The big buzz and concern in the construction industry are the new laws, some of which have already taken effect and the balance or bulk taking effect July 1, 2012. The complete Mechanic’s Lien Law has been recodified under Senate Bill 189. By the way, that apostrophe I used in the word Mechanic’s that we’ve used for many, many years, has also been drained of its existence in accordance with Assembly Bill 456. Going forward, Mechanics Lien (excluding the apostrophe) is the proper way to spell it.
I think it is imperative to continue to point out relevant changes in the new Mechanics Lien, Stop Notice and Payment Bond Laws. Here are a few more of the July 1, 2012 changes we all need to digest:
Civil Code Section 8186: If a work of improvement is made pursuant to two or more direct contracts, the owner may record a separate Notice of Completion for each direct contract.
Basically, when there are multiple direct contractors on a project, the owner is now able to record a separate Notice of Completion with respect to the scope of work of each direct contract. Under the new law, the Notice of Completion must be recorded within fifteen days of completion instead of the previous ten days.
Civil Code Section 8200 (c)(2): A claimant with a direct contractual relationship with an owner or reputed owner is required to give preliminary notice only to the construction lender or reputed construction lender, if any.
Previously, only subcontractors and material suppliers were required to give preliminary notice. Construction lenders must be identified on direct contracts. Also, after work has commenced and a construction loan is obtained, the owner has to give notice of the construction lender to any party that has given the owner preliminary notice.
Civil Code Sections 8132 – 8138: There are changes in the Conditional and Unconditional Waivers and Releases on Progress Payments, as well as in the Conditional and Unconditional Waivers and Releases on Final Payments. Examples of these new forms can be found under these code sections.
Civil Code Section 8424: Lien release bonds have been reduced from 150 percent to 125 percent of the lien amount, making them obviously more affordable. This corresponds with the required amount of a stop payment notice release bond (Civil Code Section 8510).
Civil Code Section 8488: An owner may remove or expunge a Mechanics Lien that has not been foreclosed on by the lien claimant.
Under the current law, the owner’s recovery of attorney’s fees is limited to $2,000.00. This limited amount or cap will be removed.
There are many more significant changes to the Mechanics Lien, Stop Notice and Payment Bond Laws and for your convenience, Cummins &White, LLP will be offering a complimentary seminar on March 8, 2012. If you are interested in attending, you may register by clicking here or contacting Rene Brookbank at firstname.lastname@example.org with questions.