California Making Changes to Mechanic's Lien Law
Construction Practices Newsletter
Assembly Bill 457
Recently passed legislation in California adopts changes to the state's mechanic's lien law. The California Assembly passed and Gov. Arnold Schwarzenegger signed into law Assembly Bill 457, which modifies California Civil Code sections 3084 and 3146. The new law will take effect January 1, 2011. Assembly Bill 457 makes two key changes to existing mechanic's lien law.
First, the new law incorporates a "notice of mechanic's lien" within the definition of "mechanic's lien." The notice of mechanics lien includes information on the legal effect of a mechanic's lien and options available to the property in response to the mechanic's lien. Under the new law, the lien claimant must serve the property owner with the mechanic's lien and notice of mechanic's lien. In that regard, the lien claimant must sign a proof of service that is included as part of the mechanic's lien. Failure to serve the owner will render the mechanic's lien unenforceable as a matter of law.
Second, Assembly Bill 457 requires, where the old law merely permitted, that the lien claimant file a lis pendens (notice of pendency of action) after it files a complaint to foreclose on a lien. The lien claimant must file the lis pendens within 20 days of filing the mechanic's lien foreclosure action. The lis pendens will provide constructive notice of the pendency of the action to future owners and encumbrancers of the property at issue.
Senate Bill 189
The Senate Judiciary committee is currently reviewing Senate Bill 189, introduced in
2009, which addresses further changes to mechanic's lien law. The purpose of the bill is to "modernize, simplify and clarify the law, so as to make it more user friendly, efficient and effective for all stakeholders." Mechanics Lien Law, 37 Cal. L. Revision Comm'n Reports 527 (2007). Much of Senate Bill 189 seeks to update perceived antiquated language, clarify ambiguities and streamline processes in mechanic's lien law, though some substantial changes are included in the bill.
Senate Bill 189 proposes to move all mechanic's lien law relating to public works under a separate title, rather than being scattered among the private work provisions as is now the case. The new bill proposes to make numerous changes to notice provisions as well. Currently, each provision in mechanic's lien law has a separate notice provision, often with unique requirements. The new law would change this by standardizing all notice procedures under mechanic's lien law, except where specifically excepted. Further, Senate Bill 189 would authorize the submission of notices of mechanics liens by electronic communication.
The new bill proposes several substantial alterations with respect to when work is deemed complete. For a private work of improvement, "acceptance by owner" will no longer constitute completion of the improvement. For a public work, the length of cessation of labor that triggers completion of the public work will move from 30 days under the old law, to 60 days under the new law.
It is the hope of the Legislature that Senate Bill 189 will be signed into law and take effect January 1, 2012, although there are a number of organizations, including Associated General Contractors of California, who are attempting to work with the Legislature to modify the bill as currently written, suggesting that the current legislative scheme does not need as much of an overhaul as the Judiciary Committee has suggested.