BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
SB 190 (Lowenthal)
As Amended March 16, 2011
Hearing Date: March 29, 2011
Fiscal: No
Urgency: No
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SUBJECT
Mechanics Liens
DESCRIPTION
This bill, sponsored by the California Law Revision Commission
(CLRC), 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), which
overhauled the mechanics lien law. This bill, which also would
clarify circumstances under which a mechanic's lien could be
invalidated, would contain a delayed operative date of July 1,
2012, consistent with the provisions of SB 189.
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
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 in the Civil Code provides claimants on
public works projects with other statutory remedies, including
stop notices and claims against payment bonds.
In 1999, the Assembly Judiciary Committee requested the 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
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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."
SB 189 overhauled the mechanics lien law and was 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.)
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.)
The CLRC issued a tentative recommendation in December 2010 to
provide for clean-up provisions to last year's SB 189. (See
California Law Revision Commission Tentative Recommendation,
Mechanics Lien Law: Clean-Up Legislation, December 2010.)
Those recommended clean-up provisions would revise several cross
references and correct minor technical errors.
This bill would adopt the CLRC's tentative recommendations and
would make technical corrections to last year's SB 189. This
bill would clarify circumstances under which a mechanics lien
claim could be invalidated. The provisions of this bill would
become operative on July 1, 2012, consistent with the provisions
of SB 189.
CHANGES TO EXISTING LAW
1. Existing law regulates home improvement project contracts.
(Bus. & Prof. Code Sec. 7150 et seq.)
Existing law identifies projects for which a home improvement
contract is required, outlines the contract requirements, and
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lists the items that shall be included in the contracts.
(Bus. & Prof. Code Sec. 7159.)
Existing law provides that home improvement project contracts,
as specified, must include a statement whereby the home
improvement contractor will provide to the person contracting
for home improvement after payment a full and unconditional
release from any potential mechanics liens made pursuant to
Civil Code Section 3110. (Bus. & Prof. Code Sec. 7159(c)(4).)
Existing law provides regulations regarding home improvement
projects between an owner or tenant and a contractor who is
licensed or subject to licensing. (Bus. & Prof. Code Sec.
7159.5.)
Existing law provides that a contractor who is licensed or
subject to licensing and involved with a home improvement
project is subject to discipline if the contractor fails upon
request to furnish the paying party with a full and
unconditional release from any potential mechanics lien
pursuant to Civil Code Section 8410. (Bus. & Prof. Code Sec.
7159.5(a)(6).)
Existing law regulates service and repair contracts between a
homeowner or tenant and a contractor who is licensed or
subject to licensing. (Bus. & Prof. Code Sec. 7159.14.)
Existing law provides that a service or repair contractor that
is licensed or subject to licensing who fails, upon request
and payment by the buyer, to provide to the buyer a full and
unconditional release from any potential mechanics lien
authorized pursuant to Section 8410 is subject to disciplinary
action. (Bus. & Prof. Code Sec. 7159.14(11).)
Existing law regulates structural pest control operators.
(Bus. & Prof. Code Sec. 8500 et seq.) Existing law provides
that a company performing structural pest control services for
which company registration is required must provide the owner
of the premises for which services are being rendered with a
full and unconditional release from any mechanics liens prior
to payment by the owner. (Bus. & Prof. Code Sec. 8513(d).)
Existing law regulates bond securities provided in connection
with subdivision improvements. (Gov. Code Sec. 66499 et
seq.) Existing law provides that the security provided by a
subdivider to secure payments to contractors, subcontractors,
laborers, and materials or equipment suppliers, after the
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expiration of lien recordation and acceptance of the work, be
reduced to an amount equal to the total claimed by all
recorded and noticed lien claimants, and if no claims have
been recorded, the security shall be released in full. (Gov.
Code Sec. 66499.7.)
This bill would correct the cross-references to the Civil Code
to conform to the new mechanics lien provisions enacted under
SB 189 and correct various technical errors.
2. Existing law regulates the conditions under which a
mechanics lien may be enforced. (Civil Code Sec. 8410 et
seq.)
Existing law provides that erroneous information include in a
lien claim relating to the claimant's demand, credits and
offsets deducted, work provided, or description of the site
does not invalidate a claim of lien unless: (1) the claim of
lien was made with the intent to slander title or defraud; or
(2) a bona fide owner came into possession of the property
after recordation of the lien claim and the lien claim was so
deficient that it failed to put the bona fide owner on notice
of the lien claim. (Civil Code Sec. 8422.)
This bill would clarify that slander of title is not a
circumstance under which a lien claim can be invalidated, but
any person who willfully includes in a lien claim labor,
services, equipment, or materials not furnished for the
property described in the claim will forfeit the lien.
3. Existing law , as enacted by SB 189, becomes operative on July
1, 2012. (Civil Code Section 8000 et seq.)
This bill would also become operative on July 1, 2012.
COMMENT
1. Stated need for the bill
The author writes:
This bill would make conforming revisions to two code sections
to update cross-references to sections that were repealed by
last year's enactment of SB 189, and would make similar
non-substantive revisions to cross-references in three other
code sections necessitated by the enactment of SB 189. The
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bill would also make a minor revision to a recodified section
of the mechanics lien statute enacted by SB 189, to make its
intended meaning clearer.
2. Circumstances that would invalidate a mechanics lien
This bill would clarify the circumstances under which a
mechanics lien may be invalidated. Existing law, Civil Code
Section 8422, invalidates a lien claim if the lien claim was
made with intent to slander title. The CLRC Tentative
Recommendation states the need for clarification of this
provision as follows "Civil Code Section 8422 is intended to
continue the substance of former Civil Code Sections 3118 and
3261. Section 8422 includes a reference to slander of title.
That reference might cause confusion in this context. In order
to avoid any misunderstanding, the Commission recommends that
the reference be deleted and replaced with language drawn
closely from former Civil Code Section 3118." (See California
Law Revision Commission Tentative Recommendation, Mechanics Lien
Law: Clean-Up Legislation, December 2010, p. 2.)
Former Civil Code Section 3118 provides that "Ýa]ny person who
shall willfully include in his claim of lien labor, services,
equipment, or materials not furnished for the property described
in such claim shall thereby forfeit his lien." This language,
left out of last year's mechanics lien overhaul bill (SB 189),
would be added to Civil Code Section 8422 to clarify another
circumstance under which a mechanics lien would be invalidated.
By adding this additional invalidating circumstance, this bill
would conform the new mechanics lien law to the prior mechanics
lien law.
3. Technical corrections to SB 189
This bill would make minor technical corrections to the
provisions of SB 189. The CLRC Tentative Recommendation states
that some of the technical corrections to cross-references
contained in this bill were included in SB 189 but were
inadvertently chaptered out by two other bills from last year.
(See California Law Revision Commission Tentative
Recommendation, Mechanics Lien Law: Clean-Up Legislation,
December 2010, pgs. 1- 2.) SB 392 (Florez, Stats. 2010, Ch.
698) chaptered out the technical corrections to Business and
Professions Code Section 7159. The technical corrections to
Government Code 66499.7 were chaptered out by SB 1019 (Correa,
Stats. 2010, Ch. 174). In addition to the technical
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corrections chaptered out by SB 392 and SB 1019, the CLRC
identified several other cross-reference and technical errors
contained in SB 189. This bill would correct these minor
technical errors.
Support : American Society of Landscape Architects
Opposition : None Known
HISTORY
Source : California Law Revision Commission
Related Pending Legislation : None Known
Prior Legislation : See Background and Comment 3.
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