Mechanics Lien's in California - Senate Bill SB 189

07.19.2016

In accordance to Senate Bill SB 189, California's laws regarding mechanics' liens were modified on July 1, 2012. Many of the amendments have reformed the wording, the format of the mechanics' lien notice, and the numbering of the statutes. Some of the modifications to the enforcement procedures for mechanics' liens are:

 

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In accordance to Senate Bill SB 189, California's laws regarding mechanics' liens were modified on July 1, 2012. Many of the amendments have reformed the wording, the format of the mechanics' lien notice, and the numbering of the statutes. Some of the modifications to the enforcement procedures for mechanics' liens are:
  1. A separate index will be maintained for preliminary notices filed with the county recorder (CC§8214).
     
  2. A mechanics' lien release bond is being reduced from 150% to 125% of the amount of the claim of lien (CC§8424).
     
  3. A notice of completion with required warning language has been extended from 10 days to recorded on or within 15 days after the date of completion (CC§8182 and 8416).
     
  4. The preliminary notice form and the waiver of release forms for progress payments and final payment have been revised (CC§8132 and 8138).
     
  5. For deeds of trust recorded with priority, an optional advance of funds by the construction lender that is used for construction costs has the same priority as a mandatory advance of funds by the construction lender, provided that the total of all advances does not exceed the amount of the original construction loan (CC§8458).
 
  1. There is a 20-day requirement for filing a notice of pendency of action (CC§8461).
     
  2. If it is not brought to trial within two years after commencement of the case, a court may dismiss an action to foreclose a mechanics' lien. If an owner has to file suit to foreclose a lien, the attorney's fees that the owner can collect are no longer capped at $2,000.
     
  3. After service of a bonded stop payment notice, a construction lender must give written notice within 30 days of the lender's election to not withhold funds for the claimant.
     
  4. For certain projects involving construction loans in excess of $5,000,000, an owner may be required to provide security in the form of a surety bond, irrevocable letter of credit, or escrow account. Chapter 697 (SB 189 – Lowenthal).
     
  5. Existing design professional lien laws have been repealed, and design professional liens are now part of the mechanic's lien laws. Landscape architects have also been added to the law as protected design professionals.
     

Contact Your Commonwealth Sales Executive for more information about our Mechanics' Lien Coverage.

 
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Crystal Leyvas
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