Changes to California’s Mechanics Lien Law and Release and Waiver Forms (Eff. 7/1/2012)

Significant Changes to California’s Mechanics Lien Law and Release and Waiver Forms.

Guy W. Bluff, Esq. (02-Jun-2012)

Effective July 1, 2012 all of the existing statutes governing mechanics liens, stop notices and payment bonds inCaliforniawill be repealed and replaced by updated statutes.  The previous statutory provisions were found in California Civil Code § 3082 to 3267.  The new statutory provisions are now located in California Civil Code § 8100-8200 et seq. and §8600 et seq. as relates to payment bonds.

Under existing law, a “Preliminary 20-Day Notice” must be served by most types of lien and payment bond claimants at the outset of their work, to preserve their lien claim, payment bond, and stop notice rights. If the notice is served “late” it relates back to cover work performed in the 20 days prior to mailing or service.  Under the new law, this notice is now referred to as a “Preliminary Notice.” Certain mandatory language for the Preliminary Notice has also been changed which is significantly different from that found under the prior statutes.  As a result of these statutory changes, it is important that all contractors, subcontractors and material suppliers insure that they begin using the new Preliminary Notice forms beginning July 1st.

While there are certain statutory safeguards which might allow a lien claimant to assert that the use of an older version form “substantially complied” with the mandatory language, doing so runs the risk having the lien or bond claim deemed defective thereby losing ones rights to payment.  See §8102(b).

Pursuant to §8104(b), a contractor or subcontractor must also make timely and full payment to laborers.  If the event full payment is not made when due, the contractor or subcontractor must provide written notice to the laborer, any bargaining representative, the owner and lender written notice detailing the name and address of the laborer, the wages due, hours worked, and rates of compensation.  Failure to do so can subject a contractor or subcontractor to discipline by the CSLB.

The new laws also require mandatory language and content for the four forms of Waiver and Releases.  Conditional Progress §8132; Unconditional Progress §8134; Conditional Final §8136 and Unconditional Final §8138.  Previously, the waiver and release language for all four forms was found in §3262(d).  The new language and format is now found in §8132 to §8138.  Because of these changes, contractors and suppliers should be careful to utilize new statutorily compliant forms for all releases executed on or after July 1st.  New 2012 statutorily compliant Waiver and Release forms can be located through the following link.

California Waiver and Release Forms

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Posted in California, Lien Waivers, Mechanic Liens, Preliminary Notices