BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
SB 189
Senator Lowenthal
As Amended December 15, 2009
Hearing Date: January 12, 2010
Various Codes
ADM:jd
SUBJECT
Mechanics Liens
DESCRIPTION
This omnibus mechanics lien bill would do the following:
recodify, reorganize, and clarify the mechanics lien statute;
modernize terminology and eliminate inconsistencies in
language;
make provisions more readable and easier to use;
enact separate provisions for private and public works;
modernize and streamline existing notice requirements;
revise and recast provisions relating to liens for design
professionals;
require certain bonds to be obtained from licensed sureties;
improve and clarify statutory forms relating to waivers and
releases;
allow notices under the mechanics lien statute to be given
electronically;
add procedural detail relating to a summary lien release; and
become operative January 1, 2012 to allow the industry and
homeowners to become familiar with the new reorganization
and updates.
(This analysis reflects author's amendments to be offered in
committee.)
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
(more)
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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
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.)
CHANGES TO EXISTING LAW
Mechanics lien statute
Existing law provides that mechanics, persons furnishing
materials, artisans, and laborers of every class have a lien
upon the property upon which they bestowed labor or furnished
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material for the value of such labor done and material
furnished. (Cal. Const., art.14, Sec. 3.)
Existing law sets forth obligations and rights of contributors,
owners, construction lenders, and persons otherwise involved in
an improvement to real property, in what is informally known as
the mechanics lien statute. (Civ. Code Sec. 3082 et seq.)
This bill would reorganize, restate, and modernize the language
of the existing mechanics lien statute.
Notices
Existing law requires many different types of notices under the
mechanics lien statute, with most notices subject to unique
provisions governing content, manner of service, location of
service, proof of service, and the like. (See, e.g., Civ. Code
Sec. 3103.)
This bill would standardize those requirements for all notices
given under the mechanics lien statute, except as expressly
otherwise noted.
Existing law does not allow notices under the mechanics lien
statute to be given electronically.
This bill would allow notices under the mechanics lien statute
to be given electronically, provided the recipient of the notice
has agreed in writing to receive notice in electronic form.
Existing law requires the giving of five days notice of a
hearing to summarily adjudicate a public work stop notice.
(Civ. Code Sec. 3201.)
This bill would increase that notice period to ten days, if the
notice is given by mail.
Preliminary Notices; Recordation
Existing law allows a claimant on a private work of improvement
to record a preliminary notice in the county recorder's office,
and requires the county recorder to make a good faith effort to
notify that claimant when a notice of completion on the
claimant's project has been recorded. (Civ. Code Sec. 3097(o).)
This bill would delete the provision allowing recordation of a
preliminary notice, and the provision requiring county recorder
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notification of a recorded notice of completion.
Existing law contains an ambiguity relating to whether a general
contractor must give preliminary notice to a construction lender
on a private work. (Civ. Code Sec. 3097(b).)
This bill would clarify that a general contractor must give
preliminary notice to a construction lender on a private work.
Completion of Private/Public Works of Improvement
Existing law provides that "acceptance by the owner" of a
private work of improvement is one of several events deemed to
constitute completion of that work of improvement. (Civ. Code
Sec. 3086(b).)
This bill would delete "acceptance by the owner" as an event
deemed to constitute completion of a private work of
improvement.
Existing law provides that a continuous cessation of labor for
30 days or more on specified public works of improvement
constitutes completion of that work. (Civ. Code Sec. 3086.)
This bill would require continuous cessation of labor for 60
days or more to constitute completion of those public works.
Existing law allows an owner or public entity to record a notice
of completion within 10 days after completion of a work of
improvement. (Civ. Code Sec. 3093.)
This bill would allow an owner or public entity 15 days after
completion of a work of improvement to record a notice of
completion.
Existing law allows an owner to record a notice of completion of
a portion of a private work of improvement governed by a
separate contract within 10 days after that contract has been
completed. (Civ. Code Sec. 3117.)
This bill would allow an owner to record a notice of completion
corresponding to a portion of a private work of improvement
governed by a separate contract up to 15 days after completion
of the entire work of improvement.
Waiver and Release of Claims Forms
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Existing law provides procedural requirements, including the use
of specified statutory forms, which must be followed by owners
or general contractors to obtain a waiver and release of claims
under the mechanics lien law. (Civ. Code Sec. 3262.)
This bill would recast the statutory forms for clarity, and
would make those procedural requirements applicable to
subcontractors and construction lenders as well.
Release of Lien
Existing law allows an owner to seek release of a recorded lien
claim that has not been timely prosecuted in a summary
proceeding, and allows an award of attorney's fees not to exceed
$2,000 to the prevailing party in the proceeding. (Civ. Code
Sec. 3154.)
This bill would add procedural rules relating to the proceeding,
and would allow for an award of reasonable attorney's fees to
the prevailing party.
Stop Notices; Payment Bonds; Fees
Existing law allows a stop notice claimant on a public work to
pay $2.00 to the public entity in order to be notified when the
latest of several specified events occur that trigger the
commencement of the time period in which the claimant must file
suit to enforce the stop notice. (Civ. Code Sec. 3185.)
This bill would increase the specified fee to $10.00, and would
require the public entity to provide notice of the applicable
time period for enforcement, after the occurrence of each such
event.
Existing law provides that only an owner, construction lender,
or contractor on a work of improvement may post a stop notice
release bond. (Civ. Code Sec. 3171.)
This bill would allow any person to post the release bond.
Existing law allows a statutory payment bond on a private work
and a stop notice release bond to be issued by a non-licensed
surety. (Civ. Code Secs. 3096, 3143, 3171.)
This bill would require those bonds to be issued by an admitted
surety insurer.
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Existing law makes an expedited proceeding available to a
general contractor to resolve a stop work notice dispute. (Civ.
Code Sec. 3260.2(d).)
This bill would make that expedited proceeding also available to
the owner involved in the dispute.
Clarifying Ambiguities Related to Bonds; Limitations Periods
Existing law contains an ambiguity relating to whether a private
work payment bond must be recorded prior to commencement of a
work of improvement in order to limit an owner's lien claim
liability. (Civ. Code Sec. 3235.)
This bill would clarify that the bond must be recorded prior to
commencement.
Existing law contains an ambiguity relating to whether persons
contributing to a public work pursuant to a supplemental
contract may make a claim against the payment bond provided by
the general contractor at the outset of the project. (Civ. Code
Sec. 3247(b).)
This bill would clarify that such persons may make a claim
against the payment bond provided by the general contractor at
the outset of the project.
Existing law provides that an action against a surety to enforce
a claim against a statutory private work payment bond recorded
before commencement of the work of improvement must be commenced
within six months after completion of the work of improvement.
(Civ. Code Sec. 3240.)
This bill would make that limitation period also applicable to
an action against the principal on the bond.
Existing law provides that an action against a surety on a
public work payment bond must be commenced within six months
after the period in which a stop payment notice may be given.
(Civ. Code Sec. 3249.)
This bill would make that limitation period also applicable to
an action against the principal on the bond.
Existing law contains an ambiguity relating to whether persons
contributing work to a second tier or lower subcontractor on a
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work of improvement are permitted to make a claim against the
general contractor's payment bond. (Civ. Code Sec. 3267.)
This bill would clarify that such persons are permitted to make
a claim against the general contractor's payment bond.
Labor Issues
Existing law requires a contractor that fails to timely pay
wages to laborers employed by the contractor to provide notice
of the nonpayment to the laborer, to the laborer's bargaining
representative, and to the construction lender on the project,
or face discipline. (Civ. Code Sec. 3097(k).)
This bill would expand that provision to also require notice of
the nonpayment to the owner on the project.
Notification of Contract Change of Five Percent or More
Existing law requires that an owner notify the general
contractor and construction lender of a change in the original
contract if the change increases the contract amount by five
percent or more. (Civ. Code Sec. 3123(c).)
This bill would delete that provision.
Licensed Landscape Architects
Existing law allows licensed architects, engineers, and
surveyors to claim a "design professionals lien" for
pre-commencement design services provided for a work of
improvement. Services that these design professionals provide
are also governed by selected provisions of the mechanics lien
statute. (Civ. Code Secs. 3081.1 to 3081.10.)
This bill would add licensed landscape architects to the
identified list of design professionals.
COMMENT
1. Stated need for the bill
The CLRC writes:
The existing mechanics lien statute contains archaic language
dating back to 1872. Since the last recodification of the
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statute in 1969, individual provisions have been amended more
than 70 times. Over time, the statute has become increasingly
difficult to use, generating litigation over confusing
provisions, and often leaving unsophisticated participants
unsure of their rights and obligations.
This bill would modernize terminology and make it more
uniform; clarify or eliminate inconsistencies and ambiguities
throughout the statute; divide longer provisions into shorter
and more readable provisions; and organize all provisions in a
functionally coherent order. This clarification of the law
should reduce litigation and reduce the risk that important
rights will be inadvertently lost through misunderstanding of
the law. This bill would also make a small number of
substantive improvements to existing law that would result in
an overall benefit to practitioners and persons affected by
the mechanics lien statute, with no significant detriment.
2. Overview of the bill's provisions
The provisions of the bill that would recodify the mechanics
lien law are contained in three sections of the bill, Sections
16, 17, and 22.
Section 16 of the bill would repeal the existing law informally
known as the design professionals lien statute (Civ. Code Secs.
3081.1 to 3081.10) in order to incorporate these sections into a
new mechanics lien statute.
Section 17 of the bill would repeal the existing body of law
informally known as the mechanics lien statute (Civ. Code Secs.
3082 to 3267.)
Section 22 of the bill would enact a modernized, clarified, and
better organized mechanics lien statute that would incorporate
the existing design professionals lien statute as well as all
provisions of the existing mechanics lien statute presently
applicable to both private and public works of improvement. The
new statute would appear in a new statutory Part within the
Civil Code, with the private and public work provisions in two
adjacent statutory Titles.
Of the remaining 107 sections of the bill, 103 make
non-substantive conforming revisions to code sections that
contain a cross-reference to the existing mechanics lien
statute. The conforming revisions correct the cross-references,
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and in some cases, conform existing statutory language to
language used in the new mechanics lien statute. For example, a
reference to a "20 day Preliminary Notice" has been revised to
read "Preliminary Notice." In some instances, purely
non-substantive stylistic changes (unrelated to mechanics lien
law), generated by the CLRC or by Legislative Counsel, are also
made to these sections.
Section 107, which would be uncodified, contains the bill's
operative date provision.
Sections 11 and 21 are to be amended out of the bill as author's
amendments. These sections concern the Automatic Checkout
System, which has nothing to do with the mechanics lien law.
3. Proposed substantive changes to the mechanics lien law;
rationales for changes
provided by the CLRC and author
Notices
This bill would standardize the requirements for all notices
given under the mechanics lien statute, except as expressly
otherwise noted. The standardization would reduce the
likelihood of confusion or inadvertent errors by unrepresented
or occasional practitioners whose rights under the mechanics
lien law often depend on compliance with these notice
requirements.
This bill would allow notices under the mechanics lien statute
to be given electronically, provided the recipient of the notice
has agreed in writing to receive notice in electronic form. Use
of electronic notice would reduce paperwork, reduce cost,
provide for faster receipt, facilitate the use of electronic
databases to monitor and track notices, and as to persons who
have agreed to receive notice in such form, would reduce the
risk of unsuccessful delivery.
This bill would increase the notice period for a hearing to
summarily adjudicate a public work stop notice from five to 10
days. This would correct an apparent oversight in the existing
statute, as a notice of a hearing sent by mail five days before
a hearing date may not be received until on or after the hearing
date.
Preliminary Notices; Recordation
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This bill would delete the provision allowing recordation of a
preliminary notice, and the provision requiring county recorder
notification of a recorded notice of completion. A recorded
notice of completion shortens the time for a claimant to pursue
a mechanics lien remedy. However, as existing law does not
provide for any consequence to a county recorder for failure to
provide notice of a recorded notice of completion, budgetary
considerations have caused many counties to cease giving the
notice. Deletion of these two provisions would eliminate the
possibility that a claimant will miss a claim deadline by
relying on a county recorder to notify the claimant when a
notice of completion has been recorded.
This bill would clarify that a general contractor must give
preliminary notice to a construction lender on a private work.
Giving of this notice would be consistent with a basic policy
reason underlying the giving of all preliminary notice-
identification of a contributor to a work of improvement whose
identity may otherwise be unknown to the recipient of the
notice.
Completion of Private/Public Works of Improvement
This bill would delete "acceptance by the owner" as an event
deemed to constitute completion of a private work of
improvement. The existing mechanics lien statute does not
define the term "acceptance by the owner," nor does it indicate
how it must be manifested, or to whom it must be conveyed. The
event does not appear to be significantly relied upon in the
industry, and may be constitutionally suspect to the extent it
serves to time bar a lien claim of a claimant who was reasonably
unaware that the event had occurred. The bill does continue a
provision of existing law (Civ. Code Sec. 3086(a)), which
provides that occupation or use of the work of improvement by
the owner, accompanied by cessation of labor, constitutes
completion of the work of improvement.
This bill would allow an owner to record a notice of completion
corresponding to a portion of a private work of improvement
governed by a separate contract up to 15 days after completion
of the entire work of improvement. This would standardize the
deadline for recordation of all notices of completion, which
should reduce confusion for both owners and claimants that do
not have substantial familiarity with mechanics lien law.
This bill would require continuous cessation of labor for 60
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days or more to constitute completion of public works of
improvement. On a modern public construction project, it is not
uncommon for a 30-day work stoppage to occur when the project is
far from complete. Requiring a continuous cessation of labor
for 60 days or more would reflect the realities of modern public
work projects. A 60-day requirement would also coincide with
the period of cessation of labor deemed to constitute completion
of a private work of improvement, thereby standardizing this
requirement for both private and public works of improvement.
This bill would allow an owner or public entity 15 days after
completion of a work of improvement to record a notice of
completion. On more complex projects, 10 days may not be a
sufficient time to allow for an accurate determination of
whether completion has occurred. Further, while the extra few
days could make a significant difference to an owner or public
entity, it would not significantly adversely affect a claimant,
as the claimant's time to pursue a remedy would continue to run
from the date of recordation of the notice of completion.
Waiver and Release of Claims
This bill would recast the statutory forms relating to waivers
and releases of claims for clarity, and would make these
procedural requirements applicable to subcontractors and
construction lenders. Current statutory forms and procedural
requirements already apply to owners and general contractors.
The CLRC states that there does not appear to be any sound
public policy reason why this protection of claimants intended
by the Legislature should only apply to a subgroup of entities
on a construction project that regularly seek waiver and release
forms from claimants.
Release of Lien
This bill would add procedural rules relating to the release of
a recorded lien claim that has not been timely prosecuted in a
summary proceeding, and would allow for an award of reasonable
attorney's fees to the prevailing party.
The inclusion in the statute of basic procedural guidelines for
these proceedings would assist litigants by reducing ad hoc or
inconsistent rulings on procedural issues by different trial
courts. The CLRC and author also believe that it makes sense to
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allow the court to award reasonable attorney's fees.
Stop Notices; Payment Bonds; Fees
This bill would increase a specified $2.00 notice from public
entity fee to $10.00, and would require the public entity to
provide notice of the applicable time period for enforcement,
after the occurrence of each specified event that triggers
commencement of the time period in which a claimant must file
suit to enforce a stop notice. The $2.00 fee was established in
1969, and represents approximately $10.00 of buying power today.
The revised notice would reduce confusion as to deadlines on
the part of occasional or unrepresented claimants that do not
have substantial familiarity with the mechanics lien law.
This bill would also allow any person to post a release bond.
The CLRC and the author assert that it would be unreasonable to
preclude any person that seeks to release funds withheld
pursuant to a stop notice from posting an appropriate bond to do
so.
This bill would require a statutory payment bond to be issued by
an admitted surety insurer. This requirement would provide the
bond recipient with greater assurance of the solvency of the
surety.
This bill would make an expedited (stop work notice) proceeding
available, in addition to the general contractor, to the owner
involved in the dispute. The CLRC and author do not believe
there is any policy reason not to provide an owner aggrieved by
a work stoppage the same procedural right to an expedited
resolution of the dispute that is available to the contractor in
the dispute.
Clarifying Ambiguities Related to Bonds; Limitation Periods
This bill would clarify that a private work payment bond must be
recorded prior to commencement. Pre-commencement recordation
would allow all contributors to a work of improvement to learn
prior to contributing work, whether a constitutional lien right
attributable to the work may be restricted or precluded by
statute.
This bill would clarify that persons contributing to a public
work of improvement pursuant to a supplemental contract may make
a claim against the payment bond provided by the general
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contractor at the outset of the project. To the best of CLRC's
and the author's knowledge there is not any legislative history
suggesting an intent to preclude claimants providing work on
supplemental public work contract from a payment bond remedy.
Such preclusion would severely limit the remedies available to
such claimants for unpaid work, since lien claims are not
allowed on a public work. (See Civ. Code Sec. 3109.)
This bill would make the limitation period for an action against
the principal on a bond the same as that against a surety on a
public work payment bond, i.e., within six months after the
period in which a stop payment notice may be given. The
principal on a bond typically provides for joint and several
liability of the principal as to any claim made against the
bond. Conforming the applicable limitation period for bringing
such an action against either named defendant would facilitate
the joint and several liability, and would standardize this
procedural requirement.
This bill would clarify that persons contributing work to a
second tier or lower subcontractor on a work of improvement
would be permitted to make a claim against the general
contractor's payment bond. Neither the CLRC nor the author have
uncovered any legislative history suggesting an intent to
preclude claimants that provide work to subcontractors below the
first tier from a payment bond. To the contrary, policy
considerations suggest an intent to allow such claims, as an
alternative lien claim is not available on a public work, and
may be restricted on a private work. (See Civ. Code Sec. 3235.)
This ambiguity was analyzed by the court in Union Asphalt v.
Planet Ins. (1994) 27 Cal.Rptr. 2d 371, which reached the same
conclusion.
Labor Issues
This bill would expand the provision that requires a contractor
who fails to timely pay wages to provide notice of nonpayment to
not only the laborer, the laborer's bargaining representative,
the construction lender, but also to the project owner. Such
notice would provide advance warning to the owner that a lien
claim from the unpaid laborer may be forthcoming.
Notification of Contract Change of Five Percent or More
This notification in existing law does not indicate when the
notification must be made, the manner of notification, or the
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consequences of failure to notify. Thus, the provision does not
appear to have any practical utility, is often ignored in the
industry, and appears more confusing than helpful. For those
reasons the provision would be deleted in the bill.
Licensed Landscape Architects
This bill would add licensed landscape architects to the current
list of design professionals (licensed architects, engineers,
and surveyors) who may claim a design professionals lien. All
four types of professionals are licensed under the Business and
Professions Code, and are the only types of licensed design
professionals that frequently provide pre-commencement work on a
work of improvement, often in conjunction with each other.
Thus, it makes sense to afford the same lien rights to all four
categories of design professionals.
4. Examples of nonsubstantive changes to the mechanics lien
law
The CLRC and author offer the following examples of
nonsubstantive changes to the mechanics lien law that the CLRC
and author assert are both nonsubstantive and beneficial
Definitional Changes: Owner
The term "owner" is a crucial concept in mechanics lien law that
can have several different meanings (e.g., owner of the
improvements vs. owner of the real property on which the
improvement is situated, owner of fee simple interest in either
vs. owner of a leasehold or other interest). The existing
statute, however, despite extensive use of the term in most of
its sections, does not define the term, except in subdivision
(g) of a section relating to a notice of cessation, where the
definition is expressly stated to be provided for the purpose of
that statutory section. (See Civ. Code Sec. 3092.)
This bill would provide a definition of the term applicable to
every usage throughout the new proposed statute. (proposed Civ.
Code Sec. 8028). This definition would provide practitioners
with both clarity and certainty as to the intended meaning of
the term, whenever it is necessary to construe the term as used
in any other provision of the law not relating to a notice of
cessation.
Organizational Improvement: Preliminary Notice
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A definition of preliminary notice on a private work, one of the
most fundamental concepts in mechanics lien law, appears in the
existing statute in a single statutory section, Civil Code
Section 3097, that contains a total of 50 subdivisions,
paragraphs and subparagraphs, many of which are unnumbered or
unlettered, and extends over six pages (excluding annotations)
in a volume of West's Annotated Codes.
The section, which has been amended 16 times since its
enactment, is a model of confusion for even experienced
practitioners. Although the section begins with the words
"'Preliminary 20-day notice (private work)' means ?," it
contains buried deep within the section a provision that also
expressly applies to a public work. (See Civ. Code Sec.
3097(k).) This same section contains provisions relating to
contractor discipline (Sec. 3097(h) and (k)), building permits
(Sec. 3097(i)), obligations of a county recorder to provide
special notices to claimants (Sec. 3097(o)(2)), and detailed
instruction relating to information and spaces that must appear
in specified written contracts (Sec. 3097(l) and (m)).
This bill would place these provisions in separate and easily
readable statutory sections, with the sections themselves placed
in articles or chapters containing provisions that all relate to
the same subject matter. (See, e.g., proposed Civ. Code Sec.
8200 et seq.) This would provide practitioners and readers of
the statute with a much more comprehensive understanding of the
meaning of all related provisions in the statute.
Basic Organization
Because it has been amended so many times since its last
recodification in 1969, organization of the existing mechanics
lien statute has become quite irregular and difficult to follow.
The first statutory chapter of the statute, entitled "General
Definitions" contains interspersed among the definitional
provisions other provisions that primarily contain detailed
substantive rules for practitioners. (See, e.g., Civ. Code
Secs. 3083 (bonded stop notice), 3093 (notice of completion),
3097 (preliminary notice on a private work), 3097.1 (proof of
service of preliminary notice).) This bill would group all true
definitional provisions, and only definitional provisions, in a
distinct statutory article. (See proposed Civ. Code Secs.
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8000-8050.)
The existing statute ends with a statutory chapter entitled
"Miscellaneous Provisions," which contains multiple statutory
sections relating to provisions located elsewhere in the
statute. The sections in this chapter are not arranged in any
particular order, with some expressly relating to both private
and public work (Civ. Code Secs. 3258, 3259, 3266, 3267), some
relating only to private work (Secs. 3259.5, 3260, 3260.1,
3260.2), some only to public work (Sec. 3265), and the remainder
not clearly specifying their intended application.
This bill would place these provisions together with other
related provisions, and by location would make unmistakable
whether the provision applied to a private work, a public work,
or both.
5. Opposition and the December 21 meeting
The author received opposition from California Professional
Association of Specialty Contractors (CALPASC) and the Air
Conditioning Trade Association of California. A group meeting
was held on December 21 with the author's staff, CLRC staff,
Senate Judiciary staff, stakeholders, and other interested
parties. The opposition's concerns were discussed and
addressed. During the meeting the parties agreed to work on
concerns as the bill moves through the process.
Based upon that meeting and the assurance that all parties would
work together towards a consensus bill, CALPASC withdrew its
opposition letter and in its place sent an "oppose unless
amended" letter. One of CALPASC's concerns is the interaction
between AB 547 (Monning, Ch. 109, Stats. 2009 - operative
January 1, 2011) and SB 189. The CLRC is in discussions with
the State Contractor's License Board (SCLB), the sponsor of AB
547, and SB 189 stakeholders and interested parties are informed
that the CLRC and SCLB are very close to agreed language that
would incorporate AB 457 into SB 189.
6. The Associated General Contractors of California (AGC) is
now neutral on the bill
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The AGC writes that with the December 15, 2009 amendments it has
changed its position on the bill from oppose to neutral. The
AGC also writes that there are a few remaining issues it would
like to have included in the bill, and if those issues are
resolved it would change its position to support.
7. Author's amendments
On page 26, delete lines 7-39
On page 27, delete lines 1-40
On page 28, delete lines 1-37
On page 33, delete lines 18-19
These amendments would delete Title 1.4C, Automatic Checkout
System, which has nothing to do with mechanics lien law. That
Title would remain where it is currently in statute.
Support : California Council/American Society of Landscape
Architects
Opposition : California Professional Association of Specialty
Contractors (unless amended); Air Conditioning Trade Association
of California
HISTORY
Source : California Law Revision Commission
Related Pending Legislation :
SB 629 (Liu, 2009) would, among other things, prohibit retention
proceeds withheld from any payment made by the owner to the
original contractor from exceeding five percent of the amount of
the payment otherwise due under the contract. The bill would
prohibit the percentage of the retention proceeds withheld from
any payment made by the original contractor to any
subcontractor, or by a subcontractor to another subcontractor,
from exceeding five percent of the amount of payment otherwise
due under the contract or the percentage of each payment that
may be withheld under the contract between the owner and the
original contractor, which ever is less. This bill is on the
Senate Inactive File.
AB 396 (Fuentes, 2009) would, among other things, qualify the
requirement that the public entity withhold money or bonds
sufficient to provide for reasonable litigation costs to make it
SB 189 (Lowenthal)
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applicable only if the original contractor fails to promptly
accept a tender of defense of the public entity in the
litigation. This bill has been held in the Senate
Appropriations Committee.
Prior Legislation :
AB 457 (Monning, Ch. 109, Stats. 2009 - operative January 1,
2011) provides that the definition of "claim of lien" is also
the definition of "mechanics lien" and includes within this
definition a Notice of Mechanics Lien, which would contain
specified information regarding the legal effect of the lien.
The bill requires the mechanics lien and Notice of Mechanics
Lien to be served upon the owner or reputed owner of the
property, or on the construction lender or the original
contractor if those parties cannot be served. The bill requires
a proof of service affidavit to be completed and signed by the
person serving the Notice of Mechanics Lien. The bill provides
that a failure to serve the mechanics lien, including the Notice
of Mechanics Lien, would cause the mechanics lien to be void as
a matter of law. The bill also revises the permissive
provisions regarding the recording of the complaint to enforce
the lien, to make them mandatory.
SB 1691 (Lowenthal, 2008) was an omnibus bill (similar to SB
189) that would have reorganized and restated statutory
mechanics lien law in order to improve its clarity and
usability. The reorganization and restatement was primarily
nonsubstantive. A number of substantive changes were deleted
from the bill pursuant to agreement among the stakeholders. The
bill was vetoed by the governor based upon the 2008-2009 State
Budget delay, and not upon the substance of the bill.
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