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New Laws - 1999

Summary of law changes for the 1998-1999 Legislative Session

This is a summary of the more significant legislation that the Contractors State License Board has followed during the 1998 legislative session. All of the bills in the summary have been signed into law (chaptered), and become effective on January 1, 1999, unless noted. Copies of chaptered bills are available at or by calling (916) 445-2323.

AB 771 – (Margett - Chapter 240) This measure increases the defendant guarantor's (surety bond company's) small claims courts jurisdictional limit from $2,500 to $4,000. This applies to claims filed after January 1, 2000, provided that the defendant guarantors charge a fee for their guarantor or surety services. The new law also allows the defendant guarantor, upon written request, to be granted at least a 30-day postponement of the hearing.

AB 1092 – (Goldsmith - Chapter 1010) This measure applies to prime contractors who bid on local or state agency construction jobs. It authorizes local and state agencies to allow a prime contractor to submit required information on a subcontractor (other than the subcontractor's name and location of business) up to 24 hours after bid closing deadlines. Additionally, if the public agency issues any "material changes," additions or deletions to the bid invitation within 72 hours prior to the bid closing, the bid closing deadline for prime contractors must be extended by no less than 72 hours. This measure defines "material change" as any change with a substantial cost impact on the total bid as determined by the awarding agency. It defines "bid invitation" as documents issued to prime contractors that contain descriptions of the work to be bid or the content, form or manner of submission of bids by bidders.

AB 2042 –(Goldsmith - Chapter 111) This bill clarifies existing law by stating that when a contractor issues a stop notice on a public works job, the monies withheld by the public agency will be sufficient to answer the claim and provide for the agency's reasonable cost of litigation. Also, it clarifies that public agencies can satisfy the withholding by refusing to release money held in escrow.

AB 2046 – (Goldsmith - Chapter 154) This authorizes the court to award to a prevailing defendant, attorneys' fees and expenses if the court finds that the claim brought by a state or local entity was a false claim--clearly frivolous or brought solely for purposes of harassment.

AB 2084 – (Miller - Chapter 857) This bill makes a number of changes to public works contracts, including limiting the retention between an original contractor and a subcontractor to the amount specified in the public works contract between an original contractor and public entity. Other changes in this measure include: revising the amount of a payment bond with a public entity, shortening the time contractors must pay out retention, and shortening the date in which a claimant may initiate arbitration. These provisions apply only to contracts entered into on or after January 1, 1999.

AB 2301 – (Wright - Chapter 571) This measure addresses door-to-door sales of home improvement goods or services in which the contract provided by the company takes a security interest in the home. It requires that all such contracts include a notice to homeowners that by signing the contract they give the company a security interest in their property. Additionally, this measure prohibits individuals from taking a security interest for home improvement contracts for goods or services less than $5,000 (except for a mechanics' lien or other interest that arises by operation of law). For contracts of more than $5,000, the loan proceeds must be payable to the borrower or jointly to the borrower and contractor or an escrow account.

AB 2627 – (Brown - Chapter 986) This measure allows an original contractor to serve a Ten-Day Stop Work Order, on a job in which there is no dispute as to the performance, when all monies owed pursuant to a written contract are not paid and the payments are 35 days late. This bill does not seek to overturn court decisions that ruled pay-if-pay clauses are unenforceable, but simply provides contractors, who are not being paid for their work, the ability to protect themselves. The notice must state that unless all amounts due are paid within 10 days, the contractor will stop work on the project. The contractor and their surety will not be liable for any delays or damages that are suffered because of the Stop Work Notice. Also, this measure allows for an expedited proceeding in Superior Court regarding liability for the amount of money not paid. AB 2627 states that it is against public policy to waive the above provisions in any written contract for a private work of improvement.

AB 2697 – (Ducheny - Chapter 426) Effective immediately, this measure clarifies and makes changes to SB 873 of 1997. SB 873 requires that all underwater lighting systems in public swimming pools be installed according to specified requirements to prevent shock hazard. This measure, AB 2697, deletes the exemption for public swimming pools owned or operated by state or local government agencies.

Further, AB 2697 clarifies who can do the work and conduct inspections. Specifically, this measure, as interpreted by CSLB, allows A, C-10, C-53 and C-61/D-35 to complete the work. The inspection must be done on or before May 1, 1999, by a local health officer or the qualified contractor who certifies to the local health officer that the pool is in compliance.

SB 597 – (Peace - Chapter 599) This measure expands penalties for unlawful advertising practices on the Internet. Specifically, it adds "any electronic" transmission to Business and Profession Code Section 7027.1, which will allow CSLB to issue citations for unlicensed contractors who advertise on the Internet.

SB 776 – (Johannessen - Chapter 252) This measure authorizes the Department of General Services to use the design-build procurement process for construction of state facilities. Authorization is contingent upon the Legislature's approval on a per-project basis. This measure creates a process for awarding design-build contracts. Prior to contracting for the procurement of state buildings, General Services must: 1) prepare a program setting the scope of the project; 2) establish a competitive pre-qualification and selection process for design-build teams; and 3) recommend to the Legislature a selection process for design-build initiatives.

SB 1792 – (Mountjoy - Chapter 492) This measure increases the cap on the CSLB's voluntary arbitration program from $25,000 to $50,000. It requires that the parties involved in arbitration be advised that an arbitration award rendered against a principal alone is not an award against the surety. Also, SB 1792 requires that the CSLB adopt regulations that set minimum qualification standards for arbitrators.

SB 2217 – (O'Connell - Chapter 633) This measure increases from $300 to $500 the dollar amount of work an unlicensed contractor can legally perform. (The $500 limit applies to an aggregate contract price for labor, materials, and all other items.) Unlicensed contractors must provide the purchaser with the written disclosure in Business and Professions Code section 7048 stating that they are not licensed by the CSLB. If the unlicensed individual does not give the written disclosure to the purchaser, the $500 exemption does not apply and the Registrar can issue a citation for unlicensed activity. The Registrar is authorized to issue a citation to unlicensed individuals if they fail to maintain the written notification for four years.

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