BILL ANALYSIS
AB 457
Page 1
ASSEMBLY THIRD READING
AB 457 (Monning)
As Amended March 25, 2009
Majority vote
JUDICIARY 10-0
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|Ayes:|Feuer, Tran, Brownley, | | |
| |Evans, Jones, Knight, | | |
| |Krekorian, Lieu, Monning, | | |
| |Nielsen | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Amends the existing Mechanic's Lien Law to require
service of Notice of Mechanic's Lien on the affected property
owner, or other party as specified, and recording of lis pendens
within 20 days of filing an action to foreclose upon a
mechanic's lien. Specifically, this bill :
1)Provides that "claim of lien" shall have the same meaning as
"mechanic's lien" for purposes of the statement that must be
signed and verified by the claimant recording a mechanic's
lien.
2)Requires, as a condition of recording a mechanic's lien with a
county recorder, the submission of a signed and completed
affidavit declaring that the person recording the lien has
served a Notice of Mechanic's Lien upon the property owner, or
other party as specified, in the manner required by this bill.
3)Provides that any mechanic's lien in proper form and
containing the information required by this bill, shall be
accepted by the recorder for recording and shall be deemed
duly recorded without acknowledgment.
4)Provides that if the owner or reputed owner cannot be served
by the methods prescribed in this bill, then notice may be
given to the construction lender or to the original
contractor.
5)Provides that failure to serve the notice of mechanic's lien,
AB 457
Page 2
including the Notice of Mechanic's Lien, as prescribed, shall
cause the mechanic's lien to be unenforceable as a matter of
law.
6)Requires the person filing an action to foreclose upon a
mechanic's lien to also record a notice of pendency in the
appropriate county recorder's office, in the manner provided,
on or before 20 days after the filing of the mechanic's lien
foreclosure action. Specifies that only from the time of
recording that notice shall a purchaser or encumbrancer of the
affected property be deemed to have constructive notice of the
pendency of the action.
FISCAL EFFECT : None
COMMENTS : Few state laws have been subject to more efforts at
legislative reform than California's Mechanic's Lien Law (Civil
Code Section 3109 et seq.). SB 189 (Lowenthal) was introduced
earlier this year as a two-year bill; it represents a
culmination of recommendations by the California Law Revision
Commission to revise and recast the existing statutory
framework.
AB 457 takes a more modest approach to one of the most
persistent problems in this area of law: the so-called "double
payment" or "double liability" problem. This problem typically
arises when the homeowner pays a general contractor in full but
can still be subject to a mechanic's lien if the general
contractor fails to pay the subcontractor. This measure
attempts to partially address the perceived imbalance by
providing the property owner with more notice when a lien has
been recorded and to give constructive notice to a prospective
buyer of an encumbered property. According to the sponsor, the
Contractors State License Board, many homeowners do not realize
their legal options "and often pay the lien claimant even though
they have already paid the prime contractor for the services
covered by the lien." Because lien holders are not required
under existing law to record a lis pendens after commencing a
foreclosure action, subsequent purchasers have no constructive
notice about any cloud on the title. Specifically, this bill
amends existing law in the following ways:
1) Existing law permits a lienholder to record a mechanic's
lien without providing notice to the homeowner that a lien
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has actually been filed. This bill will require, as a
condition of filing a mechanic's lien, the serving of a
Notice of Mechanic's Lien on the property owner, or in some
cases on a lender or original contractor if the property
owner cannot be located. The Notice of Mechanic's Lien
must be served with a copy of the recorded lien and
contains information explaining the legal effect of the
lien, the time periods in which actions must be commenced
and other information that is vital to the homeowner.
Moreover, this bill provides that failure to serve notice
in the prescribed manner will make the lien unenforceable
as a matter of law.
2) Existing law provides that, once a lien holder commences
an action to foreclose on a lien, he or she "may" record a
notice of pendency, or lis pendens. This bill would change
"may" to "shall" and thereby ensure that all bona fide
purchasers have constructive notice that the lien has been
recorded against the property and an action commenced.
According to the sponsor, "The goal of AB 457 is to provide all
parties involved in construction related transactions with an
opportunity to deal with the relevant obligations in advance of
the legal and financial issues that result from a mechanic's
lien. Also, for those situations where a foreclosure suit is
filed in order to satisfy the debts underlying a mechanic's
lien, clear notice should be available to all parties who are
interested in the property in question."
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334
FN: 0000230