ITEMS OF INTEREST      Page 2      Page 3

THE EPA’S NEW LEAD RENOVATION, REPAIR AND PAINTING RULE
 *Scott Holbrook Elected to Board
AN OVERVIEW OF THE ADDITIONAL LEGAL EXPOSURE A CONTRACTOR MAY ENCOUNTER IN CONSTRUCTING A GREEN BUILDING
San Diego Deputy DA Honored for Helping to Protect the Construction Industry!
Actions a Contractor Can Take to Help Survive Tough Economic Times
CALIFORNIA APPELLATE COURT HOLDS THAT A CONSTRUCTION MANAGER ON A PRIVATELY OWNED PROJECT DOES NOT NEED A
CONTRACTOR’S LICENSE
DON’T LET YOUR PROFITS GET MOTHBALLED WITH THE CONSTRUCTION PROJECT!
Construction Change Directives
THANK YOU LETTER WRITERS FOR SB802!!

THE EPA’S NEW LEAD RENOVATION, REPAIR AND PAINTING RULE By Santiago Concepcion National Econ Corporation

On April 22, 2010, a new federal regulation will be completely implemented. I’m talking specifically about the U.S. Environmental Protection Agency’s Lead
Renovation, Repair & Painting rule (40 CFR 745). One shouldn’t be fooled by the “generic” title of this regulation because it covers more than just renovation, repair & painting. The new rule applies to every trade where lead based paint is disturbed. Carpenters, plumbers, wall covering contractors, electrical contractors, finish carpentry contractors, insulation contractors, tile & terrazzo contractors, glass and glazing contractors, handymen and many other trades, must comply with these new requirements. As a certified lead professional, I know that lead exposure can be caused by almost any disturbance of lead based paint, not just renovation, repair or painting. Even the most basic, seemingly benign disturbances of lead painted or glazed surfaces can cause lead exposures if the conditions are right.

The new rule requires specific lead safe work practices be followed by anyone disturbing more than six square feet of painted surface on the interior (twenty square feet on the exterior), demolition or window replacement on what the EPA refers to as “target housing” or “child occupied facilities” for “compensation”.

Target housing is defined in the rule as any housing constructed before 1978, except housing for the elderly or persons with disabilities (unless a child under the age of 6 resides or is expected to reside there) or zero bedroom dwellings such as studio’s etc. Child occupied facility is defined in the rule as a building or a portion of a building constructed prior to 1978, visited regularly by the same child, under 6 years of age, on at least two different days within any week provided that each day’s visit lasts at least 3 hours and the combined weekly visits last at least 6 hours and the combined annual visits last at least 60 hours.

Child occupied facilities may be located in public or commercial buildings or in target housing.

The new rule requires contractors to comply with the prerenovation education requirements, training, certification & accreditation requirements, work practice standards, post renovation cleaning verification & recordkeeping requirements. In a nutshell, contractors will have to complete an EPA accredited 8 hour training course that teaches contractors how to comply with the provisions of the regulation I mentioned above. In addition to the training, contractors will be required to apply for their firms’ certification through the EPA and adopt the specific work practices taught in the 8 hour course.

The EPA is authorized to impose fines ($37,500 per violation, per day) and penalties upon contractors and firms that do not comply with this rule. Knowing or willful violations of the rule by contractors of firms can even result in imprisonment.

With the scarcity of accredited training providers and April 22, 2010 just months away, contractors & firms wanting a competitive edge are already enrolling their workers in the required course. Classes are filling up and the closer we get to April, the more we will see what some predict being a “mad rush” to get their firms EPA certification which could take up to 90 days once EPA receives their application.

For some, in today’s economic climate, that competitive edge may mean the difference between financial stability and downfall. Most cities, counties, school districts and local governments have taken notice of this new federal requirement and will inevitably require EPA certification of their vendors.

Santiago Concepcion is the Senior Project Manager & Assistant Training Director for National Econ Corporation - A leading environmental consulting & training firm located in Anaheim, CA. National Econ Corporation provides the EPA-Accredited Renovation, Repair & Painting (RRP) initial & refresher courses. For more information visit nationalecon.com or call 877-NAT-ECON, or email the author at: Santiago@nationalecon.com
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“Fairness to Subcontractors” Contribution Form"

As you can imagine, running bills in the California Legislature and defending your subcontractor rights is a costly undertaking. ASAC asks that you contribute what you are able to this effort. The 2009 legislative year has begun. Our efforts have begun. Your support is needed now. Please write your check today.
CLICK here to download the CONTRIBUTION FORM.

These supporters already came through for ASAC! Thank you to:
 

AN OVERVIEW OF THE ADDITIONAL LEGAL EXPOSURE A CONTRACTOR MAY ENCOUNTER IN CONSTRUCTING A GREEN BUILDING
by William C. Last, Jr., Attorney at Law

In recent years there has been an increasing governmental and public focus on the use of “green building” in the construction industry. Green buildings can be designed to include any of the following goals: (1) achieving a LEED certification; (2) setting energy performance consumption levels; (3) use of recycled materials; (4) self-generation of energy; (5) water use reduction; (6) indoor environmental quality including air quality; and (7) operation and manufacturing green standards. Some green buildings may be designed to simply incorporate sustainable goods and recycled building materials into the project. While other buildings are designed to obtain both sustainable goals as well as cost saving goals such as a reduction in usage of energy and other natural resources. These high performance buildings are intended to obtain measureable improved energy savings.

Disputes concerning the outcome of a green building project can result when the project owner has an expectation of how the building will perform which is different than that of the design team or the contractor. They can also result when the materials and products incorporated into the project do not perform as expected.

The remainder of this article will provide an overview of the green building concept and unique legal issues that impact a green building project.

What are benefits of green building?

Aside from the environmental benefits there are financial benefits to the owner of a green building. Typically, the costs of designing, engineering, commissioning and certifying a green building are greater than a traditional building. However, those up-front costs are expected to be more than offset by an energy cost savings over the life of the building. Furthermore, there are a number of financial incentives in the form of tax credits, exemptions and grants which are available to green buildings. These include municipal grants, project permit fast tracking, solar tax credits, utility incentives and rebates. Furthermore, green buildings can provide further benefits to the owner and developers in terms of utility rate savings and public relations benefits. Due to the
aforementioned incentives it is important that the “asbuilt” green building performs in the manner that was intended by the designer.

How is a green building certified?

Before discussing the certification process it must be noted that a building does not have to be certified in order to be a green building. Any building that is sustainable and has a beneficial or mitigated affect on the environment can be determined to be a green building.

Since there are very few if any governmentally adopted building codes for green buildings the standards and certifications are being set by non-profit organizations. The primary organizations are U.S. Green Building Council (USGBC) which created the Leadership in Energy and Environmental Design (LEED®) Green Building Rating System. The LEED program established a certification program for green buildings.
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The LEED rating system allots a certain number of points in the design process and is primary concerned with environmental and human health. LEED projects are certified on four levels. The level is based on the total points that are accumulated. The levels are: (1) Basic; (2) Sliver; (3) Gold; and (4) Platinum. In order to apply for certification a LEED project must have at least one designated LEED accredited professional involved in the project. For a professional to obtain LEED accreditation that person must apply for accreditation and pass an examination administered by USGBC.

There are other rating programs that are being used in the United States. The Building Research Establishment Environmental Assessment Method (BREEAM) Has created another rating system that is referred to as the Green Globes Rating System. Their system is web-based and is primarily used in Canada and the United Kingdom.  The Green Building Initiative (GBI) is a nonprofit organization to help home builders promote the National Association of Home Builders established the Model Green Home l Guidelines GBI as licensed the use of Green Globe system for use in the United States. Other organizations that have green building programs include, but are not limited to, International Organization for Standardization (ISO 14000), Energy Star and California Green Builder.

Are there specific regulations that apply to green builders?

Yes. There are regulations on the federal, state and local levels. On the federal level there is Executive Order No.13423, as well as performance standards that have been established by the Department of Energy. Executive Order No. 13423 requires: (1) new construction and major renovation to comply with Guiding Principles for Federal Leadership in High Performance and Sustainable Buildings; and (2) by 2015, 15% of the existing federal buildings must incorporate sustainable practices. The DOE’s standards can be found a 10 CFR §§ 433.1-435.306.

California’s energy regulations are found in the following locations: (1) Assembly Bill 4420 (1988); (2) Executive Order No. S-20-04 “The Green Building Initiative” which concerns energy reduction in State buildings and sets certain LEED standards for design and construction of new buildings; (3) California Energy code (Title 24 at 24 Cal Regs Part 6) which has standards for the building envelope and mechanical systems; (4) the California Green Building Standards Code (24 Cal Code Regs Part 11) which seeks to reduce greenhouse gas emissions; (5)
Global Warming Solutions Act of 2006 which requires the California Air Resources Board (CARB) to regulating air quality and set greenhouse emission standards to 1990 levels by the year 2020 has resulted in CARB starting to set energy efficient standards for green buildings; and (6) new supplements, addendums and practices that are designed to work with USGBC LEED Standards for certification. In addition to California statewide statutes and regulations that apply to green buildings a number of lesser public entities have adopted regulations and
ordinances that apply to green buildings, as well as promote green building projects. The California Department of Justice has a directory of Local Government Green Building Ordinances in California that can be found at http://www.ag.ca.gov/globalwarming/pdf/green_building.pdf

What additional liability exists in constructing a green building?

a. Exposure associated with the project delivery method.

The primary exposure that a contractor can have in building a green building flows from the project delivery method. There are three primary methods: (1) the owner retains a designer who prepares a complete set of plans and descriptive/method specifications upon which the contractors bids and builds the project (design-bid-build);(2) the owners design team prepares a general set of plans and project performance specifications and/or end result specifications from which the contractor bids and then takes on the responsibility for designing a building that meets the performance criteria or alternatively the contractor takes on all the design and construction obligations (design-build) and; (3) a construction manager is retained (either at risk or not at risk) to build the project. When the contractor takes on some or all the design responsibility for a green building its risk substantially increases.

When a contractor is provided with a complete set of plans and descriptive/method specifications that set forth the full scope of the work the primary source of dispute will concern whether or not the plans and specifications were complete and accurate. Generally, if the contractor builds in accordance with the plans and specifications and the system doesn’t work as designed the contractor has little if any liability. However, many contacts contain clauses intended to make the contractor responsible for a poorly designed project (e.g. requiring review of plans and specifications, requiring compliance with all applicable building codes and advances). A contractor whose intention it is to simply follow the descriptive/method specifications should review the contract to ensure that it does not include clauses that shift some of the design, outcome (e.g. certification and/or performance risk to the contractor.

When a project is “design-build” the contractor takes on the liability for ensuring that the completed project performs in accordance with the performance specifications. If the performance specifications include a requirement that the completed building is to achieve LEED certification, than the contractor’s liability is increased.

b. Exposure associated with the certification process.

In addition to liability that may flow from project delivery system, a contractor can also be liable if it fails to comply with green building practices. For example LEED certification awards points for green construction practices. Those practices that may be added to a contractors responsibilities includes: (1) managing construction waste; (2) meeting storm water prevention requirements; (3) selection and use of green building materials (e.g. recycled materials); (4) use of materials with low level volatile organic compounds; and (5)providing the owner with documentation necessary to get LEED certification. Since documentation of the project is critical to obtaining certification, delays in obtaining those documents or not being able to obtain them can result in LEED certification being lower than planned.

c. Exposure associated with using new products and materials.

Since many green buildings include the use of new and innovative products and materials, there is typically additional uncertainty about whether the products will fail to perform as advertised or be incompatible with other materials used in the project. This uncertainty results in an increased risk of liability for product or material failures. Over the years there have been numerous construction defect cases that are attributable to new materials that failed to perform as marketed by the manufacturer. Plaintiffs in such cases typically assert that any person in the chain of distribution from the manufacturer to the contractor.

d. Exposure associated with misrepresentation of the outcome.

Designers and contractors must be careful not to oversell the benefits of the green aspects of the project.  If there are affirmative misrepresentations as to the outcome of the project a party whose expectations are not satisfied may proceed with a fraud and/or negligent misrepresentation claim or a claim under various consumer protection statutes. A party’s expectation could concern such issues as the energy savings that may result from building a green building, the health benefits of such a building, or other sustainability claims. It is also conceivable that prior to the completion of the building the owner has entered into a lease with a tenant that is based on energy savings. If the building doesn’t meet the representations the tenant could possibly sue the owner. The liability from the lessor of a green building all the way down to claims made by a subcontractor to the general contractor.

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e. The damages that can be awarded can be greater for a green building.

The damages an owner may recover from a contractor for a failed green building project may be greater than those awarded in a traditional project. Primarily the potential consequential damages (e.g. cost of reconstruction process, loss of tax credits, loss of goodwill, added energy costs, and diminution in value since non-compliant) will be greater.

For the foregoing reasons the contractor must review its prime contract and subcontracts to determine if the risks associated with a green building project are limited and, if not, a least clearly set forth.

What additional legal exposure does an architect/engineer have in a green building project?

An architect’s exposure flows from whether or not the architect/engineer has committed to a specific performance standard. If the architect/engineer commits to designing a project to obtain a specific LEED certification he/she will likely have exposure if the project fails to meet that outcome. As such, architects and engineers should be wary of contractual or implied guarantees that the project will achieve a specific certification. If the rchitect/engineer fails to meet its contractual obligations it can be sued by both the owner and the contractor (the contractor will assert it is the third party beneficiary of the architect/engineers contract with the owner). Additionally, a design professional holding himself out as qualified to perform this work may
be held to a higher standard of knowledge and skill.

What are some Do’s and Do Not’s for a green building project?

(1) Do not increase the owner’s expectations relative to the outcome of the project.

(2) Do modify your standard prime contract so that it anticipates the legal and economic risks associated with a green building project, and do include flow down clauses in your subcontracts.

(3) Do anticipate and include all the additional administrative expenses and other expenses associated with obtaining certification in your bid and contract.

(4) Do choose and review selected products and materials to determine if they will perform as marketed by the manufacturer.

(5) Do not make excessive representations about your experience and/or the outcome of the project.

(6) Do ensure that you understand all the applicable building codes and regulations that impact a green building project.

(7) Do ensure that you have on staff or access to personnel who understand green building practices and the pitfalls associated with such projects.

(8) Do not rely on assumptions based on experience with standard products. Read and follow all manufacturer supplied instructions for installation and obtain written approval of any deviations from them.

(9) Do seek to limit your warranty liability, especially on new products to the same level afforded by the manufacturer.

(10)Do review the risks associated with green buildings with your insurance broker to determine if you should add any endorsements or coverage to your liability insurance coverage.

Conclusion

Green building practices will become widespread in coming years. The law is evolving relative to green building requirements and the exposure for failing to build a compliant building. Before entering into a contract to provide design services and/or construction services for a green building it is important to contractually set forth what risks are being accepted. The use of standard or unmodified contracts should be avoided when a green building as the end result.

©2009 William C. Last, Jr. wrote this article. Mr. Last is an attorney who has been specializing in Construction Law for over 29 years. In addition to belonging to a number of construction trade associations, Mr. Last holds a California “A” and “B” license. He can be contacted at 415-764-1990 or 650-696-8350. A number of his past articles can be found on his website (lhfconstructlaw.com). This bulletin is published periodically to provide general information about current legal issues. The articles are not intended to be a substitute for the advice of an attorney as to a specific problem. If you have a specific legal question or need legal advice, you should contact an attorney.

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Scott Holbrook of Crawford & Bangs Elected to Board

ALEXANDRIA, Va. — Members of the American Subcontractors Association elected Darlene East, president of Holes Incorporated, Houston, Texas, as the association’s 2009-10 president, ASA announced at its Business Forum and Convention 2009 on March 6, 2009.

“ASA represents the hopes of subcontractors all over the country,” said East. “For more than 40 years, subcontractors have turned to ASA: as an advocate, when laws and regulations don’t establish a level playing field for subcontractors; as a forum to communicate our needs to other members of the construction team, including better contracts and business practices; as an educator for the knowledge that we need to improve our companies; and as a resource for building our business networks, and, yes, our friendships throughout the industry.”

 When East begins her one-year term as ASA president on July 1, 2009, she will serve as the principal spokesperson of the association and connect with other construction industry leaders to identify and pursue common goals that promote the interests of subcontractors and the construction industry. She will also preside at meetings of ASA’s board of directors, Executive Committee and the membership of the association.

ASA members elected three other national officers to one-year terms beginning July 1, 2009: 2009-10:
ASA Vice President Timmy McLaughlin, Austin Construction Company, Summerville, S.C.;
ASA Treasurer Kerrick Whisenant, Cornerstone Detention Products Inc., Tanner, Ala.;
ASA Secretary Walter Bazan Jr., Bazan Painting Company, St. Louis, Mo.

ASA members elected five individuals to three-year terms on ASA’s board of directors beginning July 1, 2009:
Susan Baxter, Corbins Service Electric LLC, Phoenix, Ariz.;
Kevin Conboy, Southwest Lath & Plaster, Albuquerque, N.M.;
E. Scott Holbrook Jr., Crawford & Bangs, Covina, California;
Greg Kanning, Dumas Hardware, San Antonio, Texas;
and Linda Lucas, Hess Sweitzer Inc., New Berlin, Wis

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San Diego Deputy DA Honored for Helping to Protect the Construction Industry!

The Construction Industry Legislative Council (CILC), of which ASA California is a member, was pleased to honor Paul Greenwood, Deputy DA for San Diego on March 18, for his passion and dedication in protecting the integrity of the construction industry, the elderly and consumers who have been victimized by unscrupulous individuals in construction related schemes.  Many of these individuals prey on the elderly.

Mr. Greenwood has pioneered charging residential burglary, a felony, against unlicensed contractors who take money from unsuspecting individuals in their homes. In the last year he was instrumental in helping the California State License Board and California Attorney General's Office severely curtail the activities of a multi-state service and repair firm. The resulting litigation for unfair business practices resulted in a 3 million dollar judgment against that firm.

"I am honored to be recognized for the work in which I passionately believe - that of pursuing justice for seniors and seeking to hold those accountable who prey upon elders" said Mr. Greenwood. "As our population ages, the elderly are increasingly being targeted as potential victims, and elder abuse is becoming one of the fastest growing crimes in the nation. Often these unscrupulous individuals pose as licensed contractors in order to gain legitimacy and the homeowner's trust. I encourage the public to be more assertive when choosing a contractor and make full use of their local Better Business Bureau and State licensing agency to check on credentials and any history of complaints against the particular contractor."

"We're pleased to honor Mr. Greenwood for his hard work in protecting the integrity of our industry," said Julie Trost, President of the CILC.  "Sadly these dishonest people give our industry a bad reputation.  Some of these cases might not have occurred, if the person had just asked if the person was licensed.  Paul is working hard to pass laws that protect the general public, punish crooked and deceitful behavior and to communicate to the community the importance of asking questions before hiring anyone.  If they have a license, you know that they have met the basic skills needed to obtain their license.  Also, through the CSLB, the public can verify the contractor's license, review his/her workers compensation and any pending or prior legal action.  There is a reason that many of these individuals don't have a license."

Mr. Greenwood received his Bachelor of Laws in England in 1973 and was admitted to the California Bar in 1991. He has previously served as a legal consultant to the BBC in London, worked as a barrister and then a solicitor of the Supreme Court of England and Wales from 1981 to 1991.  He has worked for the San Diego District Attorney's office since 1993.

The Contractors State License Board CSLB helps protect the public by licensing and regulating California's construction industry.  In addition to educating contractors and the public about construction law, the CSLB administers exams, investigates claims, issues licenses and seeks punishment for violators.  Consumers can check the status of any construction contractor's license by going to www.cslb.ca.gov or by calling the Board's toll-free telephone number at 1-800-321-CSLB (2752).  

The Construction Industry Legislative Council (CILC) is a consortium of trade associations working to provide legislative advocacy and regulatory analysis to its member associations.  The CILC has worked hard to protect consumers and the construction industry by helping to promote hiring a licensed contractor.  For more information about the CILC please call 916-725-3351. 

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Actions a Contractor Can Take to Help Survive Tough Economic Times
By William C. Last, Jr., Attorney at Law

The construction industry is experiencing severe retraction due, in part, to financing for projects being restricted and government budgetary limitations. It has become increasingly common for a partially completed project to be halted or for payments for an ongoing project not to be paid in a timely manner. As a result, more than ever contractors must be vigilant and proactive in protecting their interests. This article will discuss some of things that can be done to minimize the risk of going unpaid on a project.

First and foremost, contractors must be diligent in looking for the signs that a project maybe in trouble. Those signs include: (1) slow and delayed progress payments; (2) scheduling deadline slippage due to subcontractors who are not performing; (3) predecessor subcontractors and suppliers who are decreasing their manpower and slowing deliveries; (4) future phases and releases of the project being terminated; (5) the project lender being taken over or going out of business; (6) other projects that are being developed by the owner being terminated; (7) project subcontractors or suppliers going out of business; (8) the project lender starting the foreclosure process; (8) if part of the project is completed, the completed units are not being sold or rented; and (9) if it is a public project, the public entity has had the funding for the project stopped or delayed.

If you detect any of the warning signs you must take immediate action to protect your interests. Such actions should include, but not be limited to:

Review the status of your preliminary lien notices: Mechanic’s liens, stop notices and payment bond claims are unique remedies that are available to contractor to ensure that he or she will be paid. But to be effective, the contractor must comply with all of the applicable statutory prerequisites for recording and foreclosure of the lien. There are three prerequisites for enforcing such remedies. These are the timely service of a Preliminary 20-Day Lien Notice; the timely recordation and/or service of the lien, stop notice and/or bond claim; and the timely filing of a lawsuit to perfect such remedies. If you have yet to serve a 20-Day Lien Notice and you are obligated to do so, you should serve one if your work is not completed. By doing so, you can use the aforementioned remedies for the goods and services provided up to 20 days before the notice was served as well as for the period after the service.

Under Civil Code §3097(o), if a 20-Day Lien Notice is properly filed with the County Recorder, that Recorder has the good faith duty to notify the filing party within five (5) days following recording of a Notice of Completion or a Notice of Cessation. This extra step of filing the Preliminary 20-Day Lien Notice with the Recorder in the county where the property is located, will aid you in determining when a Notice of Completion is filed. However, the system is not fool-proof since the Country Recorder has no liability should it fail to notify the contractor that a Notice of Completion has been filed.

Also, you must ensure that the 20-Day Lien Notice includes the proper names and address of the relevant parties. If the notice does not include the correct project owner name then the notice will be ineffective. If you are a subcontractor or supplier do not necessarily rely on information given to you by a general contractor, as it may be incorrect. The most reliable source for property owner information is at the recorder’s office in the county where the project is located.
 

The time limits within which all liens must be recorded, payment bond claims made and/or stop notices must be served are based on when the project is completed, or work on the project stops short of actual completion. The specific time limitation for recording a lien, serving a payment bond claim and/or serving a stop notice is based on: (a) whether actual completion occurs, or there is an equivalent to completion; and (b) whether or not the owner shortened the recording deadlines by recording a Notice of Completion or Notice of Cessation. After you leave the project monitor the project to ascertain if there were any short term work stoppages. Also monitor the project to determine when substantial completion was obtained or if a Notice of Completion was recorded.
 
The time limits within which all liens must be recorded on private works are based on when the project is completed, or work on the project stops short of actual completion. When actual completion has not been obtained, California law defines what constitutes completion so that the contractor will know when time for recording a lien commences to run.
Specifically, Civil Code §3086 states: "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.
The general rule is that when all the work on the project actually has been completed all possible lien claimants must record their liens within ninety (90) days from the date of actual completion. (Civil Code §§ 3115-3116).

If the project is not completed, but all work on the project stops for a specific period, California law deems the work complete after a certain period of time passes. If there is a cessation of labor for a continuous period of sixty (60) days, California law declares that such cessation is deemed to be an equivalent to the completion of the work. After that sixty (60) day period elapses, all possible lien claimants must record their liens within ninety (90) days from that date. (Civil Code §3092).

For example, if the owner runs out of money and cannot complete the original agreed-upon scope of work and, as a result, all work stops before the project is complete, the contractor has one hundred and fifty (150) days from the total and complete stoppage of all work to record a mechanic’s lien so long as no Notice of Cessation was recorded.

If, however, during the first fifty-nine (59) days of the work stoppage, the original agreed-upon scope of work recommences, the time for recording a mechanic’s lien will be restarted and subject to the same rules relative to: (a) whether actual completion occurs, or there is an equivalent to completion; (b) whether or not the owner shortened the deadlines by recording a Notice of Completion or Notice of Cessation; and (c) whether or not the contractor has a direct contract with the owner of the project.

The deadlines when a Notice of Completion or a Notice of Cessation have been recorded are:

Notice of Completion: When an owner records a valid Notice of Completion (i.e. 10 days after actual completion of work on the project) (Civil Code §3093): (a) Prime contractor in direct contract with the owner must record his or her lien within sixty (60) days of the recording of the Notice of Completion (Civil Code §§ 3115-3116); (b) All others must record their liens within thirty (30) days of the date the Notice of Completion is recorded. (Civil Code §3116).

Notice of Cessation: When an owner, after thirty (30) days of continuous cessation of labor, records a valid Notice of Cessation (this is the equivalent of recording a Notice of Completion). (Civil Code §3092): (a) Prime contractor in direct contract with the owner must record his or her lien within sixty (60) days of the recording of the Notice of Cessation; (b) All others must record their liens within thirty (30) days of the date the Notice of Cessation is recorded. (Civil Code §§ 3115, 3116).

In addition to recording a mechanics lien a contractor can also serve a bond stop notice on a private works lender. On a public works project, a contractor can serve a stop notice and also pursue the payment bond surety. These remedies are cumulative. When the economy turns down it is always to pursue every available remedy.

Conclusion

In the current construction environment it is increasingly common for a contractor to learn that a project is going to be stopped or that the owner doesn’t have the funds to pay for the work that has been performed. In such an event it the contractor must determine how the stoppage will impact there ability to collect for the work performed and how it can impact the overall cost of the project. It becomes important to document when the project was stopped so that key dates for recording liens, serving stop notices and/or bond claims can be calendared and subsequently acted on.

©2009 William C. Last, Jr. wrote this article. Mr. Last is an attorney who has been specializing in Construction Law for over 29 years. In addition to belonging to a number of construction trade associations including the Bay Area Chapter of ASA, Mr. Last holds a California “A” and “B” license. He can be contacted at 415-764-1990 or 650-696-8350. A number of his past articles can be found on his website (lhfconstructlaw.com). This bulletin is published periodically to provide general information about current legal issues. The articles are not intended to be a substitute for the advice of an attorney as to a specific problem. If you have a specific legal question or need legal advice, you should contact an attorney.
 

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American Subcontractors Association California Inc. 
 P.O. Box 292867, Sacramento, CA. 95829-2867
Phone: 888-310-2722   Fax: 530-662-2865  Email