July August 2012 | Southern California Construction Law Offices of Abdulaziz, Grossbart & Rudman

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Abdulaziz, Grossbart & Rudman Newsletter

July/August 2012

Greetings!

We hope that you enjoy this edition of our Newsletter.

Remember, if there is anything that you would like to see in the future, please let us know.

Sincerely,

The Staff At

Abdulaziz, Grossbart & Rudman

TO REGISTER OR NOT

According to Business and Professions Code section 7152 a home improvement salesperson is a "person employed by a home improvement contractor licensed under this chapter to solicit, sell, negotiate, or execute contracts for home improvements, for the sale, installation or furnishing of home improvement goods or services, or of swimming pools, spas, or hot tubs."

A home improvement salesperson is not needed for a corporation's officer of record, a limited liability company's manager, a partnership's general partner, or any qualifying person at the time of the sales transaction. Also excluded from the registration requirements are in-house salespeople or appointment schedulers for the home improvement salesperson.

How may this affect you? Business and Professions Code section 7152(6) also indicates that a bona fide service repairperson who is in the employ of a licensed contractor and whose repair or service call is limited to the service, repair, or emergency repair initially requested by the buyer of the service is not required to hold a home improvement salesperson registration. But what happens if your service repairperson does more than what they were initially called out to the jobsite for?

The CSLB does not even list the exemption of the service repairperson from registration on their website, but does indicate that registration is required if the person solicits, sells, negotiates or executes home improvement contracts for a licensed contractor outside the contractor's normal place of business.

To illustrate what we are talking about, let's create a false scenario. AG&R Plumbing is called out on a jobsite for a stopped up drain. The problem is actually much more than a stopped up drain and many pipes need to be replaced, etc. Under Business and Professions Code section 7152, the serviceperson is only allowed to unclog the drain because the service person is not permitted to negotiate a home improvement contract outside of the repair initially requested, unless that service person is also a registered home improvement salesperson.

As you can see, it is not necessary for your service repair people to have the home improvement salesperson certification, but it may be very helpful in a case such as the above scenario. It can also be helpful in keeping you out of hot water for the lack of registration should the CSLB ever investigate your company.

PRIORITIES

A senior citizen said to his 80-year old buddy, "So, I hear you're getting married?"

"Yep!"

"Do I know her?"

"Nope!"

"This woman, is she good looking?"

"Not really."

"Is she a good cook?"

"Naw, she can't cook too well."

"Does she have lots of money?"

"Nope! Poor as a church mouse."

"Well, is she good in bed?"

"I don't know."

"Why in the world do you want to marry her then?"

"Because she can still drive!"

served SERVICE OF THE PRELIMINARY NOTICE

The case of Shady Tree Farms v. Omni Financial visited the issue of service of the Preliminary Notice. In this particular matter, Shady Tree Farms ("Shady") contracted to supply over $3 million worth of trees to the owner of a Granite Park development. Shady delivered almost $2 million worth of trees but only received a $25,000 deposit so it recorded a lien and then filed suit as well as requested that their lien had priority over the deed of trust held by the construction lender, Omni Financial ("Omni").

Prior to Shady filing their lawsuit, Omni had recorded a notice of default against the owners of the Granite Park development. Once Shady filed their suit, Omni filed a motion to remove Shady's lien and expunge the Lis Pendens stating Shady's lien was invalid because it did not serve a Preliminary Notice. The trial court granted the motion and Omni foreclosed on the property.

At the Court of Appeal, Shady argued that it was not required to give the Preliminary Notice because it contracted directly with the owner as indicated in Civil Code section 3097(a). Shady is correct that they were not required to give the Preliminary Notice to the owner. However, according to Civil Code section 3097(b), they were required to give notice to the construction lender. Shady disagreed with the interpretation of the statute and indicated that they had the option to comply with either Civil Code section 3097(a) or 3097(b).

Civil Code section 3097 stated in part:

"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... is required to be given under the following circumstances:

(a) Except one under direct contract with the owner ..., every person who furnishes labor, service, equipment, or material for which a lien... otherwise can be claimed under this title..., shall, as a necessary prerequisite to the validity of any claim of lien, ... 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, ... all persons who have a direct contract with the owner and who furnish labor, service, equipment, or material for which a lien... otherwise can be claimed under this title,... shall, as a necessary prerequisite to the validity of any claim of lien, ... 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." (emphasis added)

Although Shady argued that it had the option to comply with either Civil Code section 3097(a) or 3097(b), the statute above clearly states that the Preliminary Notice is "required to be given under the following circumstances" so the Court of Appeal affirmed the trial court's decision because Shady did not give Omni the required Preliminary Notice.

Please note that because of legislation that went into effect July 1, 2012, the Civil Code sections referred to in this article have been renumbered. The majority of the statutes that refer to the Preliminary Notice are now found in Civil Code sections 8200-8216. In addition, the Preliminary 20-day Notice is now just called the Preliminary Notice.

GOVERNMENT EMPLOYEES???

A guy stopped at a rural gas station and was enjoying a soda while filling up. He watched a couple of men working along the roadside.

One man would dig a hole that was two or three feet deep and then move on. The second man came along behind the first and filled in the hole, while the other was digging a new hole. This continued until the man at the gas station could not help himself.

He walks up to the men working on the road and said, "Hold it, hold it. Can you tell me what's going on here with this digging?"

"We work for the government," one of the men said.

"But one of you is digging a hole and the other is filling it up. You are not accomplishing anything. Aren't you just wasting government money?" The man asks.

"You don't understand, mister" one of the men said, "Normally, there are three of us, me, Paul and Martin. I dig the hole, Paul sticks in the tree and Martin here puts the dirt back in."

"Yeah," piped up Martin. "Now just because Paul's sick, that doesn't mean we can't work, does it?"

DON'T MISS THESE SEMINARS!!!

How to Document a Construction Project Without Regret

The 2012 California Collection Law:

How to Comply and Get Paid

Presented by Milene C. Apanian

Hosted by NARI of Los Angeles

Thursday, August 16, 2012

12:00 p.m. - 2:00 p.m.

Those involved in a construction lawsuit know that the party with the best documents wins the dispute. It is less expensive and painful to properly document a construction project than it is to hire consultants and attorneys to do so after the fact. Join us to hear practical tips and suggestions about establishing standard procedures for documenting your projects and increasing your profits!

Have you heard that California Senate Bill 189 and other new laws have changed the statutory requirements related to Preliminary Notices, Mechanic's Liens, Stop Notices, Waiver & Release forms, Bond Claims and Prompt Payment Penalties? Contractors and subcontractors must adapt to the new statutory changes that became effective July 1, 2012 and comply with the new requirements andforms to get paid.

Do not miss it; hear the new collection laws explained and simplified!

This presentation is designed for the contractors, subcontractors, suppliers, controllers, office managers, credit managers, presidents, vice presidents and company owners and will discuss steps to take tocomply with the new statutory requirements and ensure payment on construction projects.Learning Objectives:

Understand the 2011 and 2012 changes to the California collection statutes and how to comply with the new requirements
Learn about the new Preliminary Notice, Stop Notice, and Mechanic's Lien forms and the new statutory requirements
Hear about the changes to the Waiver and Release forms
Find out about the changes to the Notice of Completion requirements
Understand the new definition of "Project Completion," and
Learn to avoid legal technicalities which make Mechanic's Liens and Stop Notices unenforceable.

Email any questions to mca@agrlaw.com

Abdulaziz, Grossbart & Rudman

provides this information as a service to its friends and clients. This Newsletter is of a general nature and is not intended to be a substitute for legal advice. This Newsletter does not establish an attorney-client relationship with the reader. Since laws are ever changing, please contact an attorney before using any of the information contained within this Newsletter.

Abdulaziz, Grossbart & Rudman

P.O. Box 15458, North Hollywood, California 91606

(818) 760-2000; (818) 760-3908 (fax)

info@agrlaw.comwww.agrlaw.com