BILL ANALYSIS �
AB 2021
Page 1
ASSEMBLY THIRD READING
AB 2021 (Wagner)
As Amended March 29, 2012
Majority vote
BUSINESS & PROFESSIONS 9-0JUDICIARY 10-0
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|Ayes:|Hayashi, Bill Berryhill, |Ayes:|Feuer, Wagner, Atkins, |
| |Allen, | |Dickinson, |
| |Butler, Eng, Hagman, | |Gorell, Huber, Jones, |
| |Hill, Ma, Smyth | |Monning, Wieckowski, |
| | | |Bonnie Lowenthal |
| | | | |
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SUMMARY : Revises the amount that an owner can withhold from a
contractor, and a contractor from a subcontractor, for disputed
private works of improvement. Specifically, this bill :
1)Requires an owner who withholds money from a contractor, and a
prime contractor or subcontractor from a subcontractor, for
disputed works of improvement involving progress payments, to
withhold an amount from a progress payment not to exceed the
sum of the following:
a) The liquidated damages owed by the contractor or
subcontractor; and,
b) 150% of the estimated cost to repair or replace contract
work that was not performed according to the contract.
2)Requires an owner who withholds money from a contractor, for
disputed works of improvement involving retention, to withhold
from the final payment an amount not to exceed the sum of the
following:
a) The liquidated damages owed by the contractor;
b) The amounts that are withheld due to a lien claim, lien
judgment, or bond payment claim;
c) 150% of the estimated cost of uncompleted work, except
for those costs withheld under b); and,
AB 2021
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d) 150% of the estimated cost to repair or replace contract
work that was not performed according to the contract,
except for those costs withheld under b) and c).
3)Requires a direct contractor who withholds money from a
subcontractor, for disputed works of improvement involving
retention, to withhold from the final payment an amount not to
exceed the sum of the following:
a) The liquidated damages owed by the subcontractor;
b) That portion of any mechanic's lien or stop payment
notice claim by the subcontractor that has already been
paid to the subcontractor;
c) The amount that would have been withheld by the owner
due to a lien claim, lien judgment, or bond payment claim,
but for a release bond provided by the direct contractor,
as specified.
d) 150% of the estimated cost of uncompleted subcontract
work, except for those costs withheld under b); and,
e) 150% of the estimated cost to repair or replace
subcontract work that was not performed according to the
subcontract, except for those costs withheld under b) or
c).
EXISTING LAW contains various provisions relating to contracts
for the performance of private and public works of improvement,
including provisions for the withholding and disbursement of
retention proceeds, and provides that, with respect to those
contracts for works of improvement, the retention proceeds
withheld from any payment may not exceed 150% of the disputed
amount.
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal by the
Legislative Counsel.
COMMENTS : Existing law authorizes an owner or contractor to
withhold up to 150% of the value of the disputed work performed
for a private work of improvement. The sponsors contend that
existing law provides a loophole for a person or contractor to
dispute work in order to withhold payment to a contractor
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because there is no definition for determining the value of
disputed work. This bill revises the amount that an owner can
withhold from a contractor, and contractor from subcontractor,
for disputed private works of improvement.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301
FN: 0003518