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Government Contracts Advisor Industry Insights & Analysis

California Mechanic’s Lien and Stop Notice Laws Get An Overhaul Aimed at Promoting Efficiency

Posted in Construction

In California, the Legislature and Governor Brown have repealed and replaced the statutory scheme pertaining to the mechanic’s lien, payment bond and stop notice rights.  SB 189 and SB 190 set forth a series of changes impacting:  (1) Works of Improvement Generally (commencing at Civil Code sections 8000 to 8154); (2) Private Works of Improvement (commencing at Civil Code sections 8160 to 8848); and (3) Public Works of Improvement (commencing at Civil Code sections 9000 to 9566).  The intended goal of these revisions is to “modernize, simplify, and clarify the law, making it more user friendly, efficient, and effective for all stakeholders.”  (Mechanic’s Lien Law Reform, 31 Cal. L. Revision Comm’n Reports 343, at 345 (2001).)

Some of the changes went into effect on January 1, 2011.  However, most become effective July 1, 2012.  Some examples of the more substantive revisions going into effect on July 1, 2012 include:

  • New standard “conditional” and “unconditional” forms for progress and final payment.  (Civil Code §§ 8132 to 8138.)
  • A modified definition of “Completion of Work of Improvement.”   (Civil Code § 8180.)
  • Reduction in the amount of mechanic’s lien release bonds from 150% of the claimed amount to 125%.  (Civil Code § 8424.)
  • Direct contractors will now be required to give preliminary notice to construction lenders. (Civil Code § 8200.) 
  • Provisions governing design professionals’ liens have been substantially modified and are now included in the new statutory scheme covering mechanic’s liens. (Civil Code §§ 8300 to 8319 et seq.)
  • A repeal of the $2,000 limit on attorneys’ fees that could be recovered by prevailing parties in petitions to remove invalid mechanic’s liens.  (Civil Code § 8488.)