Bill Text: CA SB190 | 2011-2012 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Mechanics liens.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2011-07-01 - Chaptered by Secretary of State. Chapter 44, Statutes of 2011. [SB190 Detail]
Download: California-2011-SB190-Amended.html
Bill Title: Mechanics liens.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2011-07-01 - Chaptered by Secretary of State. Chapter 44, Statutes of 2011. [SB190 Detail]
Download: California-2011-SB190-Amended.html
BILL NUMBER: SB 190 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 16, 2011
INTRODUCED BY Senator Lowenthal
FEBRUARY 8, 2011
An act to amend Sections 7159, 7159.5, 7159.14, and 8513 of the
Business and Professions Code, to amend Section 8422 of the Civil
Code, and to amend Section 66499.7 of the Government Code, relating
to mechanics liens.
LEGISLATIVE COUNSEL'S DIGEST
SB 190, as amended, Lowenthal. Mechanics liens.
The California Constitution provides that laborers of every class
who have worked upon or have furnished material for a property have a
lien upon that property for the value of the labor done and material
furnished. The California Constitution requires the Legislature to
provide, by law, for the speedy and efficient enforcement of those
liens. Existing law, operative July 1, 2012, recodified and revised
the law for enforcing mechanics liens. Existing law provides that
certain erroneous information contained in a claim of lien does not
invalidate the claim of lien, except as specified.
This bill, operative July 1, 2012, would make various technical,
conforming changes related to the recodification of the law for
enforcing mechanics liens. The bill would also require that a person
forfeit his or her lien if the person willfully includes labor or
materials in a lien claim that were not furnished to the property in
the claim.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 7159 of the Business and Professions Code is
amended to read:
7159. (a) (1) This section identifies the projects for which a
home improvement contract is required, outlines the contract
requirements, and lists the items that shall be included in the
contract, or may be provided as an attachment.
(2) This section does not apply to service and repair contracts
that are subject to Section 7159.10, if the contract for the
applicable services complies with Sections 7159.10 to 7159.14,
inclusive.
(3) This section does not apply to the sale, installation, and
servicing of a fire alarm sold in conjunction with an alarm system,
as defined in subdivision (n) of Section 7590.1, if all costs
attributable to making the fire alarm system operable, including sale
and installation costs, do not exceed five hundred dollars ($500),
and the licensee complies with the requirements set forth in Section
7159.9.
(4) This section does not apply to any costs associated with
monitoring a burglar or fire alarm system.
(5) Failure by the licensee, his or her agent or salesperson, or
by a person subject to be licensed under this chapter, to provide the
specified information, notices, and disclosures in the contract, or
to otherwise fail to comply with any provision of this section, is
cause for discipline.
(b) For purposes of this section, "home improvement contract"
means an agreement, whether oral or written, or contained in one or
more documents, between a contractor and an owner or between a
contractor and a tenant, regardless of the number of residence or
dwelling units contained in the building in which the tenant resides,
if the work is to be performed in, to, or upon the residence or
dwelling unit of the tenant, for the performance of a home
improvement, as defined in Section 7151, and includes all labor,
services, and materials to be furnished and performed thereunder, if
the aggregate contract price specified in one or more improvement
contracts, including all labor, services, and materials to be
furnished by the contractor, exceeds five hundred dollars ($500).
"Home improvement contract" also means an agreement, whether oral or
written, or contained in one or more documents, between a
salesperson, whether or not he or she is a home improvement
salesperson, and an owner or a tenant, regardless of the number of
residence or dwelling units contained in the building in which the
tenant resides, which provides for the sale, installation, or
furnishing of home improvement goods or services.
(c) In addition to the specific requirements listed under this
section, every home improvement contract and any person subject to
licensure under this chapter or his or her agent or salesperson shall
comply with all of the following:
(1) The writing shall be legible.
(2) Any printed form shall be readable. Unless a larger typeface
is specified in this article, text in any printed form shall be in at
least 10-point typeface and the headings shall be in at least
10-point boldface type.
(3) (A) Before any work is started, the contractor shall give the
buyer a copy of the contract signed and dated by both the contractor
and the buyer. The buyer's receipt of the copy of the contract
initiates the buyer's rights to cancel the contract pursuant to
Sections 1689.5 to 1689.14, inclusive, of the Civil Code.
(B) The contract shall contain on the first page, in a typeface no
smaller than that generally used in the body of the document, both
of the following:
(i) The date the buyer signed the contract.
(ii) The name and address of the contractor to which the
applicable "Notice of Cancellation" is to be mailed, immediately
preceded by a statement advising the buyer that the "Notice of
Cancellation" may be sent to the contractor at the address noted on
the contract.
(4) The contract shall include a statement that, upon satisfactory
payment being made for any portion of the work performed, the
contractor, prior to any further payment being made, shall furnish to
the person contracting for the home improvement or swimming pool
work a full and unconditional release from any potential lien
claimant claim or mechanic's mechanics
lien authorized pursuant to Sections 8400 and 8404 of the Civil Code
for that portion of the work for which payment has been made.
(5) A change-order form for changes or extra work shall be
incorporated into the contract and shall become part of the contract
only if it is in writing and signed by the parties prior to the
commencement of any work covered by a change order.
(6) The contract shall contain, in close proximity to the
signatures of the owner and contractor, a notice stating that the
owner or tenant has the right to require the contractor to have a
performance and payment bond.
(7) If the contract provides for a contractor to furnish joint
control, the contractor shall not have any financial or other
interest in the joint control.
(8) The provisions of this section are not exclusive and do not
relieve the contractor from compliance with any other applicable
provision of law.
(d) A home improvement contract and any changes to the contract
shall be in writing and signed by the parties to the contract prior
to the commencement of work covered by the contract or an applicable
change order and, except as provided in paragraph (8) of subdivision
(a) of Section 7159.5, shall include or comply with all of the
following:
(1) The name, business address, and license number of the
contractor.
(2) If applicable, the name and registration number of the home
improvement salesperson that solicited or negotiated the contract.
(3) The following heading on the contract form that identifies the
type of contract in at least 10-point boldface type: "Home
Improvement."
(4) The following statement in at least 12-point boldface type:
"You are entitled to a completely filled in copy of this agreement,
signed by both you and the contractor, before any work may be
started."
(5) The heading: "Contract Price," followed by the amount of the
contract in dollars and cents.
(6) If a finance charge will be charged, the heading: "Finance
Charge," followed by the amount in dollars and cents. The finance
charge is to be set out separately from the contract amount.
(7) The heading: "Description of the Project and Description of
the Significant Materials to be Used and Equipment to be Installed,"
followed by a description of the project and a description of the
significant materials to be used and equipment to be installed. For
swimming pools, the project description required under this paragraph
also shall include a plan and scale drawing showing the shape, size,
dimensions, and the construction and equipment specifications.
(8) If a downpayment will be charged, the details of the
downpayment shall be expressed in substantially the following form,
and shall include the text of the notice as specified in subparagraph
(C):
(A) The heading: "Downpayment."
(B) A space where the actual downpayment appears.
(C) The following statement in at least 12-point boldface type:
"THE DOWNPAYMENT MAY NOT EXCEED $1,000 OR 10 PERCENT OF THE
CONTRACT PRICE, WHICHEVER IS LESS."
(9) If payments, other than the downpayment, are to be made before
the project is completed, the details of these payments, known as
progress payments, shall be expressed in substantially the following
form, and shall include the text of the statement as specified in
subparagraph (C):
(A) A schedule of progress payments shall be preceded by the
heading: "Schedule of Progress Payments."
(B) Each progress payment shall be stated in dollars and cents and
specifically reference the amount of work or services to be
performed and materials and equipment to be supplied.
(C) The section of the contract reserved for the progress payments
shall include the following statement in at least 12-point boldface
type:
"The schedule of progress payments must specifically describe each
phase of work, including the type and amount of work or services
scheduled to be supplied in each phase, along with the amount of each
proposed progress payment. IT IS AGAINST THE LAW FOR A CONTRACTOR TO
COLLECT PAYMENT FOR WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET
DELIVERED. HOWEVER, A CONTRACTOR MAY REQUIRE A DOWNPAYMENT."
(10) The contract shall address the commencement of work to be
performed in substantially the following form:
(A) A statement that describes what constitutes substantial
commencement of work under the contract.
(B) The heading: "Approximate Start Date."
(C) The approximate date on which work will be commenced.
(11) The estimated completion date of the work shall be referenced
in the contract in substantially the following form:
(A) The heading: "Approximate Completion Date."
(B) The approximate date of completion.
(12) If applicable, the heading: "List of Documents to be
Incorporated into the Contract," followed by the list of documents
incorporated into the contract.
(13) The heading: "Note About Extra Work and Change Orders,"
followed by the following statement:
"Extra Work and Change Orders become part of the contract once the
order is prepared in writing and signed by the parties prior to the
commencement of work covered by the new change order. The order must
describe the scope of the extra work or change, the cost to be added
or subtracted from the contract, and the effect the order will have
on the schedule of progress payments."
(e) Except as provided in paragraph (8) of subdivision (a) of
Section 7159.5, all of the following notices shall be provided to the
owner as part of the contract form as specified or, if otherwise
authorized under this subdivision, may be provided as an attachment
to the contract:
(1) A notice concerning commercial general liability insurance.
This notice may be provided as an attachment to the contract if the
contract includes the following statement: "A notice concerning
commercial general liability insurance is attached to this contract."
The notice shall include the heading "Commercial General Liability
Insurance (CGL)," followed by whichever of the following statements
is both relevant and correct:
(A) "(The name on the license or "This contractor') does not carry
commercial general liability insurance."
(B) "(The name on the license or "This contractor') carries
commercial general liability insurance written by (the insurance
company). You may call (the insurance company) at __________ to check
the contractor's insurance coverage."
(C) "(The name on the license or "This contractor') is
self-insured."
(D) "(The name on the license or 'This contractor') is a limited
liability company that carries liability insurance or maintains other
security as required by law. You may call (the insurance company or
trust company or bank) at ____ to check on the contractor's insurance
coverage or security."
(2) A notice concerning workers' compensation insurance. This
notice may be provided as an attachment to the contract if the
contract includes the statement: "A notice concerning workers'
compensation insurance is attached to this contract." The notice
shall include the heading "Workers' Compensation Insurance" followed
by whichever of the following statements is correct:
(A) "(The name on the license or "This contractor') has no
employees and is exempt from workers' compensation requirements."
(B) "(The name on the license or "This contractor') carries
workers' compensation insurance for all employees."
(3) A notice that provides the buyer with the following
information about the performance of extra or change-order work:
(A) A statement that the buyer may not require a contractor to
perform extra or change-order work without providing written
authorization prior to the commencement of work covered by the new
change order.
(B) A statement informing the buyer that extra work or a change
order is not enforceable against a buyer unless the change order also
identifies all of the following in writing prior to the commencement
of work covered by the new change order:
(i) The scope of work encompassed by the order.
(ii) The amount to be added or subtracted from the contract.
(iii) The effect the order will make in the progress payments or
the completion date.
(C) A statement informing the buyer that the contractor's failure
to comply with the requirements of this paragraph does not preclude
the recovery of compensation for work performed based upon legal or
equitable remedies designed to prevent unjust enrichment.
(4) A notice with the heading "Mechanics'
"Mechanics Lien Warning" written as follows:
"MECHANICS' "MECHANICS LIEN WARNING:
Anyone who helps improve your property, but who is not paid, may
record what is called a mechanics' mechanics
lien on your property. A mechanics'
mechanics lien is a claim, like a mortgage or home equity loan,
made against your property and recorded with the county recorder.
Even if you pay your contractor in full, unpaid subcontractors,
suppliers, and laborers who helped to improve your property may
record mechanics' mechanics liens and
sue you in court to foreclose the lien. If a court finds the lien is
valid, you could be forced to pay twice or have a court officer sell
your home to pay the lien. Liens can also affect your credit.
To preserve their right to record a lien, each subcontractor and
material supplier must provide you with a document called a
Preliminary 'Preliminary Notice.' This notice is
not a lien. The purpose of the notice is to let you know that the
person who sends you the notice has the right to record a lien on
your property if he or she is not paid.
BE CAREFUL. The Preliminary Notice can be sent up to 20 days
after the subcontractor starts work or the supplier provides
material. This can be a big problem if you pay your contractor before
you have received the Preliminary Notices.
You will not get Preliminary Notices from your prime contractor or
from laborers who work on your project. The law assumes that you
already know they are improving your property.
PROTECT YOURSELF FROM LIENS. You can protect yourself from liens
by getting a list from your contractor of all the subcontractors and
material suppliers that work on your project. Find out from your
contractor when these subcontractors started work and when these
suppliers delivered goods or materials. Then wait 20 days, paying
attention to the Preliminary Notices you receive.
PAY WITH JOINT CHECKS. One way to protect yourself is to pay with
a joint check. When your contractor tells you it is time to pay for
the work of a subcontractor or supplier who has provided you with a
Preliminary Notice, write a joint check payable to both the
contractor and the subcontractor or material supplier.
For other ways to prevent liens, visit CSLB's Internet Web site at
www.cslb.ca.gov or call CSLB at 800-321-CSLB (2752).
REMEMBER, IF YOU DO NOTHING, YOU RISK HAVING A LIEN PLACED ON YOUR
HOME. This can mean that you may have to pay twice, or face the
forced sale of your home to pay what you owe."
(5) The following notice shall be provided in at least 12-point
typeface:
"Information about the Contractors' State License Board (CSLB):
CSLB is the state consumer protection agency that licenses and
regulates construction contractors.
Contact CSLB for information about the licensed contractor you are
considering, including information about disclosable complaints,
disciplinary actions, and civil judgments that are reported to CSLB.
Use only licensed contractors. If you file a complaint against a
licensed contractor within the legal deadline (usually four years),
CSLB has authority to investigate the complaint. If you use an
unlicensed contractor, CSLB may not be able to help you resolve your
complaint. Your only remedy may be in civil court, and you may be
liable for damages arising out of any injuries to the unlicensed
contractor or the unlicensed contractor's employees.
For more information:
Visit CSLB's Internet Web site at www.cslb.ca.gov
Call CSLB at 800-321-CSLB (2752)
Write CSLB at P.O. Box 26000, Sacramento, CA 95826."
(6) (A) The notice set forth in subparagraph (B) and entitled
"Three-Day Right to Cancel," shall be provided to the buyer unless
the contract is:
(i) Negotiated at the contractor's place of business.
(ii) Subject to the "Seven-Day Right to Cancel," as set forth in
paragraph (7).
(iii) Subject to licensure under the Alarm Company Act (Chapter
11.6 (commencing with Section 7590)), provided the alarm company
licensee complies with Sections 1689.5, 1689.6, and 1689.7 of the
Civil Code, as applicable.
(B) "Three-Day Right to Cancel
You, the buyer, have the right to cancel this contract within
three business days. You may cancel by e-mailing, mailing, faxing, or
delivering a written notice to the contractor at the contractor's
place of business by midnight of the third business day after you
received a signed and dated copy of the contract that includes this
notice. Include your name, your address, and the date you received
the signed copy of the contract and this notice.
If you cancel, the contractor must return to you anything you paid
within 10 days of receiving the notice of cancellation. For your
part, you must make available to the contractor at your residence, in
substantially as good condition as you received them, goods
delivered to you under this contract or sale. Or, you may, if you
wish, comply with the contractor's instructions on how to return the
goods at the contractor's expense and risk. If you do make the goods
available to the contractor and the contractor does not pick them up
within 20 days of the date of your notice of cancellation, you may
keep them without any further obligation. If you fail to make the
goods available to the contractor, or if you agree to return the
goods to the contractor and fail to do so, then you remain liable for
performance of all obligations under the contract."
(C) The "Three-Day Right to Cancel" notice required by this
paragraph shall comply with all of the following:
(i) The text of the notice is at least 12-point boldface type.
(ii) The notice is in immediate proximity to a space reserved for
the owner's signature.
(iii) The owner acknowledges receipt of the notice by signing and
dating the notice form in the signature space.
(iv) The notice is written in the same language, e.g., Spanish, as
that principally used in any oral sales presentation.
(v) The notice may be attached to the contract if the contract
includes, in at least 12-point boldface type, a checkbox with the
following statement: "The law requires that the contractor give you a
notice explaining your right to cancel. Initial the checkbox if the
contractor has given you a "Notice of the Three-Day Right to Cancel.'
"
(vi) The notice shall be accompanied by a completed form in
duplicate, captioned "Notice of Cancellation," which also shall be
attached to the agreement or offer to purchase and be easily
detachable, and which shall contain the following statement written
in the same language, e.g., Spanish, as used in the contract:
""Notice of Cancellation''
/enter date of transaction/
______________________________
(Date)
"You may cancel this transaction, without any penalty or
obligation, within three business days from the above date.
If you cancel, any property traded in, any payments made by you
under the contract or sale, and any negotiable instrument executed by
you will be returned within 10 days following receipt by the seller
of your cancellation notice, and any security interest arising out of
the transaction will be canceled.
If you cancel, you must make available to the seller at your
residence, in substantially as good condition as when received, any
goods delivered to you under this contract or sale, or you may, if
you wish, comply with the instructions of the seller regarding the
return shipment of the goods at the seller's expense and risk.
If you do make the goods available to the seller and the seller
does not pick them up within 20 days of the date of your notice of
cancellation, you may retain or dispose of the goods without any
further obligation. If you fail to make the goods available to the
seller, or if you agree to return the goods to the seller and fail to
do so, then you remain liable for performance of all obligations
under the contract."
To cancel this transaction, mail or deliver a
signed and dated copy of this cancellation
notice, or any other written notice, or send a
telegram
to_____________________________________________,
/name of seller/
at______________________________________________
/address of seller's place of
business/
not later than midnight of_____________________.
(Date)
I hereby cancel this transaction. _____________
(Date)
____________________________________
(Buyer's signature)
(7) (A) The following notice entitled "Seven-Day Right to Cancel"
shall be provided to the buyer for any contract that is written for
the repair or restoration of residential premises damaged by any
sudden or catastrophic event for which a state of emergency has been
declared by the President of the United States or the Governor, or
for which a local emergency has been declared by the executive
officer or governing body of any city, county, or city and county:
"Seven-Day Right to Cancel
You, the buyer, have the right to cancel this contract within
seven business days. You may cancel by e-mailing, mailing, faxing, or
delivering a written notice to the contractor at the contractor's
place of business by midnight of the seventh business day after you
received a signed and dated copy of the contract that includes this
notice. Include your name, your address, and the date you received
the signed copy of the contract and this notice.
If you cancel, the contractor must return to you anything you paid
within 10 days of receiving the notice of cancellation. For your
part, you must make available to the contractor at your residence, in
substantially as good condition as you received them, goods
delivered to you under this contract or sale. Or, you may, if you
wish, comply with the contractor's instructions on how to return the
goods at the contractor's expense and risk. If you do make the goods
available to the contractor and the contractor does not pick them up
within 20 days of the date of your notice of cancellation, you may
keep them without any further obligation. If you fail to make the
goods available to the contractor, or if you agree to return the
goods to the contractor and fail to do so, then you remain liable for
performance of all obligations under the contract."
(B) The "Seven-Day Right to Cancel" notice required by this
subdivision shall comply with all of the following:
(i) The text of the notice is at least 12-point boldface type.
(ii) The notice is in immediate proximity to a space reserved for
the owner's signature.
(iii) The owner acknowledges receipt of the notice by signing and
dating the notice form in the signature space.
(iv) The notice is written in the same language, e.g., Spanish, as
that principally used in any oral sales presentation.
(v) The notice may be attached to the contract if the contract
includes, in at least 12-point boldface type, a checkbox with the
following statement: "The law requires that the contractor give you a
notice explaining your right to cancel. Initial the checkbox if the
contractor has given you a "Notice of the Seven-Day Right to Cancel.'
"
(vi) The notice shall be accompanied by a completed form in
duplicate, captioned "Notice of Cancellation," which shall also be
attached to the agreement or offer to purchase and be easily
detachable, and which shall contain the following statement written
in the same language, e.g., Spanish, as used in the contract:
""Notice of Cancellation''
/enter date of transaction/
______________________________
(Date)
"You may cancel this transaction, without any penalty or
obligation, within seven business days from the above date.
If you cancel, any property traded in, any payments made by you
under the contract or sale, and any negotiable instrument executed by
you will be returned within 10 days following receipt by the seller
of your cancellation notice, and any security interest arising out of
the transaction will be canceled.
If you cancel, you must make available to the seller at your
residence, in substantially as good condition as when received, any
goods delivered to you under this contract or sale, or you may, if
you wish, comply with the instructions of the seller regarding the
return shipment of the goods at the seller's expense and risk.
If you do make the goods available to the seller and the seller
does not pick them up within 20 days of the date of your notice of
cancellation, you may retain or dispose of the goods without any
further obligation. If you fail to make the goods available to the
seller, or if you agree to return the goods to the seller and fail to
do so, then you remain liable for performance of all obligations
under the contract."
To cancel this transaction, mail or deliver a
signed and dated copy of this cancellation
notice, or any other written notice, or send a
telegram
to_____________________________________________,
/name of seller/
at______________________________________________
/address of seller's place of
business/
not later than midnight of_____________________.
(Date)
I hereby cancel this transaction. _____________
(Date)
____________________________________
(Buyer's signature)
SEC. 2. Section 7159.5 of the Business and Professions Code, as
amended by Section 6 of Chapter 697 of the Statutes of 2010, is
amended to read:
7159.5. This section applies to all home improvement contracts,
as defined in Section 7151.2, between an owner or tenant and a
contractor, whether a general contractor or a specialty contractor,
that is licensed or subject to be licensed pursuant to this chapter
with regard to the transaction.
(a) Failure by the licensee or a person subject to be licensed
under this chapter, or by his or her agent or salesperson,
to comply with the following
provisions is cause for discipline:
(1) The contract shall be in writing and shall include the agreed
contract amount in dollars and cents. The contract amount shall
include the entire cost of the contract, including profit, labor, and
materials, but excluding finance charges.
(2) If there is a separate finance charge between the contractor
and the person contracting for home improvement, the finance charge
shall be set out separately from the contract amount.
(3) If a downpayment will be charged, the downpayment may not
exceed one thousand dollars ($1,000) or 10 percent of the contract
amount, whichever is less.
(4) If, in addition to a downpayment, the contract provides for
payments to be made prior to completion of the work, the contract
shall include a schedule of payments in dollars and cents
specifically referencing the amount of work or services to be
performed and any materials and equipment to be supplied.
(5) Except for a downpayment, the contractor may neither request
nor accept payment that exceeds the value of the work performed or
material delivered.
(6) Upon any payment by the person contracting for home
improvement, and prior to any further payment being made, the
contractor shall, if requested, obtain and furnish to the person a
full and unconditional release from any potential lien claimant claim
or mechanics lien authorized pursuant to Sections 8400 and 8404 of
the Civil Code for any portion of the work for which payment has been
made. The person contracting for home improvement may withhold all
further payments until these releases are furnished.
(7) If the contract provides for a payment of a salesperson's
commission out of the contract price, that payment shall be made on a
pro rata basis in proportion to the schedule of payments made to the
contractor by the disbursing party in accordance with paragraph (4).
(8) A contractor furnishing a performance and payment bond, lien
and completion bond, or a bond equivalent or joint control approved
by the registrar covering full performance and payment is exempt from
paragraphs (3), (4), and (5), and need not include, as part of the
contract, the statement regarding the downpayment specified in
subparagraph (C) of paragraph (8) of subdivision (d) of Section 7159,
the details and statement regarding progress payments specified in
paragraph (9) of subdivision (d) of Section 7159, or the Mechanics
Lien Warning specified in paragraph (4) of subdivision (e) of Section
7159. A contractor furnishing these bonds, bond equivalents, or a
joint control approved by the registrar may accept payment prior to
completion. If the contract provides for a contractor to furnish
joint control, the contractor shall not have any financial or other
interest in the joint control.
(b) A violation of paragraph (1), (3), or (5) of subdivision (a)
by a licensee or a person subject to be licensed under this chapter,
or by his or her agent or salesperson, is a misdemeanor punishable by
a fine of not less than one hundred dollars ($100) nor more than
five thousand dollars ($5,000), or by imprisonment in a county jail
not exceeding one year, or by both that fine and imprisonment.
(1) An indictment or information against a person who is not
licensed but who is required to be licensed under this chapter shall
be brought, or a criminal complaint filed, for a violation of this
section, in accordance with paragraph (4) of subdivision (d) of
Section 802 of the Penal Code, within four years from the date of the
contract or, if the contract is not reduced to writing, from the
date the buyer makes the first payment to the contractor.
(2) An indictment or information against a person who is licensed
under this chapter shall be brought, or a criminal complaint filed,
for a violation of this section, in accordance with paragraph (2) of
subdivision (d) of Section 802 of the Penal Code, within two years
from the date of the contract or, if the contract is not reduced to
writing, from the date the buyer makes the first payment to the
contractor.
(3) The limitations on actions in this subdivision shall not apply
to any administrative action filed against a licensed contractor.
(c) Any person who violates this section as part of a plan or
scheme to defraud an owner or tenant of a residential or
nonresidential structure, including a mobilehome or manufactured
home, in connection with the offer or performance of repairs to the
structure for damage caused by a natural disaster, shall be ordered
by the court to make full restitution to the victim based on the
person's ability to pay, as defined in subdivision (e) of Section
1203.1b of the Penal Code. In addition to full restitution, and
imprisonment authorized by this section, the court may impose a fine
of not less than five hundred dollars ($500) nor more than
twenty-five thousand dollars ($25,000), based upon the defendant's
ability to pay. This subdivision applies to natural disasters for
which a state of emergency is proclaimed by the Governor pursuant to
Section 8625 of the Government Code, or for which an emergency or
major disaster is declared by the President of the United States.
SEC. 3. Section 7159.14 of the Business and Professions Code, as
amended by Section 7 of Chapter 697 of the Statutes of 2010, is
amended to read:
7159.14. (a) This section applies to a service and repair
contract as defined in Section 7159.10. A violation of this section
by a licensee or a person subject to be licensed under this chapter,
or by his or her agent or salesperson, is cause for discipline.
(1) The contract may not exceed seven hundred fifty dollars
($750).
(2) The contract shall be in writing and shall state the agreed
contract amount, which may be stated as either a fixed contract
amount in dollars and cents or, if a time and materials formula is
used, as an estimated contract amount in dollars and cents.
(3) The contract amount shall include the entire cost of the
contract including profit, labor, and materials, but excluding
finance charges.
(4) The actual contract amount of a time and materials contract
may not exceed the estimated contract amount without written
authorization from the buyer.
(5) The prospective buyer must have initiated contact with the
contractor to request work.
(6) The contractor may not sell the buyer goods or services beyond
those reasonably necessary to take care of the particular problem
that caused the buyer to contact the contractor.
(7) No payment may be due before the project is completed.
(8) A service and repair contractor may charge only one service
charge. For purposes of this chapter, a service charge includes such
charges as a service or trip charge, or an inspection fee.
(9) A service and repair contractor charging a service charge must
disclose in all advertisements that there is a service charge and,
when the customer initiates the call for service, must disclose the
amount of the service charge.
(10) The service and repair contractor must offer to the customer
any parts that were replaced.
(11) Upon any payment by the buyer, the contractor shall, if
requested, obtain and furnish to the buyer a full and unconditional
release from any potential lien claimant claim or mechanics lien
authorized pursuant to Sections 8400 and 8404 of the Civil Code for
any portion of the work for which payment has been made.
(b) A violation of paragraph (1), (2), (3), (4), (5), (6), or (8)
of subdivision (a) by a licensee or a person subject to be licensed
under this chapter, or by his or her agent or salesperson, is a
misdemeanor punishable by a fine of not less than one hundred dollars
($100) nor more than five thousand dollars ($5,000), or by
imprisonment in a county jail not exceeding one year, or by both that
fine and imprisonment.
(1) An indictment or information against a person who is not
licensed but who is required to be licensed under this chapter shall
be brought, or a criminal complaint filed, for a violation of this
section, in accordance with paragraph (4) of subdivision (d) of
Section 802 of the Penal Code, within four years from the date of the
contract or, if the contract is not reduced to writing, from the
date the buyer makes the first payment to the contractor.
(2) An indictment or information against a person who is licensed
under this chapter shall be brought, or a criminal complaint filed,
for a violation of this section, in accordance with paragraph (2) of
subdivision (d) of Section 802 of the Penal Code, within two years
from the date of the contract or, if the contract is not reduced to
writing, from the date the buyer makes the first payment to the
contractor.
(3) The limitations on actions in this subdivision shall not apply
to any administrative action filed against a licensed contractor.
(c) Any person who violates this section as part of a plan or
scheme to defraud an owner or tenant of a residential or
nonresidential structure, including a mobilehome or manufactured
home, in connection with the offer or performance of repairs to the
structure for damage caused by a natural disaster, shall be ordered
by the court to make full restitution to the victim based on the
person's ability to pay, as defined in subdivision (e) of Section
1203.1b of the Penal Code. In addition to full restitution, and
imprisonment authorized by this section, the court may impose a fine
of not less than five hundred dollars ($500) nor more than
twenty-five thousand dollars ($25,000), based upon the defendant's
ability to pay. This subdivision applies to natural disasters for
which a state of emergency is proclaimed by the Governor pursuant to
Section 8625 of the Government Code, or for which an emergency or
major disaster is declared by the President of the United States.
SEC. 4. Section 8513 of the Business and Professions Code, as
amended by Section 9 of Chapter 697 of the Statutes of 2010, is
amended to read:
8513. (a) The board shall prescribe a form entitled "Notice to
Owner" that shall describe, in nontechnical language and in a clear
and coherent manner using words with common and everyday meaning, the
pertinent provisions of this state's mechanics'
mechanics lien laws and the rights and responsibilities of
an owner of property and a registered pest control company
thereunder. Each company registered under this chapter, prior to
entering into a contract with an owner for work for which a company
registration is required, shall give a copy of this "Notice to Owner"
to the owner, his or her agent, or the payer.
(b) No company that is required to be registered under this
chapter shall require or request a waiver of lien rights from any
subcontractor, employee, or supplier.
(c) Each company registered under this chapter that acts as a
subcontractor for another company registered under this chapter
shall, within 20 days of commencement of any work for which a company
registration is required, give the preliminary notice in accordance
with Chapter 2 (commencing with Section 8200) of Title 2 of Part 6 of
Division 4 of the Civil Code, to the owner, his or her agent, or the
payer.
(d) Each company registered under this chapter that acts as a
prime contractor for work for which a company registration is
required shall, prior to accepting payment for the work, furnish to
the owner, his or her agent, or the payer a full and unconditional
release from any claim of mechanics lien by any subcontractor
entitled to enforce a mechanics' mechanics
lien pursuant to Section 8410 of the Civil Code.
(e) Each company registered under this chapter that subcontracts
to another company registered under this chapter work for which a
company registration is required shall furnish to the subcontractor
the name of the owner, his or her agent, or the payer.
(f) The provisions of this section shall be applicable only to
those registered companies, as defined in Section 8506.1, operating
pursuant to a Branch 1 or Branch 3 registration.
(g) A violation of the provisions of this section is a ground for
disciplinary action.
SEC. 5. Section 8422 of the Civil Code is amended to read:
8422. (a) Except as provided in subdivisions (b) and (c),
erroneous information contained in a claim of lien relating to the
claimant's demand, credits and offsets deducted, the work provided,
or the description of the site, does not invalidate the claim of
lien.
(b) Erroneous information contained in a claim of lien relating to
the claimant's demand, credits and offsets deducted, or the work
provided, invalidates the claim of lien if the court determines
either of the following:
(1) The claim of lien was made with intent to defraud.
(2) An innocent third party, without notice, actual or
constructive, became the bona fide owner of the property after
recordation of the claim of lien, and the claim of lien was so
deficient that it did not put the party on further inquiry in any
manner.
(c) Any person who shall willfully include in a claim of lien
labor, services, equipment, or materials not furnished for the
property described in the claim, shall thereby forfeit the person's
lien.
SEC. 6. Section 66499.7 of the Government Code is amended to read:
66499.7. The security furnished by the subdivider shall be
released in whole or in part in the following manner:
(a) Security given for faithful performance of any act or
agreement shall be released upon the performance of the act or final
completion and acceptance of the required work. The legislative body
may provide for the partial release of the security upon the partial
performance of the act or the acceptance of the work as it
progresses, consistent with the provisions of this section. The
security may be a surety bond, a cash deposit, a letter of credit,
escrow account, or other form of performance guarantee required as
security by the legislative body that meets the requirements as
acceptable security pursuant to law. If the security furnished by the
subdivider is a documentary evidence of security such as a surety
bond or a letter of credit, the legislative body shall release the
documentary evidence and return the original to the issuer upon
performance of the act or final completion and acceptance of the
required work. In the event that the legislative body is unable to
return the original documentary evidence to the issuer, the security
shall be released by written notice sent by certified mail to the
subdivider and issuer of the documentary evidence within 30 days of
the acceptance of the work. The written notice shall contain a
statement that the work for which the security was furnished has been
performed or completed and accepted by the legislative body, a
description of the project subject to the documentary evidence and
the notarized signature of the authorized representative of the
legislative body.
(b) At the time that the subdivider believes that the obligation
to perform the work for which security was required is complete, the
subdivider may notify the local agency in writing of the completed
work, including a list of work completed. Upon receipt of the written
notice, the local agency shall have 45 days to review and comment or
approve the completion of the required work. If the local agency
does not agree that all work has been completed in accordance with
the plans and specifications for the improvements, it shall supply a
list of all remaining work to be completed.
(c) Within 45 days of receipt of the list of remaining work from
the local agency, the subdivider may then provide cost estimates for
all remaining work for review and approval by the local agency. Upon
receipt of the cost estimates, the local agency shall then have 45
days to review, comment, and approve, modify, or disapprove those
cost estimates. No local agency shall be required to engage in this
process of partial release more than once between the start of work
and completion and acceptance of all work; however, nothing in this
section prohibits a local agency from allowing for a partial release
as it otherwise deems appropriate.
(d) If the local agency approves the cost estimate, the local
agency shall release all performance security except for security in
an amount up to 200 percent of the cost estimate of the remaining
work. The process allowing for a partial release of performance
security shall occur when the cost estimate of the remaining work
does not exceed 20 percent of the total original performance security
unless the local agency allows for a release at an earlier time.
Substitute bonds or other security may be used as a replacement for
the performance security, subject to the approval of the local
agency. If substitute bonds or other security is used as a
replacement for the performance security released, the release shall
not be effective unless and until the local agency receives and
approves that form of replacement security. A reduction in the
performance security, authorized under this section, is not, and
shall not be deemed to be, an acceptance by the local agency of the
completed improvements, and the risk of loss or damage to the
improvements and the obligation to maintain the improvements shall
remain the sole responsibility of the subdivider until all required
public improvements have been accepted by the local agency and all
other required improvements have been fully completed in accordance
with the plans and specifications for the improvements.
(e) The subdivider shall complete the works of improvement until
all remaining items are accepted by the local agency.
(f) Upon the completion of the improvements, the subdivider, or
his or her assigns, shall be notified in writing by the local agency
within 45 days.
(g) Within 45 days of the issuance of the notification by the
local agency, the release of any remaining performance security shall
be placed upon the agenda of the legislative body of the local
agency for approval of the release of any remaining performance
security. If the local agency delegates authority for the release of
performance security to a public official or other employee, any
remaining performance security shall be released within 60 days of
the issuance of the written statement of completion.
(h) Security securing the payment to the contractor, his or her
subcontractors and to persons furnishing labor, materials or
equipment shall, after passage of the time within which claims of
lien are required to be recorded pursuant to Article 2 (commencing
with Section 8410) of Chapter 4 of Title 2 of Part 6 of Division 4 of
the Civil Code and after acceptance of the work, be reduced to an
amount equal to the total claimed by all claimants for whom claims of
lien have been recorded and notice thereof given in writing to the
legislative body, and if no claims have been recorded, the security
shall be released in full.
(i) The release shall not apply to any required guarantee and
warranty period required by Section 66499.9 for the guarantee or
warranty nor to the amount of the security deemed necessary by the
local agency for the guarantee and warranty period nor to costs and
reasonable expenses and fees, including reasonable attorneys'
attorney's fees.
(j) The legislative body may authorize any of its public officers
or employees to authorize release or reduction of the security in
accordance with the conditions hereinabove set forth and in
accordance with any rules that it may prescribe.
(k) This section shall remain in effect only until January 1,
2016, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2016, deletes or extends
that date.
SEC. 7. This act shall be operative on July 1, 2012.
