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 Discussion of SB 189 CEB Publications Attorney Bonnie Maly discusses the numerous changes enacted by the new mechanics lien law.
Law Alert!

New Mechanic's Lien, Stop Notice, and Payment Bond Laws

(Effective July 1, 2012)

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The Law Revision Commission proposed a reordering of the statutes governing mechanics' liens, stop payment notices, payment bonds, and related remedies for both private and public works. In response, the legislature passed and the Governor signed SB 189 in 2010. A few changes became effective on January 1, 2011; the remaining will become effective on July 1, 2012. See full text of SB 189 (Stats 2010, ch 697) and summary at http://www.leginfo.ca.gov/statute.html. Although it made some substantive changes, the bill primarily renumbered all relevant Civil Code provisions. Here is a summary of the most important substantive changes under SB 189:

The term "stop notice" will become "stop payment notice," and the term "original contractor" will become "direct contractor." They retain the same functions as before the amendments effective July 1.

A design professional may record a mechanics' lien for providing work authorized for a work of improvement, subject to specified conditions. Also under SB 424 (adding CC 8319; see Stats 2011, ch 127), also effective July 1, 2012, a design professional may convert a recorded design professional lien to a mechanics' lien if certain requirements are met.

Under CC 8200(e)(2), any claimant who has a direct contractual relationship with the project owner must give a preliminary notice to the construction lender. This claimant class includes the prime or general contractor.

Under CC 9200(b), if work has ceased continuously for a 60-day period (rather than a 30-day period under the former law), the deadline for calculating service of a stop notice to a public entity is calculated from the 60th day rather than the 30th day.

CC 3149 will be repealed and joinder of plaintiffs, as well as coordination and consolidation of civil court actions to enforce mechanics' liens will be governed under the more general provisions in CCP 378, 403, 404, and 1048.

As a condition to obtaining, reinstating, or renewing a license, or continued use of an existing license, a limited liability company must post a contractor's surety bond in the amount of $100,000. Bus & P C 7071.6.5.

Although California courts of appeal have disagreed about whether a prevailing party may recover attorney fees in litigation over progress payments owing to the contractor, under CC 8800(c) (replacing CC 3260.1(b), effective July 1, 2012), the prevailing party on claims for wrongful withholding of progress payments is entitled to costs and reasonable attorney fees.

Under CC 8064, an owner may give a notice or execute or file a document under the mechanics' lien law on behalf of a co-owner if the owner acts on the co-owner's behalf and includes in the notice or document the name and address of the co-owner on whose behalf the owner acts.

For further information, see CEB's newly updated (September 2011) California Mechanics' Liens and Related Construction Remedies (4th ed Cal CEB 2012).

The Regents of the University of California, 2011. Unauthorized use and/or duplication of this material without express and written permission is strictly prohibited.


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