Thursday, June 21, 2012

California Lien Law Changes Effective July 1st, 2012

How California's Changing Lien Law Affects You


As of 7/1/12, the existing California statutes for mechanic's liens, stop notices, and bond claims will be replaced by updated statutes.  It is important to understand these changes, as they could determine whether or not your lien filing is valid.

Preliminary Notices: Under the current laws, the 20-Day Notice must be served by all subontractors and lower tier contractors or suppliers.  On July 1st, this will simply be called a "Preliminary Notice."  Subcontractors and lower tier Claimants must serve the notice on the owner and prime contractor, however laborers are not required to serve this notice.  The prime contractor is now required to serve the notice on the lender, if any.  The Preliminary Notice must be served within 20 days of first furnishing labor or material.  If it is served after this point, your lien claim may be limited to 20 days before the notice was served along with everything done after service.  Aside from a slightly altered Notice to Owner section on the document, the required job information is identical to the 20-Day Notice.

Terminology: Under the new statutes, some of the terminology has been changed.  A Stop Notice is now called a Stop Payment Notice.  The term original contractor will become Direct Contractor.  Materialman has been replaced with material supplier.  Completion now means the following: (1) actual completion of the work of improvement; (2) occupation or use by the owner accompanied by cessation of labor; (3) cessation of labor for a continuous period of 60 days; or (4) recordation of a notice of cessation after cessation of labor for a continuous period of 30 days. “Completion” has not been redefined on public works and a project will not be deemed completed unless accepted as complete by the public entity.

Who Can File: Design professionals will be able to file liens once the changes take effect.

Deadlines: The deadline for service of a Stop Notice is currently 90 days from completion.  Under the new laws, completion will be at 60 days of job cessation rather than 30 days.

Mechanic's Lien Filing: In California, the unfiled lien must be served upon the owner along with a Notice of Mechanic's Lien before it can be filed with the clerk.  Under the new statutes, a mechanic’s lien may not be recorded unless it has been accompanied by a proof of service of the lien and the Notice of Mechanic’s Lien on the property owner.



No comments:

Post a Comment