BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 189
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          SB 189 (Alan Lowenthal)
          As Amended  August 16, 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  
           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  
            work of improvement to record a notice of completion.  


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          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  

          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  
          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  


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          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: 0006116