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Understanding Mechanics Liens

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California Mechanics’ Lien law provides special protection to contractors, subcontractors, laborers and suppliers who furnish labor or materials to repair, remodel or build your home. If any of these people are not paid for the services or materials they have provided, your home may be subject to a mechanics’ lien and eventual sale in a legal proceeding to enforce the lien. This result can occur even where full payment for the work of improvement has been made by the homeowner.

The mechanics’ lien is a right that California gives to workers and suppliers to record a lien to ensure payment. This lien may be recorded where the property owner has paid the contractor in full and the contractor then fails to pay the subcontractors, suppliers, or laborers. Thus, in the worst case, a homeowner may actually end up paying twice for the same work.

Why, you may ask, can a homeowner be placed in the impossible situation of having to pay twice for the same work? The answer lies in the Constitution and laws of California. The overriding theory behind the mechanics’ lien law is that between two potentially blameless parties, the homeowner who has ordered the work and made full payment of the agreed amount and obtained the value of the work is in a better position to bear the loss than the laborer or supplier who has provided work or materials to the job site and has not been paid for his efforts by the contractor. It is the homeowner who bears the ultimate responsibility for making payment for services rendered. The theory is that the value of the property upon which the labor or materials have been bestowed has been increased by virtue of these efforts and the homeowner who has reaped this benefit is required in return to act as the ultimate guarantor of full payment to the persons responsible for this increase in value. In practice, a homeowner faced with a valid mechanics’ lien may be compelled to pay the lien claimant and then pursue conventional legal remedies against the contractor or subcontractor who initially failed to pay the lien claimant but who himself was paid by the homeowner. Another justification for this result relates to the relative financial strengths of the parties to a work of improvement. The law views the property owner as being in a better situation to absorb the financial setback occasioned by having to pay the amount of a valid mechanics’ lien, as opposed to a laborer or material man who is viewed as being less able to absorb the financial burdens occasioned by not being paid for services or materials provided in connection with a work of improvement.

The best protection against these claims is for the homeowner to employ reputable firms with sufficient experience and capital and/or require completion and payment bonding of the construction work. The issuance of checks payable

jointly to the contractor, material men and suppliers is another protective measure, as is the careful disbursement of funds in phases based upon the percentage of completion of the project at a given point in the construction process. The protection offered by mechanics’ lien releases can also be helpful.

Even if a mechanics’ lien is recorded against your property you may be able to resolve the problem without further payment to the lien claimant. This possibility exists where the proper procedure for establishing the lien was not followed. While it is true that mechanics’ liens may be recorded by persons who have provided labor, services, or materials to a job site, each is required to strictly adhere to a well-established procedure in order to create a valid mechanics’ lien.

Needless to say, this is one area of the law that is very complex, thus it may be worthwhile to consult an attorney if you become aware that a mechanics lien has been recorded against your property. In the event you discover that a lien has been recorded but no effort has been made to enforce the lien, a title company may decide to ignore the lien. However, be prepared to be presented with a positive plan to eliminate the title problems created by this type of lien. This may be accomplished by means of a recorded mechanics’ lien release from the person who created the lien, or other measures acceptable to the title company.

As in all areas of the real estate field, the best advice is to investigate the quality, integrity, and business reputation of the firm with whom you are dealing. Once you are satisfied you are dealing with a reputable company and before you begin your construction project, discuss your concerns about possible mechanics’ lien problems and work out, in advance, a method of ensuring that they will not occur.

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10 Tips for a smooth closing…

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  1. Make sure the Purchase and Sale Agreement is fully executed with names, marital status of all parties, addresses and contact phone numbers. Also, make sure the Purchase and Sale Agreement is legible since this is Escrow’s main source of information.
  2. Is there a Power of Attorney needed? If so, make sure the client has the original or it has been recorded. Have Escrow or Title review it as soon as possible to confirm form, dates and notary are correct.
  3. Are the buyers or sellers out of state? Let the Closer know early to allow adequate time for delivery of documents.
  4. Are the buyers or sellers out of the country? If so, the client must have the documents notarized at an American Consulate or Embassy.
  5. If any divorces, deaths or trusts appear on title, we will need copies of divorce decrees, death certificates or trust agreements (not necessarily available through public record).
  6. Are utilities addressed on the Purchase and Sale Agreement? Is the addendum attached? Make certain your Closer has a list of the utilities that need to be paid.
  7. If the property is a condominium or PUD, please furnish Escrow with the name and address of the Homeowner’s Association.
  8. Are there any specific or special needs of your buyer or seller? The Escrow Officer can help you with schedules, physical limitations or other needs.
  9. Is the buyer receiving a home-buyer’s warranty? If so, let the Closer know who is ordering it and who is paying for it.
  10. Did you specify Pacific Coast Title Company for the Title Order?
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Lost Note & Missing Beneficiary

Man any of you probably know that you can do “the bond thing” if the preliminary report discloses an old deed of trust, and the seller tells you, “I paid this off many moons ago, but I do not have any of the original documents and the beneficiary cannot be reached. He was last seen ascending the Himalayas with the Dalai Lama long ago. I’m sure he’s drifted into the great void by now.” But do you really know about the ramifications of “the bond thing”?

In situations where both the beneficiary and the original note are missing, “the bond thing” is a multi-step process wherein obtaining the bond is just the first step. (See California Civil Code Section 2941.7)

To obtain a bond an insurance agent must be contacted, who in turn will work with a surety company that issues Lost Note Bonds. The insurance agent will request that the applicant/seller provide copies of the note (if available) and copies of documentation that evidences payment of the note, such as cancelled checks, payment books, etc. Additionally, the applicant/seller will be asked to sign an indemnity agreement in favor of the surety company issuing the bond. Occasionally, (typically when the bond is for a substantial amount of money), the insurance agent will request a financial statement from the applicant. Standard practices charged by bonding companies would be a premium paid for the bond ranging from 1.5 to 2%, double the original principal obligation of the deed of trust (the original principal will be increased to include any additional advance amounts disclosed by the official records).

 

The minimum requirements for all bonds are:

1. The bond shall be the greater of either (A) two times the amount of the original obligation secured by the mortgage and deed of trust and any additional principal amounts, including advances, shown in any recorded amendment thereto, or (B) one-half of the total amount computed pursuant to (A) and any accrued interest on such amount, and shall be conditioned for payment of any sum which the mortgagee or beneficiary may recover in an action on the obligation secured by the mortgage or deed of trust, with costs or of litigation and reasonable attorney’s fees.

2. The obligee named in the bond can be:
a) The mortgagee or mortgagee’s successor in interest
b)The trustee who executes a reconveyance and the beneficiary or beneficiary’s successor in interest
Once the bond is in hand, is the deal all set to go? Can a reconveyance be obtained from the trustee? Unfortunately, the battle has just begun. Section 2941.7 sets forth that the bond and a declaration must be of record for at least 30 days before the trustee may issue the reconveyance. It is important to note that “prior” to the recording of the declaration, the code section requires that a notice of recording of declaration and bond be mailed by certified mail, return receipt requested to the last known address of the person to whom payments under the mortgage or deed of trust were made and to the last mortgagee or beneficiary of record at the address for such obligation shown on the instrument.

Lastly, it is recommended that the title officer, together with the owners, initiate personal contact with the trustee, who will be the person tasked with the job of reviewing the bond and declaration and who will ultimately be the one issuing the desired reconveyance. If the title officer and owners establish early contact with the trustee, the trustee will be in a position to review early drafts of the bond and declaration and thus provide the owner with helpful input. Such input will enhance the likelihood that the bond and declaration that was initially forwarded to them will be acceptable. Just as important, if the title officer has developed a rapport with the trustee, it is very likely that the trustee will deliver the reconveyance back to the owners in a very timely manner. Working together to solve title issues is how Pacific Coast Title Officers rise above the competition.

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Solar Panel Agreement Transfers

While residential solar panel installations have increased more than 50% each year since 2012 nationwide, disputes over solar panel leases have simultaneously increased during the transfer of properties. Ensure your successful closing by considering these helpful tips and considerations for transactions involving solar panel lease agreements:

Be proactive:

Preopen your escrow with Pacific Coast Title Company and use the time early in the listing or prelisting period to be sure you completely understand the terms of the agreement as it applies to the transfer of the lease. It is better to be prepared and informed ahead of time before going into contract with a potential buyer.

Check the Records:

Ensure that any solar easements have been officially recorded in public records so that it is available to be noted during the title search process. Such an omission can potentially create issues for future buyers.

Know your options:

transfer well before the close of escrow (or before the official listing) to further help ensure a smooth process of the sale.

Communication is key:

Ensure that your escrow officer is informed. The more information you can offer, the better is to a smooth transaction. Make sure you alert your escrow team to your current lease agreement, status of the agreement and requirements from the leaseholder.

Keep your solar panel leaseholder involved:

Many companies have designated specialists available and assigned to assisting buyers and sellers through the lease transfer process.

Uninsured Deeds: What you should know

Have an Uninsured Deed?

Here is what you should know.

Most common problems from Uninsured Deed’s come from Quitclaim deeds between family members, especially
husband and wife. When a person is added to title, it is a window of opportunity for matters against him/her to attach
to the property.

You should be concerned when taking a listing…

• Is it a divorce situation?
• Was it signed in distress?
• Possible bankruptcy?
• Possibly a Forgery Deed

How can you spot an uninsured deed when you order a profile from Pacific Coast Title? Here are some red flags for your reference.

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Understanding Probate

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Understanding Probate

Everyone has a will or plan, whether created or by default. Even if you have not made out a will or a trust, you still have a plan – a plan dictated by the laws of the state where you reside upon your death. Making a will is not a way to avoid “probate”, the court procedure that changes the legal ownership of your property after your death. Probate makes sure it is your last valid will, appoints the executor named in your will and supervises the executor’s work. You can do several things now that can help your executor and family later, hopefully much later on.

I am in possession of a will that distributes the decedent’s estate to me, isn’t this all I need?

No. The will must be admitted to probate and the estate of the decedent must be “probated.”

 

What does “probate” actually mean?

Generally, probate is a court proceeding that administers the estate of an individual.

 

What is the purpose of “estate administration”?

Generally, there are five purposes, many of which have subsets to them:

•To determine that the decedent is in fact dead

•To establish the validity of the will

•To identify the heirs and devisees of the decedent,

•To settle any claims that creditors may have against the estate of the decedent, and

•To distribute the property

 

What is the Public Administrator?

The Public Administrator serves in a fiduciary capacity to provide professional estate management services to county residents who die without someone willing or able to handle their affairs. The powers of the Public Administrator are mandated by the Probate Code of the State of California.

 

What is the difference between “Testate” and “Intestate”?

When one is said to have died “Testate,” it means he or she died leaving a will. If one is said to have died “Intestate,” it means he or she died without leaving a will.

 

What is the difference between an executor and an administrator?

An “executor” carries out the directions and re- quests set forth in the decedent’s will. An “administrator” is appointed by the court to manage the estate of a decedent who dies intestate.

 

What are the steps to a normal uncontested probate?

Very generally speaking they are as follows:

•Death of the decedent

•The will is delivered to the executor or Court Clerk

•A petition is filed for the Probate of Will or Letters of Administration

•A hearing is held on the petition

•Letters of Administration are issued by the Court.

•Notice to creditors is given

•Inventory and appraisement of the estate is made by an independent probate appraiser

•File Federal estate tax return. Return states “No Tax Due” or specifies an amount due

•Final accounting and petition for distribution

•Final decree of distribution

•Discharge of personal representative

 

While real property is “in probate” can it be sold?

Yes. Without getting into too much detail it can be sold either at private sale in which the executor of the estate negotiates a transaction with a buyer or at public sale in which the property is sold at public auction.

 

If there is no will, how is the property of the estate distributed?

Sections 6400 through 6414 of the California Probate Code addresses intestate succession and the distributions. The method and manner of intestate distributions is quite complex and therefore one should specifically discuss intestate distributions with his or her legal advisor.

This piece is only for information purposes. Please contact a probate attorney for more information.

Wow Potentional Buyers with our Pacific Coast Agent 3.0 App

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Our Pacific Coast Agent 3.0 is the ultimate number crunching tool for your next open house.

Working with potential buyers is an exciting and detailed process. Did you know that our Pacific Coast Agent 3.0 Pro app includes several calculators that can help you answer a prospective buyers questions. Below is a list of calculators which you can use to educate visitors at your next open house.

Quick Estimate
Gives you the ability to generate a quick estimate of fees & payment associated with a specific home.

Rent Vs. Buy
Explains how much money can potentially be saved if a one decided to purchase rather than rent.

Qualify
Shows a potential buyer how much home they can afford based on their household income and debt.

Monthly Affordability
Shows a potential buyer how much home they can afford based on their desired monthly payment.

Extra Payment
Helps show how much money a homeowner can save if they extra money towards their principal

Marketing Center
Provides some great illustrations aimed for buyers that can be emailed or shared on social media.

Farming 101 : A quick primer on farming criteria

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Farming 101

Effective and efficient real estate farming is a big key to the success of a real estate agent. Are you aware of the different criteria that is available when creating a farm? If not, that’s ok. Here is a quick primer to help you get the ball rolling.

Basic Farming Options

A. Your information can be sorted by:

  1. City
  2. Zip Codes
  3. Thomas Guide Pages – Old or new Thomas Bros. Grid
    Owner’s Name
  4. Parcel Number – Provide us with assessor book number
  5. Odd/Even – Odd or even side of the street
  6. Tract Number
  7. Census Tract – These are permanent areas intended for statistical purposes. They are bounded by visible, physical features, natural or man-made.

B.  Additional Sort by Property Characteristics

  1. Assessed value, number of bedrooms and baths
  2. Lot size – Square footage or acreage
  3. Percentage improvements – Ratio of improvement value as it relates to land value
  4. Improvements – Pool, spa
  5. Square Feet
  6. Number of Units
  7. Use Code
  8. Year Built
  9. Zoning

C. Additional Sort by Sales Price:

  1. Full Value – Full transfer, quitclaim, partial transfer
    or trustees deed
  2. Owner Occupied or Absentee Owner
  3. Sales Date
  4. Sales Price

Label Options

  1. All Caps
  2. Addressee “or current resident” – This setting adds the owner’s name and/or with current resident.
  3. We use the 5160 & 5162 Standard mailing Labels

Advanced Farming Options

A Street Address Sequence
Tax rolls listed alphabetically by street name, followed by numbered streets. Each street listed alphabetically and numerically is sub-listed by address number, from lowest to highest. This is often called a “walking farm.”

B. Vacant Land by Value Sequence
Tax Rolls listed numerically by Assessor’s Parcel Number, but limited to parcels with a valid land value and no improvement value. Consider searching by use code when looking for vacant land.

C. Absentee Owner
Tax Rolls listed numerically by Assessor’s Parcel Number, consisting of residential properties with owners that have different mailing addresses than the residential addresses.

D. Apartments by Assessor Parcel Number
Tax rolls listed numerically by Assessor’s Parcel Number exclusively for apartments… beginning with use code 1112 & 1104, or five or more units. This does not include duplexes, triplexes, or courts. Multi-family dwellings are sorted individually by their appropriate use codes.

E. Conventional/Industrial by Alphabetical Sequence
Tax rolls listed alphabetically by owner’s last name and consisting of all properties that are considered income properties. (Excluding residential [SFR] and vacant land). This farm is not sorted by use code.

F. Commercial/Industrial by Number Sequence
Tax rolls listed sequentially by its use code. This farm EXCLUDES single-family residences and mobile home parks.

G. Commercial/Industrial Use by Value Sequence
Tax rolls listed sequentially by use code, and numerically by value, from high to low within each use code. This consists of all properties EXCLUDING single-family residences and apartments.

H. “Empty Nester Farm”
Order an area with the criteria… only properties that were purchased 25 years ago or longer

Got more questions about farming? Contact us today!

 

Social Media Marketing with Pacific Coast Agent 3.0

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WANT TO MARKET ON SOCIAL MEDIA?

OUR PACIFIC COAST AGENT 3.0 APP CAN HELP.

LET US TELL YOU HOW.

wers. Whether you are looking to educate buyers about the money they can save by purchasing a home or you want help sellers realize that it’s the perfect time to sell, we got you covered. We have created various flyers about buying and selling and have stored them in the marketing center within our app.

What else can you do within the marketing center? Along with posting these on the most popular social media sites you can personalize them and share them via text and e-mail.

Want a live demo? Contact us today!