Real estate owners, lenders, contractors, subcontractors and suppliers — significant changes to California’s Mechanic’s Lien Law are now in effect. Today is the first business day for which these changes are effective, and they represent a significant overhaul of the law, affecting not only future work, but also work in progress.
In 2010, the California Legislature enacted two laws (Assembly Bill 457 and Senate Bill 189) revising the Mechanics’ Lien Law, which were to be implemented in two parts. As we previously reported, AB 457 became effective January 1, 2011, and amended Sections 3084 and 3146 of the California Civil Code. These changes were intended to reduce surprise and provide better notice to those whose interests might be adversely affected by mechanic’s liens being filed.
The second change in the Mechanics’ Lien Law (i.e. SB 189), became effective yesterday. Although many changes are a recodification and reorganization of the law, there are several important substantive changes as well. Some of these changes are:
Definitions: Several defined terms appearing in California’s Mechanics’ Lien rubric have been redefined. For instance, the meanings of “site improvement” and “work of improvement” are each much broader, and “acceptance” by the owner no longer constitutes “completion.”
Time for Recording Notice of Completion: The period for recording a Notice of Completion is extended from 10 days to 15 days.
Preliminary Notice: The language required to be in a Preliminary Notice has changed. Additionally, a construction lender is entitled to receive a Preliminary Notice.
Waiver & Release Forms: New forms of conditional/unconditional waiver and release upon progress payment and conditional/unconditional waiver and release upon final payment are required to be used. These forms appear at California Civil Code Sections 8132, 8134, 8136 and 8138. We have prepared copies of these forms for you, which are attached to this e-mail as a courtesy.
We advise our clients to revisit their contracts and forms to ensure consistency with the changes in the law. Doing so will avoid unintended consequences that can result from using outdated forms and provisions. We welcome the opportunity to help you navigate this transitional period – whether you are an owner, lender, contractor, subcontractor or supplier – the new law affects your current and future rights and responsibilities. If you have questions about how the changes in California’s Mechanics’ Lien Law affect you, your property and your business, we stand ready to help. For additional information, contact Josh Sonné or David Vogel at 619-239-3444.