As many of you are aware, Senator Sher introduced Chapter 795 (SB 914) which provided new language in the “Notice to Property Owner” portion of the 20 Day California Preliminary Notice relating to private works (California Civil Code § 3097). The bill was passed into law, signed by the governor and will become effective the first of next year. The notice to property owner as amended will read as follows:

NOTICE TO PROPERTY OWNER

If bills are not paid in full for the labor, services, equipment, or materials furnished or to be furnished, a mechanic’s lien leading to the loss, through court foreclosure proceedings, of all or part of your property being so improved may be placed against the property even though you have paid your contractor in full. You may wish to protect yourself against this consequence by (1) requiring your contractor to furnish a signed release by the person or firm giving you this notice before making payment to your contractor, * (2) requiring your contractor to furnish a receipt to establish that you paid the contractor in full and recording no later than 30 days from receipt of this preliminary notice an affidavit that you paid the contractor in full, or (3) any other method or device that is appropriate under the circumstance.

At the current time there is considerable controversy in Sacramento as to the fate of the SB 914 language which was added to the “Notice to Property Owner.” Several, including the bill’s author, contend that the language was merely a “legislative oversight” and was never intended to be included in the final draft. Rumor has it that new legislation will be introduced early next year and designated as “urgent legislation” to put the property owner notice back to its original form. It is the author’s understanding that the legislation will also contain language to make the bill retroactive to January 1, 2000.

However, in the meantime, what should you do to make sure that your California Preliminary Lien Notice is absolutely Y2K compliant commencing January 1, 2000? As all of us are aware there is certainly no guarantee as to the passage or failure of new legislation. Therefore, the author strongly suggests that you include the new language in the “Notice to Property Owner” provision of your “20 Day California Preliminary Lien Notice” on all private works commencing in Y2K (January 1, 2000).

Apparently, computer systems are not the only thing contractors must assure are Y2K compliant.