosure action 
• You must file a lawsuit to foreclose the mechanics lien wtihin 90 days of filing the mechanics lien.  Failure to do so results in the relinquishment of your mechanics lien rights.  Along with the filing of the foreclosure action, you should file a lis pendens, which announces a pending claim on the property.  

1. Only contract with licensed contractors, subcontractors and materials suppliers 
2. Make sure the written contract includes a payment schedule and the identification of specific subcontractors and materials suppliers for each step of the project 
3. Keep track of all paperwork for the project 
• Save copies of all preliminary 20 day lien notices so you can keep track of who is owed money and when they are paid
4. Pay with joint checks 
• Compare every bill from the contractor with the schedule, contract and 20 day preliminary lien notices 
• Make sure the work was performed as described
• Make the check out to the contractor and subcontractor/supplier to ensure both parties have to endorse the check and thus receive payment 
5. Before making a payment, get a signed conditional release from all possible lien claimants.  After you pay, get an unconditional release signed by each of the claimants for the portion of the work released.  
6. File a Notice of Completion with the County Recorder's office after all work is completed.  This reduces the amount of time that a contractor has to record a mechanics lien from 90 to 60 days and a subcontractor/supplier has to record a mechanics lien from 90 to 30 days.   

The California Contractors State License Board has information as well as Conditional and Unconditional Waiver and Release Forms.