Mechanics Lien recorded by the tenant on the rental prop in escrow for work done in 2022 & prop is sold with surety bond

Question

In June 2024, Tenant (T) recorded a Mechanics Lien (ML) on rental property in escrow that the Landlord (LL) was selling. T claimed that he got improvements done in Sept 2022 and spent $12,000. T did not give a copy of any contract for work, bills, or receipts for the money he claimed. For the ML, he just listed on a piece of paper dated 5/28/24 the breakdown of different items of work done and the amount he claims as paid.  
LL got & recorded a surety bond, so the escrow closed and the prop was sold. 
Per CA Civil Code 3144.5, LL mailed copy of the recorded bond to T by certified mail with a return receipt requested. 
1) What should be the next steps for LL?  
2) How can LL get discharged from the bond & ML? 
3) Based on what grounds, what lawsuit (small claims, civil) can T file against LL to claim on ML? 
4) If T does not sue LL during the 6-mth of bond & bond then released, how can T reissue a new ML on LL since the prop is sold & bond released? 
5) Any legal liability of new owner?

James L. Arrasmith · Answer

To address the situation, the first step for the landlord (LL) should be to ensure all procedures related to the surety bond and mailing the notice to the tenant (T) have been correctly followed as per California Civil Code 3144.5. Keeping detailed records of these actions is crucial in case of future disputes. LL should also prepare to defend the validity of the surety bond and the propriety of the property sale. 
 
To get discharged from the bond and the mechanics lien (ML), LL needs to wait for T to file a lawsuit to enforce the lien within the six-month period. If T fails to initiate legal action within this timeframe, the bond will be released, and the ML will effectively be nullified. LL should monitor the situation closely and document any communication from T or related legal notices during this period. 
 
If T decides to sue, he might file a civil lawsuit to enforce the ML, but without proper documentation (contracts, receipts, bills), T's claim may be weak. The lack of substantiating evidence could undermine T's case in court. If T does not sue within the six-month period, he cannot reissue a new ML on the LL because the property has been sold and the bond would be released, making it a closed matter. 
 
The new owner of the property generally has no legal liability for the previous ML once the bond is released and the sale is finalized. However, it is advisable for the new owner to consult with their legal advisor to ensure that all potential claims have been addressed and that they are fully protected from any residual liabilities.

Q: Mechanics Lien recorded by the tenant on the rental prop in escrow for work done in 2022 & prop is sold with surety bond