New Laws Affecting Contractors

Garret Murai Attorney: Wendel Rosen Black & Dean LLP

A number of new laws affecting the construction industry took effect on January 1, 2011 unless otherwise noted.  These new laws include enhanced consumer protection statutes, mandatory green building regulations, new remedies to address uninsured workers, and revenue generating fee increases.

Mechanic’s Liens - General contractors, subcontractors, materialmen and other mechanic’s lien claimants must now serve a “notice of mechanic’s lien” on the property owner, or on the construction lender or original contractor if the property owner cannot be served, together with a proof of service affidavit, when recording a mechanic’s lien. Failure to serve the notice will invalidate the mechanic’s lien.  Under previous law, no notice was required to be served.

Notices of Lis Pendens - Mechanic’s lien claimants must now record a notice of lis pendens within 20 days of filing a complaint to foreclose on a mechanic’s lien. Under previous law, the recording of a notice of lis pendens was optional.

Green Building Code - The Green Building Standards Code, also known as “CALGreen,” came into effect on January 1. CALGreen is the first mandatory state-wide green building code in the nation and applies to newly constructed residential, state-owned, commercial, school, and hospital buildings. Among other standards, CALGreen requires that new buildings reduce water consumption by 20 percent, divert 50 percent of construction waste from landfills, and include the use of low pollutant-emitting materials. Local jurisdictions that have adopted their own green building codes may continue to use those codes as long as they are stricter than CALGreen.

Worker’s Compensation - The Contractors State License Board (CSLB) may now issue “stop work” orders to licensed and unlicensed contractors who fail to carry worker’s compensation insurance for their employees. When issued, stop work orders take effect immediately but can be appealed.  Employees who lose pay due to a stop work order are entitled to up to 10 day’s pay for lost time.  Failure to comply with a stop work order is a misdemeanor punishable by up to 60 days in jail and/or a fine of up to $10,000. Penalties for failure to have worker’s compensation insurance have also increased from $1,000 to $1,500 for each employee not covered.

License Reinstatement - Contractors may now reinstate their licenses without examination or penalty if actively serving in the California National Guard or United States Military during a period of war. Requests for reinstatement must be made no later than one year after discharge or the end of active duty.

Licensing Fees - Beginning July 1, 2011, CSLB licensing fees will increase. Original contractor’s licenses for a single classification will increase from $250 to $300 and additional classifications will increase from $50 to $75.  Renewal of an active license set to expire on or after July 1, 2011 will increase from $300 to $360 and renewal of an inactive license set to expire on or after July 1, 2011 will increase from $150 to $180.  The CSLB has increased other licensing fees as well.  With one exception, these are the first increases of CSLB’s licensing fees since 1993.

Authored by
Garret Murai, Wendel Rosen Black & Dean LLP
Email: [email protected]

This article, published on the Wendel Rosen Black & Dean LLP website January 6, 2011, appears with permission from the author.

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