EFFECTIVE JANUARY 1, 2011
The Governor signed AB 457, which became effective January 1, 2011. AB 457 made some changes to the Mechanic's Lien form itself, including the requirements on the lien. It also requires the recording of a separate document known as a "Lis Pendens" which simply means "notice of pending litigation" following the filing of a lawsuit. Most importantly, the claimant will also need to serve a copy of the lien on the owner at the same time it is sent to be recorded so that the owner can take action if necessary to free their property from the lien.
A Mechanic's Lien also has to include a proof of service affidavit showing that the Mechanic's Lien has been mailed by registered mail, certified mail, or first-class mail, to:
(1) the owner's residence or place of business, or
(2) at the address shown on the building permit on file with the building department, or
(3) at any other address allowed under the Preliminary 20-Day Notice statute.
If the owner cannot be served in that manner, then the notice of lien can be served by certified mail to the construction lender or to the prime contractor. If the lien is not served as required, the lien will be unenforceable as a matter of law.
Another important change is that the lien now has to have a Notice of Mechanic's Lien. For the exact language of this Notice of Mechanic's Lien, please see further down where we discuss AB 456 because the language was changed in the 2011 Legislative session.
The other significant change that became effective January 1, 2011, occurs after a lawsuit to foreclose on the Mechanic's Lien is filed in the Superior Court. After the filing of the lawsuit to foreclose on the lien, the Plaintiff will have to record a notice of pendency of the proceedings (known as a Lis Pendens) on or before 20 days after the filing of the Mechanic's Lien foreclosure action (lawsuit). The statute goes on to provide that only from the time of recording a Lis Pendens shall a purchaser or encumbrancer of the property (typically the lender) be deemed to have notice of the lawsuit. While this amendment is not as harsh as prior versions of the legislation (which could deem the entire Mechanic's Lien action to be void), it does appear that a subsequent title insurer, lender, or bona fide purchaser, would not be subject to the Mechanic's Lien if the Notice of Lis Pendens is not recorded. That means if the owner does anything with their property (borrows against it or transfers it) while the lien is pending, the failure to record the Lis Pendens could be fatal to your right to collect.
As always, consult with a lawyer if you have any concerns. Again, these changes became effective January 1, 2011.
EFFECTIVE JANUARY 1, 2012
As discussed above, the Mechanic's Lien form now requires a Notice of Mechanic's Lien to be a part of the form. Effective January 1, 2012, because of AB 456, the new language for that form, which is to be in at least 10 point boldface type, is as follows:
NOTICE OF MECHANICS LIENATTENTION!
Upon the recording of the enclosed MECHANICS LIEN with the county recorder's office of the county where the property is located, your property is subject to the filing of a legal action seeking a court-ordered foreclosure sale of the real property on which the lien has been recorded. That legal action must be filed with the court no later than 90 days after the date the mechanics lien is recorded.The party identified in the mechanics lien may have provided labor or materials for improvements to your property and may not have been paid for these items. You are receiving this notice because it is a required step in filing a mechanics lien foreclosure action against your property. The foreclosure action will seek a sale of your property in order to pay for unpaid labor, materials, or improvements provided to your property. This may affect your ability to borrow against, refinance, or sell the property until the mechanics lien is released.
BECAUSE THE LIEN AFFECTS YOUR PROPERTY, YOU MAY WISH TO SPEAK WITH YOUR CONTRACTOR IMMEDIATELY, OR CONTACT AN ATTORNEY, OR FOR MORE INFORMATION ON MECHANICS LIENS GO TO THE CONTRACTORS' STATE LICENSE BOARD WEB SITE AT www.cslb.ca.gov.
In addition to the above language, there have been slight changes on the proof of service affidavit with respect to whom is served. Effective January 1, 2012, the affidavit should indicate "the owner or reputed owner" that is being served rather than "the person." These are minimal changes but important to comply with.
If you are interested in looking at the actual bill, click for AB 456.
Again, consult with a lawyer if you have any concerns. These changes became effective January 1, 2012.
EFFECTIVE JULY 1, 2012
SB 189 and the "clean-up" bill, SB 190, make numerous changes, particularly to the statutory references regarding the process of Mechanic's Liens, Stop Notices and Bonds. The statutes renumber and recast every statute pertaining to Mechanic's Liens, Stop Notices, and Payment Bonds, among other statutes relating to recovery by contractors.
To help you with the Civil Code section changes, please see the page Civil Code Section Changes which contains chart of the Civil Code sections as they were numbered prior to July 1, 2012, as well as after July 1, 2012. As an example of the renumbering, the information contained in Civil Code section 3081.1 will be contained in Civil Code sections 8014 and 8300 after July 1, 2012.
Because of this renumbering, although there may be no substantive changes to any forms, it is important to check your forms for reference to any Civil Code section and make sure that those Civil Code sections do not change as of July 1, 2012.
Please remember that although these laws are not effective until July 1, 2012, there is no grace period on compliance.
Changes brought on by SB 189 and SB 190 are as follows:
Definitions
SB 189 revises some common terms and form names in the construction industry.
a. Material supplier
Prior to July 1, 2012, the person who provided material or supplies to be used or consumed on a work of improvement was known as a "materialman." Starting July 1, 2012, the correct term will be "material supplier."
b. Design professional
Prior to July 1, 2012, a licensed landscape architect was not considered a design professional. Starting July 1, 2012, a licensed landscape architect is considered a design professional.
c. Direct contractor
Prior to July 1, 2012, the definition of an "original contractor" was any contractor who has a direct contractual relationship with the owner. Starting July 1, 2012, the "original contractor" will be known as a "direct contractor" and the definition is broadened to indicate that this direct contractor provides for all or part of a work of improvement.
Please note that the common industry reference to refer to the contractor that has a direct contractual relationship with the owner is a "prime contractor" and it is doubtful that the industry will quickly change the terminology that is used.
d. Direct contract
Prior to July 1, 2012, an agreement between an owner and any original contractor providing for the work of improvement, or any part thereof, was defined to be a "contract." Starting July 1, 2012, the term is changed to "direct contract."
e. Contract
As explained above, the definition of "contract" prior to July 1, 2012 changes, and the definition of "contract" starting July 1, 2012, will mean an agreement that provides for all or part of a work of improvement; but does not get into specifics regarding the contractor.
f. Preliminary Notice
Prior to July 1, 2012, the written notice given by a claimant within twenty (20) days of first furnishing labor or materials, which is meant to notify the owner(s), lender(s) or other contractor(s) of the right to enforce a Mechanic's Lien or Stop Notice, was previously referred to as a "Preliminary 20-Day Notice." Starting July 1, 2012, it will simply be referred to as a "Preliminary Notice."
g. Stop Payment Notice
Prior to July 1, 2012, the lien on funds to secure payment for a work of improvement is called a "Stop Notice." Starting July 1, 2012, this term has been changed to a "Stop Payment Notice." This was done to clear up any confusion between a Stop Payment Notice and a Stop Work Notice.
Preliminary Notice
SB 189 makes some changes to the Preliminary Notice as follows:
a. Notice to Property Owner
The Notice To Property Owner on the private works Preliminary Notice has been re-written and is effective July 1, 2012. The new notice is to be in boldface type as follows:
NOTICE TO PROPERTY OWNER
EVEN THOUGH YOU HAVE PAID YOUR CONTRACTOR IN FULL, if the person or firm that has given you this notice is not paid in full for labor, service, equipment, or material provided or to be provided to your construction project, a lien may be placed on your property. Foreclosure of the lien may lead to loss of all or part of your property. You may wish to protect yourself against this by (1) requiring your contractor to provide a signed release by the person or firm that has given you this notice before making payment to your contractor, or (2) any other method that is appropriate under the circumstances.This notice is required by law to be served by the undersigned as a statement of your legal rights. This notice is not intended to reflect upon the financial condition of the contractor or the person employed by you on the construction project.If you record a notice of cessation or completion of your construction project, you must within 10 days after recording, send a copy of the notice of completion to your contractor and the person or firm that has given you this notice. The notice must be sent by registered or certified mail. Failure to send the notice will extend the deadline to record a claim of lien. You are not required to send the notice if you are a residential homeowner of a dwelling containing four or fewer units.
b. Direct Contractor
Starting July 1, 2012, the term direct contractor should be used to describe the original or prime contractor on the Preliminary Notice.
c. Civil Code sections
Starting July 1, 2012, references to Civil Code section 3097 on the Preliminary Notice for private works should reference the new Civil Code sections 8034, 8102, 8116 and 8200 et seq.
Starting July 1, 2012, references to Civil Code section 3098 on the Preliminary Notice for public works should reference the new Civil Code sections 8034 and 9300 et seq.
d. Attachment "A" to California Preliminary Notice
Prior to July 1, 2012, Civil Code section 3097 requires a contractor who employs a laborer, but fails to pay that laborer, to include on the Preliminary Notice the identity and address of any laborer and any express trust fund to whom employer payments are due. Our office has included this as an optional attachment to the private works Preliminary Notice. Starting July 1, 2012, reference to Civil Code section 3097 will need to be changed to reference Civil Code section 8202(b) on this Attachment "A" to the Preliminary Notice for private works.
Home Improvement Contract Statement Regarding Release
Home Improvement Contracts require a statement that roughly states that upon satisfactory payment being made, a full and unconditional release from a claim is to be given upon payment. Note that this language is not required to be word for word, but if it refers to the Civil Code section, prior to July 1, 2012, it should refer to Civil Code section 3114 and starting July 1, 2012, it should refer to Civil Code section 8410.
Lien Releases and Waiver of Lien Rights
SB 189 changes the Civil Code section that discusses waiver and lien releases from Civil Code section 3262 (which is still accurate before July 1, 2012) to Civil Code sections 8122-8138 (effective July 1, 2012).
The waiver and lien releases have also been re-written, including slight changes to the names of the forms as well. Please note that the Legislature does not require the waiver and releases to be exactly word for word, but we recommend that they be. The statute indicates that "the waiver and release shall be null, void, and unenforceable unless it is in substantially the following form:" and proceeds to have the 'suggested' text for each waiver. We believe it is better to be safe rather than risk the waivers and releases being unenforceable and use the exact same language provided in the statute. We provide below the language exactly as it appears in the statute:
Conditional Waiver and Release on Progress Payment
CONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT
NOTICE: THIS DOCUMENT WAIVES THE CLAIMANT'S LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS EFFECTIVE ON RECEIPT OF PAYMENT. A PERSON SHOULD NOT RELY ON THIS DOCUMENT UNLESS SATISFIED THAT THE CLAIMANT HAS RECEIVED PAYMENT.
Identifying Information
Name of Claimant:__________________________Name of Customer:_________________________Job Location:______________________________Owner:___________________________________Through Date:______________________________
Conditional Waiver and Release
This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for labor and service provided, and equipment and material delivered, to the customer on this job through the Through Date of this document. Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. This document is effective only on the claimant's receipt of payment from the financial institution on which the following check is drawn:
Maker of Check:_______________________Amount of Check: $____________________Check Payable to:_____________________
Exceptions
This document does not affect any of the following:(1) Retentions.(2) Extras for which the claimant has not received payment.(3) The following progress payments for which the claimant has previously given a conditional waiver and release but has not received payment:Date(s) of waiver and release:___________________Amount(s) of unpaid progress payment(s): $____________________(4) Contract rights, including (A) a right based on rescission, abandonment, or breach of contract, and (B) the right to recover compensation for work not compensated by the payment.
Signature:____________________________________
Claimant's Signature:_______________________________Claimant's Title:___________________________________Date of Signature:__________________________________
Unconditional Waiver and Release on Progress Payment
Conditional Waiver and Release on Final PaymentUNCONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT
NOTICE TO CLAIMANT: THIS DOCUMENT WAIVES AND RELEASES LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL WAIVER AND RELEASE FORM.
Identifying Information
Name of Claimant:___________________________Name of Customer:__________________________Job Location:_______________________________Owner:____________________________________Through Date:______________________________
Unconditional Waiver and Release
This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for labor and service provided, and equipment and material delivered, to the customer on this job through the Through Date of this document. Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. The claimant has received the following progress payment:$___________________________________________________
Exceptions
This document does not affect any of the following:(1) Retentions.(2) Extras for which the claimant has not received payment.(3) Contract rights, including (A) a right based on rescission, abandonment, or breach of contract, and (B) the right to recover compensation for work not compensated by the payment.
Signature
Claimant's Signature:____________________________________Claimant's Title:________________________________________Date of Signature:_______________________________________
CONDITIONAL WAIVER AND RELEASE ON FINAL PAYMENT
NOTICE: THIS DOCUMENT WAIVES THE CLAIMANT'S LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS EFFECTIVE ON RECEIPT OF PAYMENT. A PERSON SHOULD NOT RELY ON THIS DOCUMENT UNLESS SATISFIED THAT THE CLAIMANT HAS RECEIVED PAYMENT.
Identifying Information
Name of Claimant:______________________________Name of Customer:_____________________________Job Location:__________________________________Owner:_______________________________________
Conditional Waiver and Release
This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for labor and service provided, and equipment and material delivered, to the customer on this job. Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. This document is effective only on the claimant's receipt of payment from the financial institution on which the following check is drawn:
Maker of Check:___________________________Amount of Check: $________________________Check Payable to:_________________________
Exceptions
This document does not affect any of the following:Disputed claims for extras in the amount of: $____________________________________
Signature
Claimant's Signature:____________________________Claimant's Title:________________________________Date of Signature:_______________________________
Unconditional Waiver and Release on Final Payment
UNCONDITIONAL WAIVER AND RELEASE ON FINAL PAYMENT
NOTICE TO CLAIMANT: THIS DOCUMENT WAIVES AND RELEASES LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL WAIVER AND RELEASE FORM.
Identifying Information
Name of Claimant:__________________________Name of Customer:_________________________Job Location:______________________________Owner:___________________________________
Unconditional Waiver and Release
This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for all labor and service provided, and equipment and material delivered, to the customer on this job. Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. The claimant has been paid in full.
Exceptions
This document does not affect the following:Disputed claims for extras in the amount of: $____________________________________
Signature
Claimant's Signature:______________________________Claimant's Title:__________________________________Date of Signature:_________________________________
Notice of Completion
a. Prior to July 1, 2012, the "Notice of Completion†can be recorded by an owner on or within 10 days after the date of completion of a work of improvement. Effective July 1, 2012, an owner will have 15 days to record the "Notice of Completion."
b. If the Notice of Completion contains an erroneous statement of the date of completion prior to July 1, 2012, it does not affect the effectiveness of the Notice of Completion if the true date of completion is 10 days or less before the date of recordation of the Notice of Completion. Effective July 1, 2012, this will be changed to the true date of completion being 15 days or less before the date of recordation of the notice.
c. Prior to July 1, 2012, a public entity may record a Notice of Completion on or within 10 days after the date of completion of a work of improvement. Effective July 1, 2012, the public entity will have 15 days after the date of completion within which to record the Notice of Completion.
Completion
Prior to July 1, 2012, Civil Code section 3086 includes that acceptance by the owner for a private work of improvement would constitute completion. Beginning July 1, 2012, Civil Code section 8180 no longer recognizes acceptance by the owner as an event that constitutes completion. However, if a work of improvement is subject to acceptance by a public entity, completion occurs on acceptance. Further, Civil Code section 9200 indicates that completion on works of improvement in the public works realm still occurs upon acceptance of the work of improvement by the public entity.
Notice of Extension of Credit
Prior to July 1, 2012, the Notice of Extension of Credit refers to Civil Code section 3144. Effective July 1, 2012, the Notice of Extension of Credit refers to Civil Code section 8460.
Please note that the statute that describes the Notice of Extension of Credit was not clear as to who must execute the Notice of Extension of Credit. At least one prominent construction commentator was of the opinion that a contractor could unilaterally extend credit by recording the notice. However, effective July 1, 2012, when the revised Civil Code, enacted by SB 189 goes into effect, Civil Code section 8460 provides explicitly that both the contractor and owner must sign the Notice of Extension of Credit. This makes perfect sense - how can one extend credit without agreeing to it? The Notice of Extension of Credit must specify exactly how much additional time to file suit to foreclose is being granted, and all of the signatures of the owner and contractor must be notarized before recording the document.
While currently the Notice of Extension of Credit must be recorded prior to the expiration of the Mechanic's Lien, the new statute also gives a little bit more leeway. Once Civil Code section 8460 is effective, a Notice of Extension of Credit must either be filed within 90 days of the recording of the original Mechanic's Lien (when that lien would expire), or if recorded later than that time, it must be recorded before any purchaser or encumbrancer for value acquires rights (i.e., the property is transferred or sold, or a loan is recorded against the property).
Mechanics Lien Warning
SB 189 originally made some grammatical changes and added a line of text to the Mechanics Lien Warning that is required on Home Improvement Contracts as well as on New Residential contracts. Once SB 190 passed, the additional line of text on the Mechanics Lien Warning required on Home Improvement Contracts was deleted but it remains for the New Residential contracts. If you do both home improvement and new residential, please be cautious which Mechanics Lien Warning you use to ensure that you are in compliance. The new notices required to be used July 1, 2012, taken directly from the statutes, are as follows:
Home Improvement Contract Mechanics Lien Warning:
MECHANICS LIEN WARNING:
Anyone who helps improve your property, but who is not paid, may record what is called a mechanics lien on your property. A 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 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 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.
New Residential Contract Mechanics Lien Warning:
MECHANICS LIEN WARNING:
Anyone who helps improve your property, but who is not paid, may record what is called a mechanics lien on your property. A 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 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 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 other persons you contract with directly 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 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.
Home Improvement Contract Statement Regarding Down Payments
Prior to July 1, 2012, the heading for a "Down Payment" is two words and so is the text in the 12-point boldface all capitalized language that follows the heading. Effective July 1, 2012, SB 189 makes each instance of "Downpayment" one word.
Cancelation Notices
Both the Three-Day Right to Cancel and the Seven-Day Right to Cancel that are to be a part of the Home Improvement Contract has been slightly altered. Following are the required notices in their entirety which are effective July 1, 2012:
a. Three-Day Right to Cancel - Please note that this notice is at least 12 point boldface type, in immediate proximity to the space reserved for the owner's signature, and is to be acknowledged by the owner by signing and dating the form.
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.
b. Seven-Day Right to Cancel -- Please note that this notice is at least 12 point boldface type, in immediate proximity to the space reserved for the owner's signature, and is to be acknowledged by the owner by signing and dating the form.
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.
Please note that both of these notices 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.'" However, this is not new.
Progress Payments from Public Utilities
Prior to July 1, 2012, the direct contractor is required to pay the subcontract the amount allowed the direct contractor on account of the work performed by the subcontractor to the extent of the subcontractor's interest in the work within 15 days of a progress payment from the public utility. Because of SB 189, beginning July 1, 2012, the direct contractor will now have 21 days within which to pay the subcontractor on a project performed for a public utility.
Notice of Time to Enforce Payment of Claim
Prior to July 1, 2012, a public entity shall give notice to a claimant that has given a stop payment notice of the time within which an action to enforce payment of the claim stated in the Stop Payment Notice must be commenced if the claimant paid the public entity two dollars ($2) at the time of giving the Stop Payment Notice. Beginning July 1, 2012, this monetary figure that must be paid to the public entity will become ten dollars ($10).
These changes become effective July 1, 2012. As always, consult with a lawyer if you have any concerns.
