BILL NUMBER: SB 189 CHAPTERED BILL TEXT …

1 bill number : SB 189 CHAPTERED bill TEXT CHAPTER 697 FILED WITH SECRETARY OF STATE SEPTEMBER 30, 2010 APPROVED BY GOVERNOR SEPTEMBER 30, 2010 PASSED THE SENATE AUGUST 25, 2010 PASSED THE ASSEMBLY AUGUST 17, 2010 AMENDED IN ASSEMBLY AUGUST 16, 2010 AMENDED IN ASSEMBLY AUGUST 2, 2010 AMENDED IN ASSEMBLY JUNE 2, 2010 AMENDED IN ASSEMBLY FEBRUARY 4, 2010 AMENDED IN SENATE JANUARY 14, 2010 AMENDED IN SENATE DECEMBER 15, 2009 INTRODUCED BY Senator Lowenthal FEBRUARY 18, 2009 An act to amend Sections 7034, , , 7159, , , , 7164, 8513, and of the Business and Professions Code, to amend Sections , , 3059, 3060, 3319, 3320, and 3321 of, to amend the heading of Part 8 (commencing with Section 7100) of Division 4 of, to amend and repeal Sections 3084 and 3252 of, to add Section 9560 to, to add Part 6 (commencing with Section 8000) to Division 4 of, to repeal Chapter 8 (commencing with Section ) of Title 14 of Part 4 of Division 3 of, and to repeal Title 15 (commencing with Section 3082)

2 Of Part 4 of Division 3 of, the Civil Code, to amend Sections 86, , , , , and 1800 of the Code of Civil Procedure, to amend Sections and of the Education Code, to amend Sections 7480, 14975, , 27287, , , and of the Government Code, to amend Sections 5463, , 19825, and 34218 of the Health and Safety Code, to amend Section of the Insurance Code, to amend Section of the Labor Code, to amend Sections , 7103, 10222, 10822, 20104, 20134, 20461, 20496, , , 20813, , 20991, 21061, 21071, 21081, 21091, 21101, 21111, 21121, 21131, 21141, 21151, 21161, 21171, 21181, 21196, 21212, 21231, 21241, 21251, 21261, 21271, 21311, 21321, 21331, 21341, 21351, 21361, 21371, 21381, 21391, 21401, 21411, 21421, 21431, 21441, 21451, 21461, 21491, 21501, 21511, 21521, 21531, 21541, 21572, 21581, 21591, 21601, 21622, and 21631 of, the Public Contract Code, and to amend Section of the Streets and Highways Code, relating to mechanics liens. LEGISLATIVE COUNSEL'S DIGEST SB 189, Lowenthal.

3 Mechanics liens. The California Constitution provides that mechanics, persons furnishing materials, artisans, and laborers of every class have a lien upon the property upon which they have bestowed labor or furnished material for the value of the labor done and material furnished. The California Constitution also requires the Legislature to provide, by law, for the speedy and efficient enforcement of those liens. Existing statutory law governs works of improvement, including design professionals' liens and mechanics liens. These provisions govern the conditions required to enforce a lien and for a mechanic's lien to be deemed valid, and define the use of the terms "materialman" and "original contractor" for purposes of the mechanics' lien law. This bill would revise and recast those statutory provisions and make both substantive and technical changes. The bill would also replace the terms "original contractor" and "materialman" with the terms "direct contractor" and "material supplier," respectively.

4 The bill would enact separate provisions governing private works of improvement and public works of improvement. The bill would revise and recast provisions governing design professionals' liens, mechanics liens, notices of cessation, payment bonds, and retention payments. The bill would make related and conforming changes. The bill would also provide that any other act, except as specified, enacted during the 2010 calendar year that takes effect on or before January 1, 2011, and that amends, adds, or repeals any section that is amended, added, or repealed by this act, as specified, shall prevail over this act. The bill would incorporate additional changes made by AB 2216 and AB 2419, contingent upon the enactment of those bills. The provisions of the bill would become operative on July 1, 2012, except as specified. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 7034 of the Business and Professions Code is amended to read: 7034.

5 (a) No contractor that is required to be licensed under this chapter shall insert in any contract, or be a party, with a subcontractor that is licensed under this chapter to any contract which contains a provision, clause, covenant, or agreement which is void or unenforceable under Section 2782 of the Civil Code. (b) No contractor that is required to be licensed under this chapter shall require a waiver of lien rights from any subcontractor, employee, or supplier in violation of Section 8122 of the Civil Code. SEC. Section 7034 of the Business and Professions Code is amended to read: 7034. (a) No contractor that is required to be licensed under this chapter shall insert in any contract, or be a party with a subcontractor that is licensed under this chapter to any contract that contains, a provision, clause, covenant, or agreement that is void or unenforceable under Section 2782 of the Civil Code. (b) No contractor that is required to be licensed under this chapter shall require a waiver of lien rights from any subcontractor, employee, or supplier in violation of Section 8122 of the Civil Code.

6 SEC. 2. Section of the Business and Professions Code is amended to read: The contractor's bond required by this article shall be executed by an admitted surety in favor of the State of California, in a form acceptable to the registrar and filed with the registrar by the licensee or applicant. The contractor's bond shall be for the benefit of the following: (a) A homeowner contracting for home improvement upon the homeowner's personal family residence damaged as a result of a violation of this chapter by the licensee. (b) A property owner contracting for the construction of a single-family dwelling who is damaged as a result of a violation of this chapter by the licensee. That property owner shall only recover under this subdivision if the single-family dwelling is not intended for sale or offered for sale at the time the damages were incurred. (c) A person damaged as a result of a willful and deliberate violation of this chapter by the licensee, or by the fraud of the licensee in the execution or performance of a construction contract.

7 (d) An employee of the licensee damaged by the licensee's failure to pay wages. (e) A person or entity, including a laborer described in subdivision (b) of Section 8024 of the Civil Code, to which a portion of the compensation of an employee of a licensee is paid by agreement with that employee or the collective bargaining agent of that employee, damaged as the result of the licensee's failure to pay fringe benefits for its employees, including, but not limited to, employer payments described in Section of the Labor Code and regulations thereunder (without regard to whether the work was performed on a private or public work). Damage to a person or entity under this subdivision is limited to actual employer payments required to be made on behalf of employees of the licensee, as part of the overall compensation of those employees, which the licensee fails to pay. SEC. Section of the Business and Professions Code is amended to read: The contractor bond required by this article shall be executed by an admitted surety in favor of the State of California, in a form acceptable to the registrar and filed with the registrar by the licensee or applicant.

8 The contractor bond shall be for the benefit of the following: (a) A homeowner contracting for home improvement upon the homeowner's personal family residence damaged as a result of a violation of this chapter by the licensee. (b) A property owner contracting for the construction of a single-family dwelling who is damaged as a result of a violation of this chapter by the licensee. That property owner shall only recover under this subdivision if the single-family dwelling is not intended for sale or offered for sale at the time the damages were incurred. (c) A person damaged as a result of a willful and deliberate violation of this chapter by the licensee, or by the fraud of the licensee in the execution or performance of a construction contract. (d) An employee of the licensee damaged by the licensee's failure to pay wages. (e) A person or entity, including a laborer described in subdivision (b) of Section 8024 of the Civil Code, to which a portion of the compensation of an employee of a licensee is paid by agreement with that employee or the collective bargaining agent of that employee, damaged as the result of the licensee's failure to pay fringe benefits for its employees, including, but not limited to, employer payments described in Section of the Labor Code and regulations thereunder (without regard to whether the work was performed on a private or public work).

9 Damage to a person or entity under this subdivision is limited to actual employer payments required to be made on behalf of employees of the licensee, as part of the overall compensation of those employees, which the licensee fails to pay. SEC. 3. Section of the Business and Professions Code is amended to read: The qualifying individual's bond required by this article shall be executed by an admitted surety insurer in favor of the State of California, in a form acceptable to the registrar and filed with the registrar by the qualifying individual. The qualifying individual's bond shall not be required in addition to the contractor's bond when, as set forth under paragraph (1) of subdivision (b) of Section 7068, the individual proprietor has qualified for the license by his or her personal appearance, or the qualifier is a general partner as set forth under paragraph (2) of subdivision (b) of Section 7068. The qualifying individual's bond shall be for the benefit of the following persons: (a) A homeowner contracting for home improvement upon the homeowner's personal family residence damaged as a result of a violation of this chapter by the licensee.

10 (b) A property owner contracting for the construction of a single-family dwelling who is damaged as a result of a violation of this chapter by the licensee. That property owner shall only recover under this subdivision if the single-family dwelling is not intended for sale or offered for sale at the time the damages were incurred. (c) A person damaged as a result of a willful and deliberate violation of this chapter by the licensee, or by the fraud of the licensee in the execution or performance of a construction contract. (d) An employee of the licensee damaged by the licensee's failure to pay wages. (e) A person or entity, including a laborer described in subdivision (b) of Section 8024 of the Civil Code, to which a portion of the compensation of an employee of a licensee is paid by agreement with that employee or the collective bargaining agent of that employee, that is damaged as the result of the licensee's failure to pay fringe benefits for its employees including, but not limited to, employer payments described in Section of the Labor Code and regulations adopted thereunder (without regard to whether the work was performed on a public or private work).