BILL ANALYSIS Ó
SB 190
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Date of Hearing: June 14, 2011
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 190 (Lowenthal) - As Amended: March 16, 2011
PROPOSED CONSENT
SENATE VOTE : 36-0
SUBJECT : MECHANICS' LIENS
KEY ISSUE : SHOULD THE LEGISLATURE IMPLEMENT A RECOMMENDATION OF
THE CALIFORNIA LAW REVISION COMMISSION TO MAKE ADDITIONAL
TECHNICAL IMPROVMENTS TO LAST YEAR'S REORGANIZATION OF THE
MECHANICS' LIEN STATUTES?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This non-controversial clean-up bill is sponsored by the
California Law Revision Commission (CLRC) to enact technical
amendments to last year's SB 189 (Lowenthal) in order to update
several cross-references and make technical corrections to
various new mechanics liens provisions enacted in the prior
measure, which reorganized and recodified the mechanics lien
laws. 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.
SUMMARY : Clarifies mechanics' lien laws. Specifically, this
bill :
1)Corrects cross-references to the Civil Code to conform to the
new mechanics' lien provisions enacted under SB 189 to address
various technical errors.
2)Clarifies 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.
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3)Becomes operative on the same date as SB 189 which also
becomes operative on July 1, 2012.
EXISTING LAW :
1)Regulates home improvement project contracts. (Bus. & Prof.
Code Sec. 7150 et seq.)
2)Identifies projects for which a home improvement contract is
required, outlines the contract requirements, and lists the
items that shall be included in the contracts. (Bus. & Prof.
Code Sec. 7159.)
3)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).)
4)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).)
5)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).)
6)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).)
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7)Provides that the security provided by a subdivider to secure
payments to contractors, subcontractors, laborers, and
materials or equipment suppliers, after the 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.)
8)Regulates the conditions under which a mechanics lien may be
enforced. (Civil Code Sec. 8410 et seq.)
9)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.)
COMMENTS : The California Constitution grants laborers and
materials suppliers a mechanic's 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 lien law 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
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
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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. The provisions of
this bill would become operative on July 1, 2012, consistent
with the provisions of SB 189.
Specifically, 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 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.
REGISTERED SUPPORT / OPPOSITION :
Support
Air Conditioning Sheet Metal Association
Air-conditioning & Refrigeration Contractors Association
Building Industry Credit Association
California Chapters of the National Electrical Contractors
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Association
California Landscape & Irrigation Council
California Legislative Conference of the Plumbing, Heating and
Piping Industry
Opposition
None on file
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334