BILL ANALYSIS
SB 189
Page 1
SENATE THIRD READING
SB 189 (Alan Lowenthal)
As Amended August 16, 2010
Majority vote
SENATE VOTE :35-0
JUDICIARY 10-0 APPROPRIATIONS 17-0
-----------------------------------------------------------------
|Ayes:|Feuer, Tran, Brownley, |Ayes:|Fuentes, Conway, |
| |Evans, Hagman, Jones, | |Bradford, |
| |Knight, Monning, Nava, | |Charles Calderon, Coto, |
| |Huffman | |Davis, |
| | | |De Leon, Gatto, Hall, |
| | | |Harkey, Miller, Nielsen, |
| | | |Norby, Skinner, Solorio, |
| | | |Torlakson, Torrico |
|-----+--------------------------+-----+--------------------------|
| | | | |
-----------------------------------------------------------------
SUMMARY : Updates the mechanics lien statutes. Specifically, this
bill :
1)Reorganizes, restates, and modernizes the language of the
existing mechanics lien statute.
2)Standardizes those requirements for all notices given under the
mechanics lien statute, except as expressly otherwise noted.
3)Increases that notice period to ten days, if the notice is given
by mail.
4)Clarifies that a general contractor must give preliminary notice
to a construction lender on a private work.
5)Deletes the vague term "acceptance by the owner" as an event
deemed to constitute completion of a private work of
improvement.
6)Requires continuous cessation of labor for 60 days or more to
constitute completion of those public works.
7)Allows an owner or public entity 15 days after completion of a
work of improvement to record a notice of completion.
SB 189
Page 2
8)Recasts the statutory forms for clarity, and would make those
procedural requirements applicable to subcontractors as well.
9)Adds procedural rules relating to the proceeding, and would
allow for an award of reasonable attorney's fees to the
prevailing party.
10)Reduces the required amount of certain bonds to 125% of the
recorded lien claim.
11)Requires public entities to provide notice of all specified
events that trigger the commencement of the time period for
enforcement.
12)Allows any person to post a release bond, requires those bonds
to be issued by an admitted surety insurer, makes the expedited
proceeding also available to the owner involved in the dispute,
clarifies that the bond must be recorded prior to commencement,
and clarifies that such persons may make a claim against the
payment bond provided by the general contractor at the outset of
the project.
13)Makes the limitation period also applicable to an action
against the principal on the bond.
14)Clarifies that such persons are permitted to make a claim
against the general contractor's payment bond.
15)Expands that provision to also require notice of the nonpayment
to the owner on the project.
16)Adds licensed landscape architects to the identified list of
design professionals.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, 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 : 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
SB 189
Page 3
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.
In 1999, this 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.)
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334
FN: 0006116