BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 189
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          SENATE THIRD READING
          SB 189 (Alan Lowenthal)
          As Amended August 2, 2010
          Majority vote 

           SENATE VOTE  :35-0  
           
           JUDICIARY           10-0        APPROPRIATIONS      17-0        
           
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          |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
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            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  








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          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