BILL ANALYSIS SB 189 Page 1 Date of Hearing: August 4, 2010 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair SB 189 (Lowenthal) - As Amended: August 2, 2010 Policy Committee: JudiciaryVote:10-0 (Consent) Urgency: No State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill streamlines, reorganizes, recasts, and updates the state's mechanics lien statutes, effective July 1, 2012. FISCAL EFFECT To the extent the revised statute clarifies current ambiguities in the mechanics lien law, there would be reductions in construction litigation costs to the state and to local governments, as well as the private sector, and a reduction in court costs. COMMENTS 1)Background . The California Constitution grants laborers and materials suppliers a mechanics lien on any property improved by their labor or material. The mechanics lien law in the Civil Code, dating to 1872, generally specifies the obligations, rights, and remedies of those involved in a construction project. Mechanics liens are not available on public works of improvement. However, the mechanics lien law provides claimants on public works projects with other statutory remedies, including stop notices and claims against payment bonds. 2)Purpose . This bill is based on the February 2008 recommendations of the California Law Revision Commission (CLRC), which in 2004 began a comprehensive review of the mechanics lien law. The CLRC believed that this statute had "become increasingly difficult to use, generating litigation over confusing provisions, and often leaving participants SB 189 Page 2 unsure of their rights and obligations." The commission has thus sought to draft a "nonsubstantive reorganization of the existing mechanics lien statute that would modernize and clarify existing law." In general, the bill repeals existing sections of law known informally as the design professionals lien statute and the mechanics lien statutes and incorporates both into a new modernized, clarified, and better organized mechanic lien statute. The new statute appears in a new statutory Part within the Civil Code. The first title in this Part contains provisions jointly applicable to both private and public works; the next two titles of the Part contain provisions exclusively applicable to either private or public works, respectively. In addition, 102 sections of the bill simply make non-substantive conforming changes to code sections containing cross-references to the existing mechanics lien statute. The bill also makes several modest, substantive changes to this body of law, regarding notice provisions, waiver and release of claims, stop notices and payment bonds, payment bonds, and adding licensed architects to the current list of design professionals (licensed architects, engineers, and surveyors) who may claim a design professionals lien. For a detailed discussion of these changes, see the Assembly Judiciary Committee's analysis of this bill. The author's most recent amendments move the operative date of the bill from January 1, 2012 to July 1, 2012, provide double jointing language with AB 2216 (Fuentes), and include numerous technical changes. Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081