BILL ANALYSIS SB 189 Page 1 SENATE THIRD READING SB 189 (Alan Lowenthal) As Amended August 2, 2010 Majority vote SENATE VOTE :35-0 JUDICIARY 10-0 APPROPRIATIONS 17-0 ----------------------------------------------------------------- |Ayes:|Feuer, Tran, Brownley, |Ayes:|Fuentes, Conway, | | |Evans, Hagman, Jones, | |Bradford, | | |Knight, Monning, Nava, | |Charles Calderon, Coto, | | |Huffman | |Davis, | | | | |De Leon, Gatto, Hall, | | | | |Harkey, Miller, Nielsen, | | | | |Norby, Skinner, Solorio, | | | | |Torlakson, Torrico | |-----+--------------------------+-----+--------------------------| | | | | | ----------------------------------------------------------------- SUMMARY : Updates the mechanics lien statutes. Specifically, this bill : 1)Reorganizes, restates, and modernizes the language of the existing mechanics lien statute. 2)Standardizes those requirements for all notices given under the mechanics lien statute, except as expressly otherwise noted.
3)Increases that notice period to ten days, if the notice is given by mail. 4)Clarifies that a general contractor must give preliminary notice to a construction lender on a private work. 5)Deletes the vague term "acceptance by the owner" as an event deemed to constitute completion of a private work of improvement. 6)Requires continuous cessation of labor for 60 days or more to constitute completion of those public works. 7)Allows an owner or public entity 15 days after completion of a SB 189 Page 2 work of improvement to record a notice of completion. 8)Recasts the statutory forms for clarity, and would make those procedural requirements applicable to subcontractors as well. 9)Adds procedural rules relating to the proceeding, and would allow for an award of reasonable attorney's fees to the prevailing party. 10)Reduces the required amount of certain bonds to 125% of the recorded lien claim. 11)Requires public entities to provide notice of all specified events that trigger the commencement of the time period for enforcement. 12)Allows any person to post a release bond, requires those bonds to be issued by an admitted surety insurer, makes the expedited proceeding also available to the owner involved in the dispute, clarifies that the bond must be recorded prior to commencement, and clarifies that such persons may make a claim against the payment bond provided by the general contractor at the outset of the project. 13)Makes the limitation period also applicable to an action against the principal on the bond. 14)Clarifies that such persons are permitted to make a claim against the general contractor's payment bond. 15)Expands that provision to also require notice of the nonpayment to the owner on the project. 16)Adds licensed landscape architects to the identified list of design professionals. FISCAL EFFECT : According to the Assembly Appropriations Committee, 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 : The California Constitution grants laborers and materials suppliers a mechanics lien on any property improved by SB 189 Page 3 their labor or material. The mechanics lien law in the Civil Code 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. In 1999, this Committee requested the California Law Revision Commission (CLRC) to provide a comprehensive review of mechanics lien law and make suggestions for possible areas of reform. Following initial efforts to substantively revise specific provisions of existing law, the CLRC began studying a general revision of mechanics lien law in 2004. The CLRC believed that the mechanics lien statute had "become increasingly difficult to use, generating litigation over confusing provisions, and often leaving participants unsure of their rights and obligations." Therefore, the CLRC decided that its primary objective would be to revise the statute in a way that would make it easier for all practitioners to use and understand. It placed its highest priority on drafting a "nonsubstantive reorganization of the existing mechanics lien statute that would modernize and clarify existing law." This bill is based upon the February 2008 recommendations of the CLRC resulting from its study of mechanics lien law. (California Law Revision Commission, Recommendation, Mechanics Lien Law, February 2008.) It is also based upon working group discussions with stakeholders and other interested parties. In general, the CLRC included substantive changes to existing law only if the proposed reform fell into one of two categories: 1) substantive reforms that were believed to bring about an overarching improvement to the statute as a whole, thereby benefiting all affected persons; and, 2) substantive reforms that, although primarily benefiting one group of persons affected by the statute more than others, were perceived not to unduly burden any other group. (See California Law Revision Commission Memorandum 2009-45, October 13, 2009.) Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334 FN: 0006022