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November 2011

California Legislative Update

Below is an overview of recent and pending legislation in California that may affect design professionals in the construction industry.

Amendments To California's Professional Design and Mechanics Lien Laws

The Bills and their Provisions

In 2010, California passed SB 189 to revamp the professional design and mechanics lien statutes.  Effective July 1, 2012, the amendments repeal the current professional design and mechanics lien statutes and enact a new chapter and title incorporating both professional design and mechanics liens.  This bill added licensed landscape architects to the current list of design professionals (licensed architects, engineers, and surveyors) who may claim a design professional lien.  Additionally, the process for filing a lien has been streamlined.

As a result of the changes made last year, the Legislature enacted several additional amendments to the new lien statute.  First, SB 190 made technical amendments to last year's bill, updating cross-references and making technical corrections.  Additionally, it provides clarification that a lien claim cannot be invalidated under slander of title, but any willful additions of labor, services, equipment, or materials not furnished for the property in the lien claim will result in a forfeiture of the lien.  Second, AB 456 adds specificity regarding the contents of the required proof of service affidavit. The affidavit must contain the name and address of the owner or reputed owner upon whom the mechanics lien was served, and the title or capacity of person served with notice.

Newly enacted section 8319 of the Civil Code becomes effective July 1, 2012.  It allows design professionals to convert their expired design liens into mechanics liens when the lien is partially or fully unpaid, and the mechanics lien is recorded within 30 days of expiration of the design lien.  The recorded mechanics lien will note that it is a converted lien, but will be effective as of the date the mechanics lien was filed and given priority as such.  Additionally, a converted professional design lien will not require a preliminary notice.

The Impact on Liens and Professional Design Liens Laws

The impact of the 2010 changes will not be seen until July 1, 2012, when the amendments become effective.  Last year's legislation streamlined the requirements for obtaining a lien, which will hopefully make the process less confusing for contractors and design professionals.  Additionally, landscape architects will have additional remedies for recovery of unpaid fees.  SB 190 will have little impact as it makes only technical changes.  Similarly, AB 456 will likely have little impact, as it makes a minor change to existing law and is designed to avoid a mechanics lien from being invalidated because of a minor error in the name, part of the name, or title.

New Civil Code section 8319 closes a loop-hole between professional design liens and mechanics liens to prevent private project owners from avoiding payment owed to design professionals.  Under the current scheme, a professional design lien expires once construction on a project begins or 90 days after the lien is recorded and the professional has not begun enforcement of the lien.  As a result, private project owners are able to escape payment when the lien expires.  Section 8319 closes that loophole by allowing the design professional to convert the professional design lien into a mechanics lien when certain requirements are met.  How successful this will be is difficult to determine as design professionals must affirmatively enforce their rights by filing a converted lien, leaving it up to the individual design professionals to take advantage of the tool.

Amendments To California's Water Laws

The Bills and Their Provisions

AB 849 changes how standards for graywater systems are set at the local level.  Under existing law, a city, county, or other local agency may prohibit the use of graywater systems entirely, or enact more restrictive building standards for graywater systems than those adopted by the Department of Housing and Community Development.  Under AB 849, the authority to entirely prohibit the use of graywater systems is repealed, and a city, county, or other local agency could enact an ordinance or pass a resolution modifying the state-wide standards for local climatic, geological, topographical, or public health conditions only if the local standards are more restrictive than the DHCD's.

The legislature considered and passed legislation regulating rainwater capture systems (AB 275).  However, Governor Brown vetoed the legislation.  Whether that issue will return to the legislative agenda in 2012 remains to be seen.  Similarly, there was a substantial legislative fight over the appropriate and necessary licenses for a design professional to perform work on a California's storm-water pollution plan permits (SWPPP).  One proposal sought to limit the acceptable licensure on such work to only licensed civil engineers.  That proposal was gutted at the last minute and what passed was a provision relating to the training necessary for a civil engineer to design an SWPPP.  That legislation, however, was ultimately vetoed by Governor Brown.

Impact on Water Laws

AB 849 would potentially increase graywater systems and increase water conservation efforts.  By making the Department of Housing and Community Development's standards the default, it will be easier for builders and private land owners wanting to use graywater as a means of water conservation to build and install graywater systems meeting the standards.  It may also decrease the use of black water or homemade graywater systems that are not built to standard. 

It is unlikely that the dispute between Civil Engineers and other design professionals about who is qualified to design an SWPPP and what training is necessary to do so is over.  We expect this issue will return the legislature in future sessions.  For this term, there is no change in existing law on that subject.

For more information regarding recent developments in Construction Law, please contact Kimberly Blake or Ian Williamson at 619-696-6700 in the Construction Practice Group at Gordon & Rees LLP.

Construction

Kimberly A. Blake


Construction