SUMMARY OF RECENT EFFECTIVE (AND SOON TO BE EFFECTIVE) CHANGES TO CALIFORNIA CONSTRUCTION PAYMENT ENFORCEMENT STATUTES

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1 SUMMARY OF RECENT EFFECTIVE (AND SOON TO BE EFFECTIVE) CHANGES TO CALIFORNIA CONSTRUCTION PAYMENT ENFORCEMENT STATUTES Aprl 18, 2012

2 CHANGES EFFECTIVE JANUARY 1, 2011 FORMER CURRENT C.C * C.C Record len wth the recorder. Must serve owner wth the Mechanc s Len and Notce of Mechanc s Len. Notce and Affdavt of servce recorded. Servce by frst class mal permtted. *As of July 1, 2012: C.C C.C ** Len s unenforceable as a matter of law f clamant fals to comply Ls Pendens may be recorded. Ls Pendens shall be recorded on or before 20 days flng of the Mechanc s Len. **As of July 1, 2012: C.C

3 CHANGES EFFECTIVE JANUARY 1, 2012 CURRENTLY EFFECTIVE JULY 1, 2012 C.C Codfy Calforna s mechanc's len laws. C.C are repealed. C.C Codfy Calforna s mechanc s len laws. Organzed nto 3 categores: 1. Works of mprovement generally ( ); 2. Prvate works of mprovement ( ); and 3. Publc works of mprovement ( ) C.C Materalman C.C Orgnal Contractor C.C (Prvate Work) Prelmnary 20-Day Notce C.C. 3097(b) - Except the contractor all persons who have a drect contract wth the owner shall, as a necessary prerequste to the valdty of any clam of len, clam on a payment bond cause to be gven to the constructon lender a wrtten prelmnary notce as prescrbed by ths secton. C.C C.C Materal Suppler C.C Drect Contractor C.C. 8200(e)(2) Prelmnary Notce A clamant wth a drect contractual relatonshp wth an owner or reputed owner s requred to gve prelmnary notce only to the constructon lender. C.C The publc works prelmnary notce requrements are set forth n No substantve changes to former C.C

4 C.C Stop Notce C.C Completon" ncludes: (a) The occupaton or use of a work of mprovement by the owner accompaned by cessaton of labor. (b) The acceptance by the owner of the work of mprovement. (c) A cessaton of labor for 60 days, or a cessaton of labor for 30 days f the owner fles for record a notce of cessaton. C.C Stop Payment Notce C.C (Prvate Work) Completon no longer ncludes acceptance by the owner on prvate work projects. C.C (Publc Work) Acceptance stll consttutes completon. However, cessaton must be for a contnuous perod of 60 days to result n completon. If the work s subject to acceptance by any publc entty, completon s the date of such acceptance; provded, however, that, except as to contracts awarded under the State Contract Act, a cessaton of labor on any publc work for a contnuous perod of 30 days shall be a completon thereof. C.C The notce of completon shall be recorded wthn 10 days after completon. C.C (Prvate Work) - An owner may record a notce of completon on or wthn 15 days after the date of completon of a work of mprovement. C.C (Publc Work) A publc entty may record a notce of completon on or wthn 15 days after the date of completon of the work of mprovement. C.C No formal notce requrement. Pettoner must verfy that the len clamant s unwllng to execute a release of the len C.C The prevalng party shall be enttled to attorneys' fees not to exceed two thousand dollars ($2,000). C.C Mechanc s len release bond shall be n a penal sum equal to 11/2 tmes the amount of the clam C.C (Prvate Work)- If the owner, constructon lender or any orgnal contractor or subcontractor dsputes the valdty of any stop notce, he may fle a release bond. C.C At least 10 days before flng petton, owner must gve clamant notce demandng a release of len. C.C The prevalng party s enttled to reasonable attorney's fees. C.C Mechanc s len release bond shall be n an amount equal to 125 percent of the amount of the clam of len... C.C (Prvate Work) A person may obtan release of funds wthheld pursuant to a stop payment notce by gvng the person wthholdng the funds a release bond. 3

5 C.C. 3096/3171 (Prvate Work). Payment bonds and stop notce release bonds must be executed by good and suffcent suretes. C.C. 3262(a) Nether the owner nor orgnal contractor shall wave, affect, or mpar the clams and lens of other persons except by ther wrtten consent... [that] follows substantally one of the forms set forth n ths secton. C.C Sets forth all four waver and release forms. C.C. 8510/8606 The bond shall be gven by an admtted surety nsurer. C.C An owner, drect contractor, or subcontractor may not wave, affect, or mpar any other clamant s rghts under ths part unless and untl the clamant executes and delvers a waver and release under ths artcle. C.C. 8132: Condtonal Upon Progress. Mnor substantve change that requres the clamant to dentfy, by date and amount, all prevously executed condtonal releases that have not been pad. C.C. 8134: Uncondtonal Upon Progress. No substantve change. C.C. 8136: Condtonal Upon Fnal. Mnor substantve change requrng dentfcaton of clamant s customer. C.C. 8138: Uncondtonal Upon Fnal. No substantve change. C.C Tme for Recordaton of len by drect contractor. C.C Tme for Recordaton of len by a Clamant other than the drect contractor. C.C Tme for commencement, foreclosure acton. C.C No substantve changes. C.C No substantve changes. C.C Combnes both former sectons. C.C Credt. 4