BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
AB 456 (Wagner)
As Amended June 21, 2011
Hearing Date: July 5, 2011
Fiscal: No
Urgency: No
RD
SUBJECT
Mechanics Liens
DESCRIPTION
Existing law, with respect to the service of a copy of a
mechanics lien and Notice of Mechanics Liens, provides that a
proof of service affidavit shall show the name and address of
the person or persons upon whom the copy of the claim of
mechanics lien was served, and, if appropriate, the title or
capacity in which he or she was served.
This bill would amend those sections of existing law to provide
that a proof of service affidavit shall show the name and
address of the owner or reputed owner upon whom the copy of the
claim of mechanics lien was served, and, if appropriate, the
title or capacity in which the owner or reputed owner was
served. This bill would make other technical changes.
BACKGROUND
The California Constitution provides those contributing to a
private work of improvement the right to a mechanics' lien,
which is a security interest in real property that can be
foreclosed. (CEB Mechanics Liens, Section 1.1.) California's
Civil Code governs lien procedures, specifies the obligations,
rights, and remedies of those involved in a construction
project. (See Civ. Code Secs. 3082 et seq. and 8160 et seq.)
Prior to January 1, 2011, California law provided that a
lienholder who has filed a complaint to foreclose on a
mechanic's lien may record in the office of the proper county
recorder a notice of pendency of the foreclosure action (a "lis
(more)
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pendens"). Moreover, it did not require that a mechanic's lien
or notice of the lien be served on the property owner. This
sometimes resulted in a property owner paying twice for the same
labor or materials where the property owner pays the prime
contractor, but the prime contractor does not pass on the
payment to the appropriate subcontractor or material supplier.
With the passage of AB 457 (Monning, Ch. 109, Stats. 2009),
operative on January 1, 2011, California law now requires
recording a notice of pendency of the foreclosure action in
order to better provide notification to all parties interested
in a construction project. It also requires the lienholder to
serve both the mechanic's lien and a specified Notice of
Mechanic's Lien on the property owner, giving the property owner
notice of his or her rights and available remedies. SB 189
(Lowenthal, Ch. 697, Stats. 2010), among other things,
reorganized, restated, and modernized the language of the
existing mechanics lien statute. Provisions related to works of
improvement, including sections governing mechanics liens,
currently located at Civil Code Section 3082 et seq. will be
repealed on July 1, 2012, with the revised and recast provisions
to be located under Civil Code Section 8160 et seq., operative
July 1, 2012.
The mechanic's lien and the Notice of Mechanic's lien, when
served, must be accompanied by a proof of service affidavit that
contains specified information, including the name and, if
appropriate, the title of the person or persons upon whom the
copy of the claim of mechanics lien was served.
This bill, sponsored by the Air Conditioning and Refrigeration
Contractors Association (ARCA), Air Conditioning and Sheet Metal
Association (ACSMA), Building Industry Credit Association
(BICA), California Chapter of the American Fence Association,
California Chapters of the National Electrical Contractors
Association (NECA), California Fence Contractors' Association,
California Landscape and Irrigation Council (CLIC), California
Legislative Conference of the Plumbing, Heating, and Piping
Industry (CLC), Construction Industry Force Account Council
(CIFAC), Engineering Contractors' Association, Flasher Barricade
Association, Marin Builders' Association would make clarifying
changes to the proof of affidavits requirements and other
technical changes.
CHANGES TO EXISTING LAW
Existing law provides that mechanics, persons furnishing
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materials, artisans, and laborers of every class have a lien
upon the property upon which they bestowed labor or furnished
material for the value of such labor done and material
furnished. (Cal. Const., art. 14, sec. 3.)
Existing law , operative until July 1, 2012, provides that
mechanics, contractors, subcontractors, artisans, architects,
material suppliers, lessors of equipment, and others who bestow
labor, skill, supplies, or services to a private work of
property improvement have a lien upon the property and
establishes the procedures by which the lien may be recorded and
enforced. (Civ. Code Sec. 3109 et seq.)
Existing law , operative July 1, 2012, provides that a person who
provides work authorized for a work of improvement has a lien
right, and establishes the procedures by which the lien may be
recorded and enforced. Such persons include, but are not
limited to, direct contractors, subcontractors, material
suppliers; equipment lessors, laborers, and design
professionals. (Civ. Code Sec. 8400 et seq.)
Existing law provides that a "claim of lien" (or "mechanic's
lien") means a written statement, signed and verified by the
claimant that contains all of the following information:
a statement of the claimant's demand after deducting all just
credits and offsets;
the name of the owner or reputed owner, if known;
a general statement of the kind of labor, services, equipment,
or materials furnished by the claimant;
the name of the person by whom the claimant was employed or to
whom the claimant furnished the labor, services, equipment, or
materials;
a description of the site sufficient for identification;
a proof of service affidavit completed and designed by the
person serving the Notice of Mechanic's Lien, as specified;
and
a statement of a Notice of Mechanic's Lien, as specified.
(Civ. Code Sec. 3084(a) operative until July 1, 2012; Civ.
Code Sec. 8416(a), operative July 1, 2012, is substantially,
similar, but also adds to this list the claimant's address.)
Existing law requires service of a copy of the mechanic's lien
and the Notice of Mechanic's Lien, as specified, on the owner or
reputed owner as follows:
for an owner or reputed owner to be notified by mail, as
specified, addressed to the owner or reputed owner at the
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owner's or reputed owner's residence or place of business
address or at the address shown by the building permit on file
with the authority issuing a building permit for the work, or
as otherwise specified; and
if the owner or reputed owner cannot be served in this manner,
then the notice may be given by mail, as specified, addressed
to the construction lender or to the original contractor.
(Civ. Code Sec. 3084(c)(1)(A)-(B), operative until July 1,
2012; Civ. Code Sec. 8416(c)(1)-(2), operative on July 1,
2012.)
Existing law , operative until July 1, 2012, provides that "a
proof of service affidavit" is an affidavit of the person making
the service, showing the date, place, and manner of service and
facts showing that the service was made as specified. Existing
law requires that the affidavit show the name and address of the
person or persons upon whom copy of the mechanic's lien and the
Notice of Mechanic's Lien was served, and if appropriate, the
title or capacity in which he or she was served. (Civ. Code
Sec. 3084(a)(6).)
Existing law , operative July 1, 2012, provides that the proof of
service affidavit must show the date, place, and manner of
service, and facts showing that the service was made as
specified. Existing law requires that the affidavit show the
name and address of the person or persons upon whom the copy of
the claim of mechanics lien was served, and, if appropriate, the
title or capacity in which he or she was served. (Civ. Code
Sec. 8416(a)(7).)
Existing law provides that failure to serve a copy of the
mechanic's lien as prescribed above, including the Notice of
Mechanic's Lien as specified, shall cause the mechanic's lien to
be unenforceable as a matter of law. (Civ. Code Sec. 3084(d),
operative until July 1, 2012; Civ. Code Sec. 8416(e), operative
July 1, 2012.)
This bill would replace the use of the words "person or persons"
with "owner or reputed owner" in the above described provisions,
thereby requiring that a proof of service affidavit show the
name and address of the owner or reputed owner upon whom the
copy of the claim of mechanics lien was served, and, if
appropriate, the title or capacity in which the owner or reputed
owner was served.
This bill would replace references to "mechanic's lien" with
"mechanics lien."
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COMMENT
1. Stated need for the bill
According to the author, "AB 457 (Monning - Ch. 109, Stats.
2009) requires that a mechanic's lien and the accompanying Proof
of Service Affidavit be served on an owner or reputed owner by
registered mail, certified mail, or first-class mail, evidenced
by a certificate of mailing, postage prepaid, addressed to the
owner or reputed owner at the owner's or reputed owner's
residence or place of business address or at the address shown
by the building permit on file. This bill would provide
clarification and consistency in the code to ensure that, if the
owner or reputed owner is listed in the Proof of Service
Affidavit, then there wouldn't be the opportunity to invalidate
the lien based on a minor error in the name, part of the name or
title."
According to the sponsors of this bill:
Passage of this measure is critical, because it makes an
important clarifying change to existing law that, if left
unchanged, could result in mechanics liens being invalidated
due to very minor errors. . . . Throughout the Civil Code
Sections 3084 and Ý8]146, and in the mechanic's lien itself,
it requires the name of the owner or reputed owner while in
the Proof of Service Affidavit it requires the name and title
of the person served. In a day-to-day application of this new
law those who are preparing the mechanic's lien, and the Proof
of Service Affidavit that is now required, often do not know
or have access to accurate information regarding the specific
name and title of a person to be listed on the Proof of
Service Affidavit, which is now part of the mechanic's lien.
This is true particularly when the property is owned by a
business organization. This creates a large problem because
the new statuÝt]e states that: "Failure to serve the
mechanic's lien, including the notice of mechanic's lien, as
prescribed by this section, shall cause the mechanic's lien to
be unenforceable as a matter of law." ÝEmphasis in original.]
AB 456 is a simple amendment to the new statute to insert
"owner or reputed owner" where the current statute specifies
"person or personsÝ,"] and in doing so, provides clarification
and consistency in the code to ensure that, if the owner or
reputed owner is listed in the Proof of Service Affidavit,
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then there Ýwould not] be the opportunity to invalidate the
lien based on a minor error in name, part of the name, or
title.
2. This bill makes clarifying changes to consistently provide
that notice is upon the owner or reputed owner of the property
on which a mechanics lien is recorded
Upon recording a mechanics lien, existing law requires that a
Notice of Mechanics Lien be served upon the owner or reputed
owner, as specified. Existing law also requires that an
accompanying Proof of Service Affidavit be served on an owner or
reputed owner. That proof of service affidavit, however, is
required to show the name and address of the person or persons
upon whom the copy of the claim of mechanics lien was served,
and, if appropriate, the title or capacity in which he or she
was served. (See Civ. Code Secs. 3084(a)(6) and 8416(a)(7).
This bill would amend the existing law requirements of the
contents of the proof of service affidavit, to provide that it
must show the name and address of the owner or reputed owners
upon whom the claim of mechanics lien was served, and, if
appropriate, the title or capacity in which the owner or reputed
owner was served.
This change is significant because any errors made could affect
the enforceability of the mechanics lien. This is because
existing law also provides that failure to serve the copy of the
claim of mechanics lien as prescribed by this section, including
the Notice of Mechanics Lien as specified, shall cause the claim
of mechanics lien to be unenforceable as a matter of law. (See
Code Civ. Proc. 8416(e) and 3084(d), which similarly provides
failure to serve the mechanic's lien, including the Notice of
Mechanic's Lien as specified, shall cause the mechanic's lien to
be unenforceable as a matter of law.)
According to the author and sponsors of this bill, "those who
are preparing the mechanic's lien, and the Proof of Service
Affidavit that is now required, often do not know or have access
to accurate information regarding the specific name and title of
a person to be listed on the Proof of Service Affidavit, which
is now part of the mechanic's lien. This is true particularly
when the property is owned by a business organization." As a
result, the lien could be invalidated based on a minor error in
name, part of the name, or title of the person or persons upon
whom the proof of affidavit states service is made.
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This bill would change "person or person" to "owner or reputed
owner" to remove that possibility. Committee staff notes this
change would appear to be consistent with other provisions of
these existing law sections.
Support : None Known
Opposition : None Known
HISTORY
Source : Air Conditioning and Refrigeration Contractors
Association (ARCA); Air Conditioning and Sheet Metal Association
(ACSMA); Building Industry Credit Association (BICA); California
Chapter of the American Fence Association; California Chapters
of the National Electrical Contractors Association (NECA);
California Fence Contractors' Association; California Landscape
and Irrigation Council (CLIC); California Legislative Conference
of the Plumbing, Heating, and Piping Industry (CLC);
Construction Industry Force Account Council (CIFAC); Engineering
Contractors' Association; Flasher Barricade Association; Marin
Builders' Association
Related Pending Legislation : SB 190 (Lowenthal), would make
would update several cross-references and make technical
corrections to various new mechanics liens provisions enacted in
last year's SB 189 (Lowenthal, Ch. 697, Stats. 2010). SB 190
would also clarify circumstances under which a mechanic's lien
could be invalidated. As of June 22, 2011, this bill has been
enrolled and presented to the Governor for signature or veto.
Prior Legislation :
AB 189 (Lowenthal, Ch. 697, Stats. 2010), See Background.
AB 457 (Monning, Ch. 109, Stats. 2009), See Background.
Prior Vote :
Assembly Floor (Ayes 69, Noes 0)
Assembly Judiciary Committee (Ayes 10, Noes 0)
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