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The following are excerpts from the vast body of law governing contractors and construction in California and they are not intended to be an exhaustive list of the applicable statutes governing your particular needs. You should consult with an attorney to determine your rights and the applicable law which you must follow!
CALIFORNIA CODES
CIVIL CODE
SECTION 3082-3106
- 3082.
Unless the context otherwise requires, the provisions in this
chapter govern the construction of this title.
- 3083.
"Bonded stop notice" means a stop notice, given to any
construction lender, accompanied by a bond with good and sufficient
sureties in a penal sum equal to 11/4 times the amount of such claim
conditioned that if the defendant recovers judgment in an action
brought on such verified claim or on the lien filed by the claimant,
the claimant will pay all costs that may be awarded against the
owner, original contractor, construction lender, or any of them, and
all damages that such owner, original contractor, or construction
lender may sustain by reason of the equitable garnishment effected by
the claim or by reason of the lien, not exceeding the sum specified
in the bond. To be effective such bonded stop notice shall be
delivered to the manager or other responsible officer or person at
the office of the construction lender or must be sent to such office
by registered or certified mail. If such notice is delivered or sent
to any institution or organization maintaining branch offices, it
shall not be effective unless delivered or sent to the office or
branch administering or holding such construction funds.
- 3084.
(a) "Claim of lien" means a written statement, signed and
verified by the claimant or by the claimant's agent, containing all
of the following:
(1) A statement of the claimant's demand after deducting all just
credits and offsets.
(2) The name of the owner or reputed owner, if known.
(3) A general statement of the kind of labor, services, equipment,
or materials furnished by the claimant.
(4) The name of the person by whom the claimant was employed or to
whom the claimant furnished the labor, services, equipment, or
materials.
(5) A description of the site sufficient for identification.
(b) A claim of lien in otherwise proper form, verified and
containing the information required by this section shall be accepted
by the recorder for recording and shall be deemed duly recorded
without acknowledgment.
- 3085.
"Claimant" means any person entitled under this title to
record a claim of lien, to give a stop notice in connection with any
work of improvement, or to recover on any payment bond, or any
combination of the foregoing.
- 3086.
"Completion" means, in the case of any work of improvement
other than a public work, actual completion of the work of
improvement. Any of the following shall be deemed equivalent to a
completion:
(a) The occupation or use of a work of improvement by the owner,
or his agent, accompanied by cessation of labor thereon.
(b) The acceptance by the owner, or his agent, of the work of
improvement.
(c) After the commencement of a work of improvement, a cessation
of labor thereon for a continuous period of 60 days, or a cessation
of labor thereon for a continuous period of 30 days or more if the
owner files for record a notice of cessation.
If the work of improvement is subject to acceptance by any public
entity, the completion of such work of improvement shall be deemed to
be the date of such acceptance; provided, however, that, except as
to contracts awarded under the State Contract Act, Chapter 3
(commencing with Section 14250), Part 5, Division 3, Title 2 of the
Government Code, a cessation of labor on any public work for a
continuous period of 30 days shall be a completion thereof.
- 3087.
"Construction lender" means any mortgagee or beneficiary
under a deed of trust lending funds with which the cost of the work
of improvement is, wholly or in part, to be defrayed, or any assignee
or successor in interest of either, or any escrow holder or other
party holding any funds furnished or to be furnished by the owner or
lender or any other person as a fund from which to pay construction
costs.
- 3088.
"Contract" means an agreement between an owner and any
original contractor providing for the work of improvement or any part
thereof.
- 3089.
(a) "Laborer" means any person who, acting as an employee,
performs labor upon or bestows skill or other necessary services on
any work of improvement.
(b) "Laborer" also includes any person or entity, including an
express trust fund described in Section 3111, to whom a portion of
the compensation of a laborer as defined in subdivision (a) is paid
by agreement with that laborer or the collective bargaining agent of
that laborer. To the extent that a person or entity defined in this
subdivision has standing under applicable law to maintain a direct
legal action, in their own name or as an assignee, to collect any
portion of compensation owed for a laborer, that person or entity
shall have standing to enforce any rights under this title to the
same extent as the laborer. This section is intended to give effect
to the long-standing public policy of this state to protect the
entire compensation of laborers on works of improvement, regardless
of the form in which that compensation is to be paid.
- 3090.
"Materialman" means any person who furnishes materials or
supplies to be used or consumed in any work of improvement.
- 3092.
"Notice of cessation" means a written notice, signed and
verified by the owner or his agent, containing all of the following:
(a) The date on or about when the cessation of labor commenced.
(b) A statement that such cessation has continued until the
recording of the notice of cessation.
(c) The name and address of the owner.
(d) The nature of the interest or estate of the owner.
(e) A description of the site sufficient for identification,
containing the street address of the site, if any. If a sufficient
legal description of the site is given, the validity of the notice
shall not, however, be affected by the fact that the street address
is erroneous or is omitted.
(f) The name of the original contractor, if any, for the work of
improvement as a whole.
(g) For the purpose of this section, "owner" means the owner who
causes a building, improvement, or structure, to be constructed,
altered, or repaired (or his successor in interest at the date of a
notice of cessation from labor is filed for record) whether the
interest or estate of such owner be in fee, as vendee under a
contract of purchase, as lessee, or other interest or estate less
than the fee. Where such interest or estate is held by two or more
persons as joint tenants or tenants in common, any one or more of the
cotenants may be deemed to be the "owner" within the meaning of this
section. Any notice of cessation signed by less than all of such
cotenants shall recite the names and addresses of all such cotenants.
The notice of cessation shall be recorded in the office of the
county recorder of the county in which the site is located and shall
be effective only if there has been a continuous cessation of labor
for at least 30 days prior to such recording.
- 3093.
"Notice of completion" means a written notice, signed and
verified by the owner or his agent, containing all of the following:
(a) The date of completion (other than a cessation of labor). The
recital of an erroneous date of completion shall not, however,
affect the validity of the notice if the true date of completion is
within 10 days preceding the date of recording of such notice.
(b) The name and address of the owner.
(c) The nature of the interest or estate of the owner.
(d) A description of the site sufficient for identification,
containing the street address of the site, if any. If a sufficient
legal description of the site is given, the validity of the notice
shall not, however, be affected by the fact that the street address
recited is erroneous or that such street address is omitted.
(e) The name of the original contractor, if any, or if the notice
is given only of completion of a contract for a particular portion of
such work of improvement, as provided in Section 3117, then the name
of the original contractor under such contract, and a general
statement of the kind of work done or materials furnished pursuant to
such contract.
The notice of completion shall be recorded in the office of the
county recorder of the county in which the site is located, within 10
days after such completion. A notice of completion in otherwise
proper form, verified and containing the information required by this
section shall be accepted by the recorder for recording and shall be
deemed duly recorded without acknowledgment.
If there is more than one owner, any notice of completion signed
by less than all of such co-owners shall recite the names and
addresses of all of such co-owners; and provided further, that any
notice of completion signed by a successor in interest shall recite
the names and addresses of his transferor or transferors.
For the purpose of this section, owner is defined as set forth in
subdivision (g) of Section 3092.
- 3094.
"Notice of nonresponsibility" means a written notice, signed
and verified by a person owning or claiming an interest in the site
who has not caused the work of improvement to be performed, or his
agent, containing all of the following:
(a) A description of the site sufficient for identification.
(b) The name and nature of the title or interest of the person
giving the notice.
(c) The name of the purchaser under contract, if any, or lessee,
if known.
(d) A statement that the person giving the notice will not be
responsible for any claims arising from the work of improvement.
Within 10 days after the person claiming the benefits of
nonresponsibility has obtained knowledge of the work of improvement,
the notice provided for in this section shall be posted in some
conspicuous place on the site. Within the same 10-day period
provided for the posting of the notice, the notice shall be recorded
in the office of the county recorder of the county in which the site
or some part thereof is located.
- 3095.
"Original contractor" means any contractor who has a direct
contractual relationship with the owner.
- 3096.
"Payment bond" means a bond with good and sufficient sureties
that is conditioned for the payment in full of the claims of all
claimants and that also by its terms is made to inure to the benefit
of all claimants so as to give these persons a right of action to
recover upon this bond in any suit brought to foreclose the liens
provided for in this title or in a separate suit brought on the bond.
An owner, original contractor, or a subcontractor may be the
principal upon any payment bond.
- 3097.
"Preliminary 20-day notice (private work)" means a written
notice from a claimant that is given prior to the recording of a
mechanic's lien, prior to the filing of a stop notice, and prior to
asserting a claim against a payment bond, and is required to be given
under the following circumstances:
(a) Except one under direct contract with the owner or one
performing actual labor for wages as described in subdivision (a) of
Section 3089, or a person or entity to whom a portion of a laborer's
compensation is paid as described in subdivision (b) of Section 3089,
every person who furnishes labor, service, equipment, or material
for which a lien or payment bond otherwise can be claimed under this
title, or for which a notice to withhold can otherwise be given under
this title, shall, as a necessary prerequisite to the validity of
any claim of lien, payment bond, and of a notice to withhold, cause
to be given to the owner or reputed owner, to the original
contractor, or reputed contractor, and to the construction lender, if
any, or to the reputed construction lender, if any, a written
preliminary notice as prescribed by this section.
(b) Except the contractor, or one performing actual labor for
wages as described in subdivision (a) of Section 3089, or a person or
entity to whom a portion of a laborer's compensation is paid as
described in subdivision (b) of Section 3089, all persons who have a
direct contract with the owner and who furnish labor, service,
equipment, or material for which a lien or payment bond otherwise can
be claimed under this title, or for which a notice to withhold can
otherwise be given under this title, shall, as a necessary
prerequisite to the validity of any claim of lien, claim on a payment
bond, and of a notice to withhold, cause to be given to the
construction lender, if any, or to the reputed construction lender,
if any, a written preliminary notice as prescribed by this section.
(c) The preliminary notice referred to in subdivisions (a) and (b)
shall contain the following information:
(1) A general description of the labor, service, equipment, or
materials furnished, or to be furnished, and an estimate of the total
price thereof.
(2) The name and address of the person furnishing that labor,
service, equipment, or materials.
(3) The name of the person who contracted for purchase of that
labor, service, equipment, or materials.
(4) A description of the jobsite sufficient for identification.
(5) The following statement in boldface type:
NOTICE TO PROPERTY OWNER
If bills are not paid in full for the labor, services, equipment,
or materials furnished or to be furnished, a mechanic's lien leading
to the loss, through court foreclosure proceedings, of all or part of
your property being so improved may be placed against the property
even though you have paid your contractor in full. You may wish to
protect yourself against this consequence by (1) requiring your
contractor to furnish a signed release by the person or firm giving
you this notice before making payment to your contractor, or (2) any
other method or device that is appropriate under the circumstances.
(6) If the notice is given by a subcontractor who has failed to
pay all compensation due to his or her laborers on the job, the
notice shall also contain the identity and address of any laborer and
any express trust fund to whom employer payments are due.
If an invoice for materials or certified payroll contains the
information required by this section, a copy of the invoice,
transmitted in the manner prescribed by this section shall be
sufficient notice.
A certificated architect, registered engineer, or licensed land
surveyor who has furnished services for the design of the work of
improvement and who gives a preliminary notice as provided in this
section not later than 20 days after the work of improvement has
commenced shall be deemed to have complied with subdivisions (a) and
(b) with respect to architectural, engineering, or surveying services
furnished, or to be furnished.
(d) The preliminary notice referred to in subdivisions (a) and (b)
shall be given not later than 20 days after the claimant has first
furnished labor, service, equipment, or materials to the jobsite. If
labor, service, equipment, or materials have been furnished to a
jobsite by a claimant who did not give a preliminary notice, that
claimant shall not be precluded from giving a preliminary notice at
any time thereafter. The claimant shall, however, be entitled to
record a lien, file a stop notice, and assert a claim against a
payment bond only for labor, service, equipment, or material
furnished within 20 days prior to the service of the preliminary
notice, and at any time thereafter.
(e) Any agreement made or entered into by an owner, whereby the
owner agrees to waive the rights or privileges conferred upon the
owner by this section shall be void and of no effect.
(f) The notice required under this section may be served as
follows:
(1) If the person to be notified resides in this state, by
delivering the notice personally, or by leaving it at his or her
address of residence or place of business with some person in charge,
or by first-class registered or certified mail, postage prepaid,
addressed to the person to whom notice is to be given at his or her
residence or place of business address or at the address shown by the
building permit on file with the authority issuing a building permit
for the work, or at an address recorded pursuant to subdivision (j).
(2) If the person to be notified does not reside in this state, by
any method enumerated in paragraph (1) of this subdivision. If the
person cannot be served by any of these methods, then notice may be
given by first-class certified or registered mail, addressed to the
construction lender or to the original contractor.
(3) When service is made by first-class certified or registered
mail, service is complete at the time of the deposit of that
registered or certified mail.
(g) A person required by this section to give notice to the owner,
to an original contractor, and to a person to whom a notice to
withhold may be given, need give only one notice to the owner, to the
original contractor, and to the person to whom a notice to withhold
may be given with respect to all materials, services, labor, or
equipment he or she furnishes for a work of improvement, that means
the entire structure or scheme of improvements as a whole, unless the
same is furnished under contracts with more than one subcontractor,
in which event, the notice requirements shall be met with respect to
materials, services, labor, or equipment furnished to each
contractor.
If a notice contains a general description required by subdivision
(a) or (b) of the materials, services, labor, or equipment furnished
to the date of notice, it is not defective because, after that date,
the person giving notice furnishes materials, services, labor, or
equipment not within the scope of this general description.
(h) If the contract price to be paid to any subcontractor on a
particular work of improvement exceeds four hundred dollars ($400),
the failure of that contractor, licensed under Chapter 9 (commencing
with Section 7000) of Division 3 of the Business and Professions
Code, to give the notice provided for in this section, constitutes
grounds for disciplinary action by the Registrar of Contractors.
If the notice is required to contain the information set forth in
paragraph (6) of subdivision (c), a failure to give the notice,
including that information, that results in the filing of a lien,
claim on a payment bond, or the delivery of a stop notice by the
express trust fund to which the obligation is owing constitutes
grounds for disciplinary action by the Registrar of Contractors
against the subcontractor if the amount due the trust fund is not
paid.
(i) Every city, county, city and county, or other governmental
authority issuing building permits shall, in its application form for
a building permit, provide space and a designation for the applicant
to enter the name, branch, designation, if any, and address of the
construction lender and shall keep the information on file open for
public inspection during the regular business hours of the authority.
If there is no known construction lender, that fact shall be noted
in the designated space. Any failure to indicate the name and
address of the construction lender on the application, however, shall
not relieve any person from the obligation to give to the
construction lender the notice required by this section.
(j) A mortgage, deed of trust, or other instrument securing a
loan, any of the proceeds of which may be used for the purpose of
constructing improvements on real property, shall bear the
designation "Construction Trust Deed" prominently on its face and
shall state all of the following: (1) the name and address of the
lender, and the name and address of the owner of the real property
described in the instrument, and (2) a legal description of the real
property that secures the loan and, if known, the street address of
the property. The failure to be so designated or to state any of the
information required by this subdivision shall not affect the
validity of the mortgage, deed of trust, or other instrument.
Failure to provide this information on this instrument when
recorded shall not relieve persons required to give preliminary
notice under this section from that duty.
The county recorder of the county in which the instrument is
recorded shall indicate in the general index of the official records
of the county that the instrument secures a construction loan.
(k) Every contractor and subcontractor employing laborers as
described in subdivision (a) of Section 3089 who has failed to pay
those laborers their full compensation when it became due, including
any employer payments described in Section 1773.1 of the Labor Code
and regulations adopted thereunder shall, without regard to whether
the work was performed on a public or private work, cause to be given
to those laborers, their bargaining representatives, if any, and to
the construction lender, if any, or to the reputed construction
lender, if any, not later than the date the compensation became
delinquent, a written notice containing all of the following:
(1) The name of the owner and the contractor.
(2) A description of the jobsite sufficient for identification.
(3) The identity and address of any express trust fund described
in Section 3111 to which employer payments are due.
(4) The total number of straight time and overtime hours on each
job.
(5) The amount then past due and owing.
Failure to give this notice shall constitute grounds for
disciplinary action by the Registrar of Contractors.
(l) Every written contract entered into between a property owner
and an original contractor shall provide space for the owner to enter
his or her name , residence address, and place of business if any.
The original contractor shall make available the name and address of
residence of the owner to any person seeking to serve the notice
specified in subdivision (c).
(m) Every written contract entered into between a property owner
and an original contractor, except home improvement contracts and
swimming pool contracts subject to Article 10 (commencing with
Section 7150) of Chapter 9 of Division 3 of the Business and
Professions Code, shall provide space for the owner to enter the name
and address of the construction lender or lenders. The original
contractor shall make available the name and address of the
construction lender or lenders to any person seeking to serve the
notice specified in subdivision (c). Every contract entered into
between an original contractor and subcontractor, and between
subcontractors, shall provide a space for the name and address of the
owner, original contractor, and any construction lender.
(n) Where one or more construction loans are obtained after
commencement of construction, the property owner shall provide the
name and address of the construction lender or lenders to each person
who has given the property owner the notice specified in subdivision
(c).
(o) (1) Each person who has served a preliminary 20-day notice
pursuant to subdivision (f) may file the preliminary 20-day notice
with the county recorder in the county in which any portion of the
property is located. A preliminary 20-day notice filed pursuant to
this section shall contain all of the following:
(A) The name and address of the person furnishing the labor,
service, equipment, or materials.
(B) The name of the person who contracted for purchase of the
labor, services, equipment, or materials.
(C) The common street address of the jobsite.
(2) Upon the acceptance for recording of a notice of completion or
notice of cessation the county recorder shall mail to those persons
who have filed a preliminary 20-day notice, notification that a
notice of completion or notice of cessation has been recorded on the
property, and shall affix the date that the notice of completion or
notice of cessation was recorded with the county recorder.
(3) The failure of the county recorder to mail the notification to
the person who filed a preliminary 20-day notice, or the failure of
those persons to receive the notification or to receive complete
notification, shall not affect the period within which a claim of
lien is required to be recorded. However, the county recorder shall
make a good faith effort to mail notification to those persons who
have filed the preliminary 20-day notice under this section and to do
so within five days after the recording of a notice of completion or
notice of cessation.
(4) This new function of the county recorder shall not become
operative until July 1, 1988. The county recorder may cause to be
destroyed all documents filed pursuant to this section, two years
after the date of filing.
(5) The preliminary 20-day notice that a person may file pursuant
to this subdivision is for the limited purpose of facilitating the
mailing of notice by the county recorder of recorded notices of
completion and notices of cessation. The notice that is filed is not
a recordable document and shall not be entered into those official
records of the county which by law impart constructive notice.
Notwithstanding any other provision of law, the index maintained by
the recorder of filed preliminary 20-day notices shall be separate
and distinct from those indexes maintained by the county recorder of
those official records of the county which by law impart constructive
notice. The filing of a preliminary 20-day notice with the county
recorder does not give rise to any actual or constructive notice with
respect to any party of the existence or contents of a filed
preliminary 20-day notice nor to any duty of inquiry on the part of
any party as to the existence or contents of that notice.
(p) (1) The change made to the statement described in subdivision
(c) by Chapter 974 of the Statutes of 1994 shall have no effect upon
the validity of any notice that otherwise meets the requirements of
this section. The failure to provide, pursuant to Chapter 974 of the
Statutes of 1994, a written preliminary notice to a subcontractor
with whom the claimant has contracted shall not affect the validity
of any preliminary notice provided pursuant to this section.
(2) (A) The inclusion of the language added to paragraph (5) of
subdivision (c) by Chapter 795 of the Statutes of 1999, shall not
affect the validity of any preliminary notice given on or after
January 1, 2000, and prior to the operative date of the amendments to
this section enacted at the 2000 portion of the 1999-2000 Regular
Session, that otherwise meets the requirements of that subdivision.
(B) A preliminary notice given on or after January 1, 2000, and
prior to the operative date of the amendments to this section enacted
at the 2000 portion of the 1999-2000 Regular Session, shall not be
invalid because of the failure to include the language added to
paragraph (5) of subdivision (c) by Chapter 795 of the Statutes of
1999, if the notice otherwise complies with that subdivision.
(C) The failure to provide an affidavit form or notice of rights,
or both, pursuant to the requirements of Chapter 795 of the Statutes
of 1999, shall not affect the validity of any preliminary notice
pursuant to this section.
- 3097.1.
Proof that the preliminary 20-day notice required by
Section 3097 was served in accordance with subdivision (f) of Section
3097 shall be made as follows:
(a) If served by mail, by the proof of service affidavit described
in subdivision (c) of this section accompanied either by the return
receipt of certified or registered mail, or by a photocopy of the
record of delivery and receipt maintained by the post office, showing
the date of delivery and to whom delivered, or, in the event of
nondelivery, by the returned envelope itself.
(b) If served by personally delivering the notice to the person to
be notified, or by leaving it at his address or place of business
with some person in charge, by the proof of service affidavit
described in subdivision (c).
(c) A "proof of service affidavit" is an affidavit of the person
making the service, showing the time, place and manner of service and
facts showing that such service was made in accordance with Section
3097. Such affidavit shall show the name and address of the person
upon whom a copy of the preliminary 20-day notice was served, and, if
appropriate, the title or capacity in which he was served.
- 3098.
"Preliminary 20-day notice (public work)" means a written
notice from a claimant that was given prior to the assertion of a
claim against a payment bond, or the filing of a stop notice on
public work, and is required to be given under the following
circumstances:
(a) In any case in which the law of this state affords a right to
a person furnishing labor or materials for a public work who has not
been paid therefor to assert a claim against a payment bond, or to
file a stop notice with the public agency concerned, and thereby
cause the withholding of payment from the contractor for the public
work, any person that has no direct contractual relationship with the
contractor, other than a person who performed actual labor for wages
or an express trust fund described in Section 3111, may file the
preliminary notice, but no payment shall be withheld from the
contractor pursuant to that notice unless the person has caused
written notice to be given to the contractor, and the public agency
concerned, not later than 20 days after the claimant has first
furnished labor, services, equipment, or materials to the jobsite,
stating with substantial accuracy a general description of labor,
service, equipment, or materials furnished or to be furnished, and
the name of the party to whom the same was furnished. This notice
shall be served by mailing the same by first-class mail, registered
mail, or certified mail, postage prepaid, in an envelope addressed to
the contractor at any place the contractor maintains an office or
conducts business, or his or her residence, or by personal service.
In case of any public works constructed by the Department of Public
Works or the Department of General Services of the state, such notice
shall be served by mailing in the same manner as above, addressed to
the office of the disbursing officer of the department constructing
the work, or by personal service upon the officer. When service is
by registered or certified mail, service is complete at the time of
the deposit of the registered or certified mail.
(b) Where the contract price to be paid to any subcontractor on a
particular work of improvement exceeds four hundred dollars ($400),
the failure of that contractor, licensed under Chapter 9, (commencing
with Section 7000) of Division 3 of the Business and Professions
Code, to give the notice provided for in this section, constitutes
grounds for disciplinary action by the Registrar of Contractors.
(c) The notice requirements of this section shall not apply to a
laborer described in Section 3089 or to an express trust fund
described in Section 3111.
(d) If labor, service, equipment, or materials have been furnished
to a jobsite by a claimant who did not give a preliminary notice
pursuant to subdivision (a), that claimant shall not be precluded
from giving a preliminary notice at any time thereafter. The
claimant shall, however, be entitled to assert a claim against a
payment bond and file a stop notice only for labor, service,
equipment, or material furnished within 20 days prior to the service
of the preliminary notice, and at any time thereafter.
(e) The failure to provide, pursuant to Chapter 974 of the
Statutes of 1994, a written preliminary notice to a subcontractor
with whom the claimant has contracted shall not affect the validity
of any preliminary notice provided pursuant to this section.
- 3099.
"Public entity" means the state, Regents of the University of
California, a county, city, district, public authority, public
agency, and any other political subdivision or public corporation in
the state.
- 3100.
"Public work" means any work of improvement contracted for by
a public entity.
- 3101.
"Site" means the real property upon which the work of
improvement is being constructed or performed.
- 3102.
"Site improvement" means the demolishing or removing of
improvements, trees, or other vegetation located thereon, or drilling
test holes or the grading, filling, or otherwise improving of any
lot or tract of land or the street, highway, or sidewalk in front of
or adjoining any lot or tract of land, or constructing or installing
sewers or other public utilities therein, or constructing any areas,
vaults, cellars, or rooms under said sidewalks or making any
improvements thereon.
- 3103.
"Stop notice" means a written notice, signed and verified by
the claimant or his or her agent, stating in general terms all of the
following:
(a) The kind of labor, services, equipment, or materials furnished
or agreed to be furnished by such claimant.
(b) The name of the person to or for whom the same was done or
furnished.
(c) The amount in value, as near as may be, of that already done
or furnished and of the whole agreed to be done or furnished.
(d) The name and address of the claimant.
The notice, in the case of any work of improvement other than a
public work, shall be delivered to the owner personally or left at
his or her residence or place of business with some person in charge,
or delivered to his or her architect, if any, if the notice is
served upon a construction lender, holding construction funds and
maintaining branch offices, it shall not be effective as against the
construction lender unless given to or served upon the manager or
other responsible officer or person at the office or branch thereof
administering or holding the construction funds. The notice, in the
case of any public work for the state, shall be filed with the
director of the department which let the contract and, in the case of
any other public work, shall be filed in the office of the
controller, auditor, or other public disbursing officer whose duty it
is to make payments under the provisions of the contract, or with
the commissioners, managers, trustees, officers, board of
supervisors, board of trustees, common council, or other body by whom
the contract was awarded. No stop notice shall be invalid by reason
of any defect in form if it is sufficient to substantially inform
the owner of the information required.
Any stop notice may be served by registered or certified mail with
the same effect as by personal service.
- 3104.
"Subcontractor" means any contractor who has no direct
contractual relationship with the owner.
- 3105. "Subdivision" means a work of improvement consisting of two
or more separate residential units or two or more buildings, mining
claims, or other improvements owned or reputed to be owned by the
same person or on which the claimant has been employed by the same
person. A separate residential unit means one residential structure,
together with any garage or other improvements appurtenant thereto.
- 3106.
"Work of improvement" includes but is not restricted to the
construction, alteration, addition to, or repair, in whole or in
part, of any building, wharf, bridge, ditch, flume, aqueduct, well,
tunnel, fence, machinery, railroad, or road, the seeding, sodding, or
planting of any lot or tract of land for landscaping purposes, the
filling, leveling, or grading of any lot or tract of land, the
demolition of buildings, and the removal of buildings. Except as
otherwise provided in this title, "work of improvement" means the
entire structure or scheme of improvement as a whole.
- 3110.
Mechanics, materialmen, contractors, subcontractors, lessors
of equipment, artisans, architects, registered engineers, licensed
land surveyors, machinists, builders, teamsters, and draymen, and all
persons and laborers of every class performing labor upon or
bestowing skill or other necessary services on, or furnishing
materials or leasing equipment to be used or consumed in or
furnishing appliances, teams, or power contributing to a work of
improvement shall have a lien upon the property upon which they have
bestowed labor or furnished materials or appliances or leased
equipment for the value of such labor done or materials furnished and
for the value of the use of such appliances, equipment, teams, or
power whether done or furnished at the instance of the owner or of
any person acting by his authority or under him as contractor or
otherwise. For the purposes of this chapter, every contractor,
subcontractor, sub-subcontractor, architect, builder, or other person
having charge of a work of improvement or portion thereof shall be
held to be the agent of the owner.
- 3110.5.
(a) (1) This section shall apply only to an owner who
contracts for a work of improvement for construction, alteration,
addition to, or repair upon, property, whether the contracting owner
is the owner of a fee simple absolute interest in the property or the
owner of any lesser interest in the property. For purposes of this
section, a lessee of real property shall be considered to be the
owner of a fee simple absolute interest in that real property if and
only if: (A) the initial term of the lease is at least 35 years and
(B) the lease covers one or more lawful parcels under the Subdivision
Map Act (Division 2 (commencing with Section 66410) of Title 7 of
the Government Code) and any applicable local ordinances adopted
pursuant thereto, in their entirety, including, but not limited to,
parcels approved pursuant to certificate of compliance proceedings.
For purposes of this section, the owner of a fee simple absolute
interest shall not be deemed to be the owner of less than a fee
simple absolute interest by reason of any mortgages, deeds of trust,
ground leases, or other liens or encumbrances or rights to occupancy
that may encumber the fee simple absolute interest. If the owner
contracting for the work of improvement is an owner of an interest in
the property which is less than a fee simple absolute interest, this
section does not require the owner of the fee simple absolute
interest who does not contract for the work of improvement to provide
any security pursuant to this section or to comply with any of the
other obligations of an owner under this section. If the owner
contracting for the work of improvement is an owner of the fee simple
absolute interest in the property, this section does not require the
owner of an interest in the property which is less than a fee simple
absolute interest who does not contract for the work of improvement
to provide any security pursuant to this section or to comply with
any of the other obligations of an owner under this section.
(2) An owner contracting for a work of improvement is subject to
this section only if one of the following conditions is satisfied:
(A) The owner contracting for the work of improvement is the owner
of a fee simple absolute interest in the property upon which the
work of improvement is to be made, and the value of the contract for
the work of improvement is more than five million dollars
($5,000,000).
(B) The owner contracting for the work of improvement is the owner
of an interest which is less than a fee simple absolute interest,
including a leasehold interest, in the property upon which the work
of improvement is to be made, and the value of the contract for the
work of improvement is more than one million dollars ($1,000,000).
(b) If an owner of property, whether an owner of a fee simple
absolute interest or any lesser interest therein, contracts for any
work of improvement for construction, alteration, addition to, or
repair upon, the property, and the contracting owner is subject to
the requirements of this section, as determined by subdivision (a),
the contracting owner shall supply to the original contractor, if a
lending institution is providing a construction loan, a copy
certified by the county recorder of the recorded construction
mortgage or deed of trust that shall disclose the amount of the
construction loan. In addition, if the contracting owner is not the
majority owner of the original contractor, the contracting owner
shall provide security for the contracting owner's payment
obligations under the construction contract. The security shall be
used only when the contracting owner defaults on his or her
contractual obligations to the original contractor. The security for
the contracting owner's payment obligations under the construction
contract shall be provided by one of the following means:
(1) A payment bond, as defined in Section 3096, in the amount of
either (A) not less than 25 percent of the total amount of any
construction contract that is subject to this section where the
construction contract provides that the work of improvement is
scheduled to be substantially completed within six months following
the commencement thereof, or (B) not less than 15 percent of the
total amount of any other construction contract that is subject to
this section, which payment bond shall be payable upon default by the
contracting owner of any undisputed amount under the contract that
has been due and payable for more than 30 days. The payment bond
shall be from a California admitted surety which is either listed in
the Department of the Treasury's Listing of Approved Sureties
(Department Circular 570) or that has an A.M. Best rating of A or
better and has an underwriting limitation, pursuant to Section 12090
of the Insurance Code, greater than the value of the contract amount
of the bond.
(2) An irrevocable letter of credit from a financial institution,
as defined in Section 5107 of the Financial Code, inuring to the
benefit of the original contractor in the amount of either (A) not
less than 25 percent of the total amount of any construction contract
that is subject to this section where the construction contract
provides that the work of improvement is scheduled to be
substantially completed within six months following the commencement
thereof, or (B) not less than 15 percent of the total amount of any
other construction contract that is subject to this section. The
maturity date of the letter of credit and other terms of the letter
of credit shall be determined by agreement between the contracting
owner, the original contractor, and the issuer of the letter of
credit provided that the contracting owner shall be required to
maintain the letter of credit in effect until the contracting owner
has satisfied all of its payment obligations to the original
contractor.
(3) (A) An escrow account, designated as a "construction security
escrow account," maintained with an escrow agent licensed under the
Escrow Law, as set forth in Division 6 (commencing with Section
17000) of the Financial Code, or with any person exempt from the
Escrow Law pursuant to paragraph (1) or (3) of subdivision (a) of
Section 17006 of the Financial Code, which construction security
escrow account shall be located in California and in which the
contracting owner shall deposit funds in the amount provided in
subparagraph (B); provided that the original contractor shall not be
obligated to accept a construction security escrow account as
security unless the contracting owner establishes to the reasonable
satisfaction of the original contractor (which may be established by
a written opinion of legal counsel for the contracting owner), that
the contracting owner has granted the original contractor a
perfected, first priority security interest in the construction
security escrow account and all funds deposited by the contracting
owner therein and the proceeds thereof. The funds on deposit in the
construction security escrow account shall be the sole property of
the contracting owner, subject to the security interest in favor of
the original contractor. The escrowholder shall be instructed by the
contracting owner and the original contractor to hold the funds on
deposit in the construction security escrow account for the purpose
of perfecting the original contractor's security interest therein and
to disburse those funds only upon the joint authorization of the
contracting owner and the original contractor, or in accordance with
an order of any court which is binding on both the owner and the
original contractor. This section does not require any construction
lender to agree to deposit proceeds of a construction loan in a
construction security escrow account.
(B) Prior to commencement of the work under the construction
contract, the contracting owner shall make an initial deposit to the
construction security escrow account in the amount of either (i) not
less than 25 percent of the total amount of any construction contract
which is subject to this section where the construction contract
provides that the work of improvement is scheduled to be
substantially completed within six months following the commencement
thereof, or (ii) not less than 15 percent of the total amount of any
other construction contract which is subject to this section. In
addition, if the construction contract provides for a so-called
retainage or retention to be withheld from periodic payments to the
original contractor, the contracting owner shall deposit all amounts
withheld as retainage or retention in the construction security
escrow account at the same time the contracting owner makes the
corresponding payment to the original contractor from which the
retainage or retention is withheld provided, however, that in no
event shall the amount required to be maintained on deposit in the
construction security escrow account exceed the total amount of
future payments remaining to be due the original contractor under its
construction contract (as the same may be adjusted by agreement
between the contracting owner and the original contractor). If the
amount of funds on deposit in the construction security escrow
account equals or exceeds the total amount of future payments
remaining to be due the original contractor, the contracting owner
and the original contractor shall authorize the disbursement to the
original contractor of funds on deposit in the construction security
escrow account to pay progress payments then due the original
contractor under its construction contract (in whole or in part), but
in no event shall either party be obligated to authorize the
disbursement of any funds that would cause the amount remaining on
deposit in the construction security escrow account following that
disbursement to be less than the total amount of future payments
remaining to be due the original contractor after application of any
funds disbursed to the original contractor. The contracting owner
and the original contractor shall authorize the disbursement to the
contracting owner of any funds remaining on deposit in the
construction security escrow account after the original contractor
has been paid all amounts due under its construction contract. The
contracting owner and the original contractor shall authorize the
disbursement of funds on deposit in the construction security escrow
account in accordance with the order of any court which is binding on
both of them. The contracting owner and the original contractor may
agree in the construction contract upon additional conditions for
the disbursement of funds on deposit in the construction security
escrow account provided that the conditions shall not cause the
amount remaining on deposit in the construction security escrow
account to be less than the amount required pursuant to this
subparagraph.
(c) For the purposes of subdivision (b), if the price under the
construction contract is not a fixed price, the amount of security to
be provided shall be determined with reference to the guaranteed
maximum price, if there is one, or if there is no guaranteed maximum
price, the amount of security shall be determined with reference to
the contracting owner's and original contractor's good faith estimate
as to the total cost anticipated to be incurred under the
construction contract. If any contracting owner that is required to
provide security under this section with respect to a construction
contract fails to provide that security or fails to maintain that
security as required, the original contractor may make written demand
on the contracting owner to do so, and if the contracting owner
fails to provide and maintain that security within 10 days after the
original contractor makes written demand on the owner, the original
contractor may suspend work until the required security is provided
and maintained in accordance with this section.
(d) This section does not affect provisions in this code providing
for mechanics' liens, stop notices, bond remedies, or prompt payment
rights of a subcontractor, including the original contractor's
payment responsibilities as set forth in Section 7108.5 of the
Business and Professions Code and Section 10262 of the Public
Contract Code.
(e) This section does not apply to the construction of
single-family residences, including single-family residences located
within a subdivision, and any associated fixed works that require the
services of a general engineering contractor, as defined in Section
7056 of the Business and Professions Code, any public works projects,
or housing developments eligible for a density bonus pursuant to
Section 65915 of the Government Code. As used in this section, the
term "single-family residence" means a real property improvement used
or intended to be used as a dwelling unit for one family.
(f) This section does not apply to either of the following:
(1) Any contract where the contracting owner is either a qualified
publicly traded company or a wholly owned subsidiary of a qualified
publicly traded company, provided that the obligations of the
subsidiary under the construction contract are guaranteed by the
parent which is a qualified publicly traded company. As used in this
section, the term "qualified publicly traded company" means any
company having a class of equity securities listed for trading on the
New York Stock Exchange, the American Stock Exchange or the NASDAQ
stock market and the nonsubordinated debt securities thereof which
are rated as "investment grade" by either Fitch ICBA, Inc., Moody's
Investor Services, Inc., Standard & Poor's Ratings Services or a
similar statistical rating organization which is nationally
recognized for rating the creditworthiness of publicly traded
companies. If at any time prior to final payment of all sums due
under the construction contract the nonsubordinated debt securities
of the qualified publicly traded company are downgraded to below
"investment grade" by one of the referenced rating agencies, the
contracting owner of the property will no longer be exempt from the
provisions of this section.
(2) Any contract where the contracting owner is either a qualified
private company or a wholly owned subsidiary of a qualified private
company, provided that the obligations of the subsidiary under the
construction contract are guaranteed by the parent which is a
qualified private company. As used in this section, the term
"qualified private company" means any company that has no equity
securities listed for trading on the New York Stock Exchange, the
American Stock Exchange or the NASDAQ stock market, and that has a
net worth determined in accordance with generally accepted accounting
principles in excess of fifty million dollars ($50,000,000). If at
any time prior to final payment of all sums due under the
construction contract the net worth of the qualified private company
is reduced below the level referenced in this section, the owner of
the property will no longer be exempt from the provisions of this
section.
(g) It is against public policy to waive the provisions of this
section in any contract for any private work of improvement to which
this section applies.
- 3111.
For the purposes of this chapter, an express trust fund to
which a portion of a laborer's total compensation is to be paid
pursuant to an applicable employment agreement or a collective
bargaining agreement for the provision of benefits, including, but
not limited to, employer payments described in Section 1773.1 of the
Labor Code and regulations thereunder, shall be entitled to assert
the same rights and claims as laborers performing labor upon, or
bestowing skill or other necessary services on, a work of
improvement, to the extent of the compensation agreed to be paid to
that express trust fund for labor on that improvement only.
- 3112.
Any claimant who, at the instance or request of the owner (or
any other person acting by his authority or under him, as contractor
or otherwise) of any lot or tract of land, has made any site
improvement has a lien upon such lot or tract of land for work done
or materials furnished.
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