BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 189|
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UNFINISHED BUSINESS
Bill No: SB 189
Author: Lowenthal (D)
Amended: 8/16/10
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 1/12/10
AYES: Corbett, Harman, Hancock, Leno, Walters
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE FLOOR : 35-0, 1/25/10
AYES: Aanestad, Ashburn, Calderon, Cedillo, Cogdill,
Corbett, Correa, Cox, Denham, DeSaulnier, Ducheny,
Dutton, Hancock, Harman, Hollingsworth, Huff, Kehoe,
Leno, Liu, Lowenthal, Negrete McLeod, Oropeza, Padilla,
Pavley, Price, Romero, Simitian, Steinberg, Strickland,
Walters, Wiggins, Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: Alquist, Florez, Maldonado, Runner,
Vacancy
ASSEMBLY FLOOR : 75-0, 8/17/10 - See last page for vote
SUBJECT : Mechanics liens
SOURCE : California Law Revision Commission
DIGEST : This omnibus mechanics lien bill recodifies,
reorganizes, and clarifies the mechanics lien statute;
modernizes terminology and eliminates inconsistencies in
language; makes provisions more readable and easier to use;
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enacts separate provisions for private and public works;
modernizes and streamlines existing notice requirements;
revises and recasts provisions relating to liens for design
professionals; requires certain bonds to be obtained from
licensed sureties; improves and clarifies statutory forms
relating to waivers and releases; allows notices under the
mechanics lien statute to be given electronically; adds
procedural detail relating to a summary lien release; and
becomes operative July 1, 2012 to allow the industry and
homeowners to become familiar with the new reorganization
and updates.
Assembly Amendments (1) provide that a stop work notice is
also to be posted at the main post office of the site if
one exists, (2) delete provisions authorizing submission of
notices electronically as well as language related to
requirements for large projects, (3) add double-jointing
language with AB 2216 (Fuentes) and AB 2419 (Cook), and (4)
change the operative date from January 1, 2012 until July
1, 2012.
ANALYSIS : The California Constitution provides that
mechanics, persons furnishing materials, artisans, and
laborers of every class have a lien upon the property upon
which they have bestowed labor or furnished material for
the value of the labor done and material furnished. The
California Constitution also requires the Legislature to
provide, by law, for the speedy and efficient enforcement
of those liens.
Existing statutory law governs works of improvement,
including design professionals' liens and mechanics liens.
These provisions govern the conditions required to enforce
a lien and for a mechanic's lien to be deemed valid, and
define the use of the terms "materialman" and "original
contractor" for purposes of the mechanics' lien law.
This bill revises and recasts those statutory provisions
and make both substantive and technical changes. This bill
also replaces the terms "original contractor" and
"materialman" with the terms "direct contractor" and
"material supplier," respectively.
This bill enacts separate provisions governing private
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works of improvement and public works of improvement. This
bill revises and recasts provisions governing design
professionals' liens, mechanics liens, notices of
cessation, payment bonds, and retention payments. This
bill makes related and conforming changes.
This bill also provides that any other act, except as
specified, enacted during the 2010 calendar year that takes
effect on or before January 1, 2011, and that amends, adds,
or repeals any section that is amended, added, or repealed
by this act, as specified, shall prevail over this act.
This bill incorporates additional changes made by AB 2216
and AB 2419, contingent upon the enactment of those bills.
The provisions of the bill become operative on July 1,
2012, except as specified.
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 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
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"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.
(CLRC, "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
CLRC "Memorandum 2009-45," October 13, 2009.)
Comments
According to the Senate Judiciary Committee analysis, 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, 2009 with the author's
staff, CLRC staff, Senate Judiciary Committee 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), Chapter 109,
Statutes of 2009 - operative January 1, 2011, and SB 189.
The CLRC is in discussions with the Contractors State
License Board (CSLB), the sponsor of AB 547, and SB 189
stakeholders and interested parties are informed that the
CLRC and CSLB are very close to agreed language that
incorporates AB 457 into SB 189.
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The Associated General Contractors of California (AGC)
writes that with the December 15, 2009 amendments it has
changed its position on the bill from oppose to neutral.
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.
Prior Legislation
AB 457 (Monning), Chapter 109, Statutes of 2009 (which
passed the Senate on July 9, 2009 with a vote of 34-0) -
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 contains 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), 2007-08 Session, 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 1/25/10)
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California Law Revision Commission (source)
California Council/American Society of Landscape Architects
ARGUMENTS IN SUPPORT : The CLRC writes:
"The existing mechanics lien statute contains archaic
language dating back to 1872. Since the last
recodification of the 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."
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Bass, Bill
Berryhill, Tom Berryhill, Block, Blumenfield, Bradford,
Buchanan, Caballero, Carter, Chesbro, Conway, Cook, Coto,
Davis, De La Torre, De Leon, DeVore, Eng, Evans, Feuer,
Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines,
Galgiani, Garrick, Gatto, Gilmore, Hagman, Hall, Harkey,
Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries,
Jones, Knight, Lieu, Logue, Bonnie Lowenthal, Ma,
Mendoza, Miller, Monning, Nava, Nestande, Niello,
Nielsen, Norby, V. Manuel Perez, Portantino, Ruskin,
Salas, Saldana, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
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Villines, Yamada, John A. Perez
NO VOTE RECORDED: Beall, Blakeslee, Brownley, Charles
Calderon, Vacancy
RJG:mw 8/18/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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