AB 626 adds new Public Contract Code section 9204. It creates a new claims resolution procedure in addition to those already found in the Public Contract Code sections 10240 to 10240.13 (state public works arbitration) and 20104 to 20104.6 (claims against local agencies under $375,000 unless agency has elected to arbitrate under section 10240, et seq.). It applies to contractor claims on all public works projects, except for projects of the following Departments: Water Resources, Transportation, Parks and Recreation, Corrections and Rehabilitation, Military, General Services, and the High-Speed Rail Authority. This section becomes effective for contracts entered after January 1, 2017 and expires December 31, 2019 unless renewed.
It is an all-too-common scenario in California construction: Nine and a half years after completion of a major California construction project, immediately before the 10 year “statute of repose” for suing on “latent” construction defects expires, a lawsuit claiming damages for “recently discovered” latent construction defects is filed. The property owner sues the contractor for the alleged defects. The direct contractor sues all its subcontractors for indemnity and defense. The attorneys spontaneously generate. Experts proliferate. Claimed defects are extrapolated. Four or five years later, after a few dozen attorneys earn a small fortune in fees, the insurance companies make payments. Attorneys collect more fees. The owners take what remains. They repair nothing . . . and buy vacation homes.
The “Notice of Non-Responsibility” is one of the most misunderstood and ineffectively used of all the legal tools available to property owners in California construction law. As a result, in most cases the answer to the above question is “No”, the posting and recording of a Notice of Non-Responsibility will not prevent enforcement of a California Mechanics Lien.
ALEXANDRIA, Va. — A reference manual published by the American Subcontractors Association, Retainage Law in the 50 States, is helping construction subcontractors understand retainage laws where the projects they bid and work on are located.
As it applies to subcontractors, retainage is the practice of regularly holding a portion of progress payments that subcontractors earn for performing construction services.
“In most states, retainage is a typical practice in both public and private construction contracts,” the manual explains. “The mandatory or permissive nature of retainage varies from state to state. In a few states, the retained funds may be held in escrow, to be paid back to the contractor or subcontractor with interest. Some states also permit contractors and subcontractors to substitute securities in lieu of retainage. Other states require contracting agencies or owners to reduce the rate or even eliminate retainage once a certain portion of the contract is complete.”
Each state entry in the manual reviews critical factors in retainage law for private and public work, including the retainage rate permitted under law, retainage release milestones, and any options to provide alternative securities in lieu of retainage.