BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 189
                                                                  Page  1

          Date of Hearing:   August 4, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                  SB 189 (Lowenthal) - As Amended:  August 2, 2010 

          Policy Committee:                               
          JudiciaryVote:10-0 (Consent)

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill streamlines, reorganizes, recasts, and updates the  
          state's mechanics lien statutes, effective July 1, 2012. 

           FISCAL EFFECT  

          To the extent the revised statute clarifies current ambiguities  
          in the mechanics lien law, there would be reductions in  
          construction litigation costs to the state and to local  
          governments, as well as the private sector, and a reduction in  
          court costs.

          COMMENTS  
           
          1)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, dating to 1872, 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  
            provides claimants on public works projects with other  
            statutory remedies, including stop notices and claims against  
            payment bonds.
           
          2)Purpose  . This bill is based on the February 2008  
            recommendations of the California Law Revision Commission  
            (CLRC), which in 2004 began a comprehensive review of the  
            mechanics lien law. The CLRC believed that this statute had  
            "become increasingly difficult to use, generating litigation  
            over confusing provisions, and often leaving participants  








                                                                  SB 189
                                                                  Page  2

            unsure of their rights and obligations."  The commission has  
            thus sought to draft a "nonsubstantive reorganization of the  
            existing mechanics lien statute that would modernize and  
            clarify existing law."

            In general, the bill repeals existing sections of law known  
            informally as the design professionals lien statute and the  
            mechanics lien statutes and incorporates both into a new  
            modernized, clarified, and better organized mechanic lien  
            statute. The new statute appears in a new statutory Part  
            within the Civil Code. The first title in this Part contains  
            provisions jointly applicable to both private and public  
            works; the next two titles of the Part contain provisions  
            exclusively applicable to either private or public works,  
            respectively.

            In addition, 102 sections of the bill simply make  
            non-substantive conforming changes to code sections containing  
            cross-references to the existing mechanics lien statute. The  
            bill also makes several modest, substantive changes to this  
            body of law, regarding notice provisions, waiver and release  
            of claims, stop notices and payment bonds, payment bonds, and  
            adding licensed architects to the current list of design  
            professionals (licensed architects, engineers, and surveyors)  
            who may claim a design professionals lien. For a detailed  
            discussion of these changes, see the Assembly Judiciary  
            Committee's analysis of this bill.

            The author's most recent amendments move the operative date of  
            the bill from January 1, 2012 to July 1, 2012, provide double  
            jointing language with AB 2216 (Fuentes), and include numerous  
            technical changes.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081