January 17, 2012
California’s legislature has revised California’ mechanics lien laws in an effort to modernize and simplify them. The majority of the changes are minor and are intended to be non-substantive, but there are a few key changes. These changes take effect on July 1, 2012. Below is a brief preview of the changes, which will be addressed in more detail in a revised California section of LienLawOnLine.
Much of the terminology regarding mechanics liens has changed. For example, under the new laws, “direct contractor” is used in place of the somewhat ambiguous “original contractor,” and is defined as “a contractor that has a direct contractual relationship with an owner.” Civ. Code § 8016. Similarly, “materialman” has been replaced with “material supplier.”
Under the new laws, all notice requirements have been standardized and relocated to a new subdivision. Civ. Code §§ 8100 – 8118. These sections govern the contents of notice, the manner of serving the notice, when notice is deemed complete, and proof of service.
The new laws create new waiver and release forms, which must be used. Civ. Code §§ 8120 – 8138.
The new laws make several changes with respect to completion. Under the new laws, “acceptance by the owner” is no longer included as a means of achieving completion. Civ. Code § 8180. Also owners will now have 15 days to record the Notice of Completion instead of the previous 10-day period. Civ. Code § 8182. Lastly, when there are multiple direct contractors, owners are now permitted to file separate Notices of Completion for each portion of the work. Civ. Code § 8186.
The new laws generally do not change the requirements of preliminary notice. However, under the new laws, direct contractors are required to give preliminary notice only to construction lenders. Civ. Code § 8200(e)(2).
Under Civil Code section 8424, mechanics lien release bonds are only required to be equal to 125% of the claim, rather than 150%, as they previously were.
The new laws provide a new procedure for judicially releasing liens, which was not previously included. Civ. Code § 8480. Included in these new procedures is a requirement that at least 10 days before petitioning for a release of lien the owner gives the claimant notice and demands a release of lien. Civ. Code § 8482. Additional new provisions include formal burden of proof requirements and the elimination of a cap on the recovery of attorney’s fees for petition for a release of lien. Civ. Code § 8488.
Deborah S. Ballati, Esquire (Contributing Author)
B. Scott Douglass, Esquire (Contributing Author)
Farella Braun & Martel, LLP
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