BILL NUMBER: AB 263	CHAPTERED  08/13/01

	CHAPTER  181
	FILED WITH SECRETARY OF STATE  AUGUST 13, 2001
	APPROVED BY GOVERNOR  AUGUST 12, 2001
	PASSED THE SENATE  JULY 21, 2001
	PASSED THE ASSEMBLY  MAY 24, 2001
	AMENDED IN ASSEMBLY  MAY 9, 2001

INTRODUCED BY   Assembly Member Correa

                        FEBRUARY 16, 2001

   An act to add Section 995.311 to the Code of Civil Procedure,
relating to bonds.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 263, Correa.  Bonds:  public works contracts.
   Existing law, the Bond and Undertaking Law, provides a
comprehensive system for the execution and approval of bonds and
undertakings.  Existing law provides that a bond shall be executed by
2 or more sufficient personal sureties, or by one sufficient
admitted surety insurer, or by any combination of sufficient personal
sureties and admitted surety insurers, unless the statute providing
for the bond requires execution by an admitted surety insurer.
   This bill would provide that any bond required on a public works
contract, as defined, shall be executed by an admitted surety
insurer.  This bill would require a public agency approving the bond
on a public works contract to verify that the bond is being executed
by an admitted surety insurer, and would provide that the public
agency may fulfill this duty by  either obtaining specified
information from the Department of Insurance website or from the
county clerk and attaching it to the bond.  By increasing the duties
of local agencies, this bill would create a state-mandated local
program.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement, including the creation of a State Mandates Claims Fund
to pay the costs of mandates that do not exceed $1,000,000 statewide
and other procedures for claims whose statewide costs exceed
$1,000,000.
   This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 995.311 is added to the Code of Civil
Procedure, to read:
   995.311.  (a) Notwithstanding any other provision of law, any bond
required on a public works contract, as defined in Section 1101 of
the Public Contract Code, shall be executed by an admitted surety
insurer.  A public agency approving the bond on a public works
contract shall have a duty to verify that the bond is being executed
by an admitted surety insurer.
   (b) A public agency may fulfill its duty under subdivision (a) by
verifying the status of the party executing the bond in one of the
following ways:
   (1) Printing out information from the website of the Department of
Insurance confirming the surety is an admitted surety insurer and
attaching it to the bond.
   (2) Obtaining a certificate from the county clerk that confirms
the surety is an admitted insurer and attaching it to the bond.
  SEC. 2.  Notwithstanding Section 17610 of the Government Code, if
the Commission on State Mandates determines that this act contains
costs mandated by the state, reimbursement to local agencies and
school districts for those costs shall be made pursuant to Part 7
(commencing with Section 17500) of Division 4 of Title 2 of the
Government Code.  If the statewide cost of the claim for
reimbursement does not exceed one million dollars ($1,000,000),
reimbursement shall be made from the State Mandates Claims Fund.