New California Legislation Changes Lien, Defect, Licensing, Public Contracting Laws


February 9, 2004

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(A version of this article will appear in the California Construction Law Reporter, published by the West Group.)

By James Acret

In the legislative sessions of 2003, the Legislature passed, and the governor signed, an unusually large number of new laws that affect the construction industry. Most take effect from January 1, 2004. Following are summaries of important new laws.

MECHANIC’S LIENS

Owners Must Give Notice that Notice of Completion Has Been Recorded

Civil Code §3097 is amended to require owners of private construction projects to notify the original contractor “and any lien claimant who has provided the owner with a preliminary 20-day lien notice” that a notice of completion or notice of cessation has been recorded “within ten days of its recordation.” Notice shall be by registered, certified or first-class mail evidenced by a certificate of mailing. Failure to notify will extend deadlines to record a mechanic’s lien.

Duplicative §3259.5 is added to the Civil Code requiring the owner to notify the original contractor “and any claimant other than the original contractor who has provided a preliminary 20-day notice” that a notice of completion or notice of cessation has been recorded. “The notice shall be sent within ten days after recordation….” Notice shall be by registered, certified, or first-class mail evidenced by a certificate of mailing. “Failure to give notice to a contractor or claimant within ten days… shall extend the period of time in which that contractor or claimant may file a mechanic’s lien or stop notice to ninety days beyond the date that a notice of completion or notice of cessation has been recorded.” The sole liability for failing to give the notice shall be the extension of time.

“Owner” is defined as a person who has an interest in real property or the person’s successor in interest on the date a notice of completion or notice of cessation is filed for record and who causes an improvement to be constructed on the property. “Owner” does not include a person who occupies the real property as a personal residence if the dwelling contains no more than four residential units, nor does it include a person who has a security interest in the property. Chapter 54, Statutes of 2003, SB 134, Figueroa, effective January 1, 2004.

COMMENT: The purpose of recording a notice of completion is to cut down the period of time within which mechanic’s liens may be recorded. It is ironic that under this new legislation the effect of recording a notice of completion (if the owner fails to follow requisite procedures) will be to extend, rather than reduce, the period of time within which a mechanic’s lien claim may be recorded.

The new requirement also has unintended consequences by creating serious problem for construction lenders and title insurers. Most construction contracts and construction loan agreements provide that retention will be disbursed 35 days after a Notice of Completion is recorded. This gives the title company time to determine whether mechanic’s lien claims have been recorded before the owner or the construction lender authorize disbursement of the retention.

Under the new law, though, a Notice of Completion will be valid only if the property owner gave a Notice of Notice to all potential claimants. There is no practical way for a title company to determine whether all required Notices of Notice were properly served other than to rely on the assurances of the owner. Whether title companies will be willing to accept such assurances remains to be seen. If they do not, a new rule of practice may soon arise: Instead of 35 days after Notice of Completion, retention will be disbursed 105 days thereafter. Thus, the very claimants who lobbied for the new Notice of Notice would find themselves waiting an extra 60 to 70 days for their money.

Preliminary 20-Day Notice Language Is Changed

New language is added to the Notice to Property Owner segment of the preliminary 20-day notice for private projects:

Other than residential homeowners of dwellings containing fewer than five units, private project owners must notify the original contractor and any lien claimant who has provided the owner with a preliminary 20-day lien notice in accordance with Section 3097 of the Civil Code that a notice of completion or notice of cessation has been recorded within 10 days of its recordation. Notice shall be by registered mail, certified mail, or first-class mail, evidenced by a certificate of mailing. Failure to notify will extend the deadlines to record a lien.

Civil Code 3097, Statutes of 2003, Chapter 54, SB 134, Figueroa, effective January 1, 2004.

Claimant May File Action to Foreclose on Mechanic’s Lien and at Same Time Preserve Its Arbitration Rights

Under existing law, a plaintiff in an action to foreclose a mechanic’s lien may preserve arbitration rights by presenting an application to stay proceedings pending arbitration.

Code of Civil Procedure §1281.5 is amended to provide another way to preserve arbitration rights: Plaintiff may include an allegation in the complaint that plaintiff does not waive arbitration rights and intends to move the court within 30 days after service of the summons and complaint to stay proceedings pending arbitration. As an alternative, the plaintiff may employ the former procedure by filing a simultaneous application for stay.

Defendants must file a petition to compel arbitration at or before the time they answer the complaint or their arbitration rights are waived. Statutes of 2003, Chapter 22, SB 113, effective January 1, 2004.

Procedure to Petition for Release of Mechanic’s Lien Is Modified

Under existing law, when a claim of lien has expired because the claimant failed to file a foreclosure action within the required time, a property owner may petition for a decree to release the property from the lien. Civil Code §3154 is amended to clarify its language. The most important modification is to increase the amount of attorney fees recoverable by the prevailing party from $1,000 to $2,000. Statutes of 2003, Chapter 279, AB 447, Vargas, effective January 1, 2004.

CONSTRUCTION DEFECTS

SB 800 Is Extensively Amended

Civil Code §896 is amended to include “general contractor” among the parties that are subject to SB 800. Under §911, a general contractor shares the status of “builder” if the general contractor is in the business of building and selling residential units. General contractors who are not “builders” will be treated like subcontractors.

Two obvious solecisms are corrected: 1.) A builder is required to provide the purchaser of a residence only with a copy of Title 7 of the Civil Code instead of the lengthy and inapposite Part 2.  2) The correct word spoliation is substituted for the non-word spoilation in §916.

The original version of §936 read:

This section does not apply to any subcontractor, material supplier, individual product manufacturer, or design professional to which strict liability would apply.

Because strict liability does apply to subcontractors, material suppliers and manufacturers, the language could have been interpreted to remove these parties from application of SB 800. The substitute language reads as follows:

However, the negligence standard in this section does not apply to any general contractor, subcontractor, material supplier, individual product manufacturer, or design professional * * * with respect to claims for which strict liability would apply.

Section 938 originally provided that “this title applies only to residences originally sold on or after January 1, 2003.” As amended, the title applies only to new residential units where the purchase agreement was signed by the seller on or after January 1, 2003.

Section 945.5 is amended to extend to general contractors, subcontractors, suppliers, manufacturers and design professionals affirmative defenses that previously were available only to the builder. The defenses are force majeure, failure to minimize damages, damage caused by homeowner, statute of limitations, release and successful repair by the builder.

The bill also provides that the Department of Insurance should conduct a study to determine whether lower rates are justified for comprehensive general liability insurance policies with respect to construction defect claims arising out of projects built with apprentices enrolled in an apprenticeship program approved by the California Apprenticeship Council. (Apparently the Legislature doesn’t know that comprehensive general liability policies disappeared along with flower children in the 1970s.) Statutes of 2003, Chapter 762, AB 903, Steinberg, effective January 1, 2004.

LICENSING, REGISTRATION

State Grabs Money from Construction Industry License Funds

The current budget provides $46,729,000 to support the Contractors State License Board and calls for transfer from the Contractors State License Fund to the General Fund of $8,700,000 as a “loan to the general fund” to be repaid by September 1, 2004.

Some $2,741,000 is appropriated to support the California Board of Architectural Examiners, with $1,800,000 is to be transferred from the Board of Architectural Examiners Fund to the General Fund as a loan. But, the act fails to provide any date for repayment of the loan. The Landscape Architects Technical Committee is allocated $807,000, but $1,225,000 is transferred from the Landscape Architects Fund to the General Fund as a loan, with no date scheduled for repayment. Chapter 157, Statutes of 2003.

Contractors Must Prominently Display Business Names and License Numbers on Vehicles

Section 7029.6 is added to the Business and Professions Code to require licensed contractors to display on motor vehicles used in the construction business their business names and license numbers in type “of at least 72-point font or three-quarters of an inch in height and width.” Statutes of 2003, Chapter 118, AB 1538, Berg, effective January 1, 2004.

Landscape Contractors May Contract for Swimming Pools

Business and Professions Code §7027.5 is amended to specifically authorize landscape contractors to enter into prime contracts involving construction of swimming pools, spas or hot tubs provided that construction of the swimming pool, spa or hot tub is subcontracted to a licensed swimming pool (C-53) contractor. Statutes of 2003, Chapter 34, AB 341, effective January 1, 2004.

Licensed Contractors Must Bond Judgments

Business and Professions Code §7071.17 is amended to require all licensees to notify the registrar in writing of any unsatisfied final judgment entered against them. After such notification, the licensee may continue contracting operations if it files a bond sufficient to guarantee payment of the judgment. This section does not apply if the financial obligation has been discharged in a bankruptcy proceeding. The term “judgment” includes a final arbitration award when the time to file a petition to vacate the award has expired. Statutes of 2003, Chapter 363, AB 1382, Correa, effective January 1, 2004.

Home Improvement Contracts Need Not Be Translated

Civil Code §1632 is amended to require that any person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese or Korean shall provide a translation of the contract in the language used for negotiations. However, home improvement contracts as defined in Business and Professions Code §§7151.2 and 7159 are exempt from the translation requirements. Statutes of 2003, Chapter 589, SB 146, Escutia, effective January 1, 2004.

Powers of Arbitrators Are Modified

Business and Professions Code §7085.5, relating to arbitration of disputes between consumers and contractors, formerly permitted an arbitrator to enter award requiring specific performance of a construction contract. That section is amended to delete the authority of the arbitrator to award specific performance but to allow the arbitrator to award all direct costs and expenses for the completion or repair of a project. The same section also is amended to require the Contractors State License Board to pay the expenses of an expert witness only if the case involves workmanship issues.

Substantial Compliance Provisions Are Tightened and Extended

Existing law allows a court to determine that there has been substantial compliance with contractor licensure requirements if it is shown that the person had been duly licensed as a contractor, acted reasonably and in good faith to maintain proper licensure, and did not know or reasonably should not have known that he or she was not duly licensed. Business and Professions Code §7031 is amended to provide that substantial compliance may be found only when the contractor acted promptly and in good faith to reinstate the license upon learning it was invalid. Section 7031 provides that an unlicensed contractor must disgorge any money paid for unlicensed activities. Section 7031 is amended to allow a court to apply the doctrine of substantial compliance to exempt a contractor from the disgorgement requirement. (The Legislature stated that the changes made by this act are declaratory of existing law.) Statutes of 2003, Chapter 289, AB 1386, Shirley Horton, effective January 1, 2004.

Penalties Are Adopted for Repeat Violations of the Contractor License Law

Existing law provides that it is a misdemeanor to engage in the contracting business without proper licensure. If a person previously has been convicted of such an offense, the court shall impose a fine of 20 percent of the contract price and, as amended, the repeat offender shall be confined in a county jail for not less than 90 days except in an unusual case where the interests of justice justify imposition of a lesser sentence or fine. Business and Professions Code §7028, Statutes of 2003, Chapter 706, SB 443, Figueroa, effective January 1, 2004.

Temporary Labor Service Agencies Are Required to Obtain Contractor Licenses

Business and Professions Code §7026.1 is amended to bring within the definition of “contractor” (for licensing purposes) a temporary labor service agency that provides workers for construction work. No license is required, however, if there is a properly licensed contractor exercising supervision and directly responsible for the final results of the work. Statutes of 2003, Chapter 759, AB 544, Montanez, effective January 1, 2004.

License Board Must Disclose Violations of Labor Code

Business and Professions Code §27 is amended to require the Contractors State License Board to disclose on the Internet violations by any licensee of the Labor Code. Statutes of 2003, Chapter 849, AB 1418, Laird, effective January 1, 2004.

Unlicensed Parties May Not Call Themselves Landscape Architects

Business and Professions Code §5640 is amended to provide penalties for use, by an unlicensed person, of “landscape architect,” “landscape architecture,” “landscape architectural” or any other titles, words or abbreviations that would imply licensure as a landscape architect. Section 5657 is amended to require licensees to notify the Landscape Architects Technical Committee of changes of address. Statutes of 2003, Chapter 325, SB 1079, Committee on Business and Professions, effective January 1, 2004.

Minor Amendments: Insurance, Bonding, Obstruction, Public Disclosures, Lists

Section 7027.4 is added to the Business and Professions Code to make it a cause for discipline if a contractor advertises that it is “insured” without identifying in the advertisement the type of insurance carried. Contractors also are forbidden to advertise that they are “bonded” if the reference is to a contractor license bond or a disciplinary bond.

Business and Professions Code §7029.1 is amended to permit licensed contractors to bid a project as joint venturers, but they still must obtain a joint venture license before the award of the contract.

New Business and Professions Code §7116.5 makes it a cause for discipline to obstruct an investigation conducted by the Contractors State License Board.

Business and Professions Code §7124.6 requires the registrar of contractors to publicize complaints on file against licensed contractors. The law is amended to require the record to be deleted if no additional disciplinary action has been filed for five years. Disclosures of suspension or revocation of contractor licenses shall be deleted from the records if no additional disciplinary actions have been filed for seven years.

Section 8710.1 is added to the Business and Professions Code to provide that protection of the public shall be the highest priority for the Board for Professional Engineers and Land Surveyors.

Health and Safety Code §19825 is amended to delete the requirement that the Contractors State License Board provide semi-annually to local building departments a list of contractors who did not secure payment of worker’s compensation.

Statutes of 2003, Chapter 607, SB 1077, Committee on Business and Professions, effective January 1, 2004.

PUBLIC CONTRACTS

Public Contractors Must Comply with Extensive Code of Right Conduct

Section 6108 (g) is added to the Public Contract Code providing that most state agencies may not enter into a contract with any contractor who fails to meet the following requirements:

• Contractors and subcontractors shall comply with all appropriate state laws concerning wages, safety and non-discrimination.
  
  
• Contractors and subcontractors shall maintain a policy of not terminating any employee except for just cause and the employee shall have access to a mediation process.
  
  
• Contractors and subcontractors shall ensure that workers are paid at least minimum wages and benefits.
  
  
• Contractors and subcontractors must comply with overtime laws.
  
  
• Overtime hours must be worked voluntarily.
  
  
• Child labor is prohibited.
  
  
• There may be no form of forced labor.
  
  
• The work environment shall be safe and healthy.
  
  
• There may be no discrimination on the basis of age, sex, pregnancy, maternity leave status, marital status, race, nationality, country of origin, ethnic origin, disability, sexual orientation, gender identity, religion or political opinion.
  
  
• No worker may be subjected to harassment or retaliation.
  
  
• No worker may be forced to take contraceptives or pregnancy tests.
  
  
• Contractors and bidders shall list the names and addresses of each subcontractor to be utilized and list each manufacturing or other facility or operation of the contractor or subcontractor for performance of the contract. The list shall be updated and provide names, addresses, telephone numbers, e-mail addresses, and the nature of the business association.

Statutes of 2003, Chapter 711, SB 578, Alarcon, effective January 1, 2004.

NOTE: It is arguable whether these new provisions in subdivision (g) of §6108 apply to public works contracts. Section 6108 is divided into nine subdivisions; subdivision (g) is the seventh. The first subdivision, (a), applies to apparel, equipment, materials and supplies “other than procurement related to a public works contract.” Subdivisions (b) and (c), although ambiguous, appear to be similarly limited. Subdivision (f) deals with establishment by the Department of Industrial Relations of a sweat-free code of conduct. Subdivision (g), however, begins with the bald statement that “no state agency may enter into a contract with any contractor unless the contractor meets the following requirements....” There is no provision within the text of subdivision (g) that would exclude public works contracts and, therefore, subdivision (g) (perhaps unintentionally) may apply to construction contracts. Section 6108 appears in Chapter 6, and most of the code sections in Chapter 6 clearly apply to public works contracts and licensed contractors.

LAUSD Is Authorized to Utilize Job Order Contracting

Article 60.3 commencing with §20919 is added to Public Contract Code. It authorizes the Los Angeles Union School District to utilize job order contracting. The objective is to accelerate construction contracting while reducing costs.

The district is to create a catalog of construction tasks and the unit prices to perform those tasks, the prices to be developed using prevailing wages but to exclude overhead and profit. The district could then issue job order contracts of up to $1 million. Job order contracts would be competitively bid by licensed, bonded and insured contractors. The work would be performed according to job order contract technical specifications to be published by the district.

The district must establish and enforce a labor compliance program for job order contracts. Bids are to be submitted by prequalified job order contractors based on adjustment factors to the unit prices listed in the catalog. Work will be awarded to the lowest responsible prequalified bidder.

Prequalification will be according to a standard questionnaire prepared by the Department of Industrial Relations involving such things as licensing, experience, financial capacity, safety programs, apprenticeship programs, OSHA and Labor Code compliance, claims and defaults. Job order contracts are subject to Subcontractor Listing Law requirements.

The district is to report to the Legislature whether job order contracting saves time and money and, pending such a report, the Legislature placed a moratorium on the enactment of additional legislation authorizing job order contracting. Statutes of 2003, Chapter 889, AB 14, Jerome Horton, effective January 1, 2004.

‘Racial Discrimination’ Is Defined; Prop. 209 Shall Not Be Interpreted to Grant a Cause of Action to Challenge Measures Undertaken to Advance Racial Groups

Section 31 of Article I of the California Constitution (Proposition 209) prohibits California public agencies from discriminating against or granting preferential treatment to any person on the basis of race. This bill adds §8315 to the Government Code to provide that “racial discrimination” has the same meaning as defined in the International Convention on the Elimination of All Forms of Racial Discrimination as adopted by the United Nations General Assembly in 1965. The bill also provides that §31 shall not be interpreted as granting an individual a private cause of action to challenge special measures undertaken to secure advancement of racial groups pursuant to the International Convention. Section 31 shall not be construed as requiring the government to prove racial discrimination before undertaking measures to secure advancement of minority groups.

The International Convention provides that special measures taken to secure advancement of racial groups in order to ensure equal enjoyment of human rights shall not be deemed racial discrimination and also requires states to bring to an end, by all appropriate means, racial discrimination and to encourage integrationist, multi-racial movements. Statutes of 2003, Chapter 211, AB 703, Dymally, effective January 1, 2004.

Conditions for Accepting an ‘Or Equal’ Are Expanded

Public Contract Code §§3400 and 10129 require public agencies to add the words “or equal” after the designation of a construction item that would otherwise limit the bidding to any one specific concern or any one designated brand or product except for field testing or experimenting or to match other products already in use on a particular public improvement. The statutes are amended so as to enable an agency “to obtain a necessary item that is only available from one source” or in order to respond to an emergency. The legislation is intended to codify existing California case law. Statutes of 2003, Chapter 233, SB 110, Margett, effective January 1, 2004.

Contractors Are Not to Discriminate Against Domestic Partners

Section 10295.3 is added to the Public Contract Code to provide that no state agency may enter into a contract for the acquisition of goods or services for $100,000 or more with a contractor who discriminates between employees with spouses and employees with domestic partners. Contractors must certify their compliance. Statutes of 2003, Chapter 752, AB 17, Kehoe, effective January 1, 2004.

Supervision of Project Inspectors Is Modified

School districts are authorized to enter into design-build contracts for school facilities costing more than $10 million. Under existing law, the school district governing board must employ a project inspector. Education Code §17250.35 is amended to provide that the project inspector shall act under the direction of either the Director of Department of General Services or a competent, qualified agent of the school district. Statutes of 2003, Chapter 53, AB 1573, effective January 1, 2004.

Requirements for Substitutions of Subcontractors Are Tightened

Under existing law, an awarding authority may consent to the substitution of a subcontractor when the listed subcontractor fails to sign a contract based upon the general terms, plans and specifications for the project or the terms of the subcontractor’s written bid. Public Contract Code §4107 is amended to require the contractor to present to the subcontractor a written contract for the scope of work and at the price specified in the subcontractor’s bid. Statutes of 2003, Chapter 180, AB 902, Diaz, effective January 1, 2004.

Department of Transportation May Reduce Required Amounts for Bonds on Jumbo Projects

The State Contract Act requires that contractors provide performance and payment bonds equal to at least one-half of the contract price. This bill gives the Department of Transportation the authority (on projects with a contract price greater than $250 million) to specify that the payment bond shall equal “not less than one-half of the contract price or $500,000,000, whichever is less.” This urgency statute took effect on August 4, 2003. Public Contract Code §10222, Statutes of 2003, Chapter 186, AB 1745, Committee on Transportation.

COMMENT: To this observer, the amendment does not make sense. The Legislature states that the amendment is an urgency statute in order to ensure that the Department of Transportation will be able to secure competitive bids for major construction projects. So, the intention was to reduce the amount of the required bond. The Legislature intended to lower the payment bond requirement on contracts of more than $250,000,000. This would imply that on a $250,000,001 contract, the amount of the bond could be less than $125,000,000. As written, this amendment could reduce the amount of a payment bond only in the case of a contract in excess of the colossal sum of $1 billion. The Department of Transportation is unlikely to issue a contract in excess of $1 billion any time soon because its entire budget for capital outlay, $1,011,072,000, is just over $1 billion. (Statutes of 2003, Chapter 157.) This observer suspects a typographical error. The legislature intended $50 million, not $500 million. Who is responsible? Hard to say. The bill has no author!

Work May Go on Despite Bid Protest

Section 510 is added to the Public Contract Code to provide that in the event of a bid protest, the contract nevertheless may be awarded pending a final decision on the protest. If the contract is determined to be invalid because of problems in the competitive bidding process caused solely by the public agency, the contractor tentatively awarded the contract would be entitled to be paid the reasonable cost (excluding profit) of the labor, equipment, materials and services furnished. Statutes of 2003, Chapter 678, AB 453, Yee, effective January 1, 2004.

State May Use Reverse Auctions to Purchase Goods and Services

Section 10290.3 is added to the Public Contract Code to authorize the Department of General Services to utilize reverse auctions for the acquisition of goods and services. The department is to specify an opening date and time for receiving electronic bids and designate the closing date and time. Bids are to be posted electronically on the Internet, and bidders may lower their prices. Bidders must be preregistered. The reverse auction process may not, however, be used for bidding on most public works construction contracts. Statutes of 2003, Chapter 266, AB 722, Matthews, effective January 1, 2004.

’Expatriate Companies’ Barred from Public Contracts

This act adds a new chapter to the Public Contract Code commencing with §10286 providing that state agencies, with certain exceptions, may not enter into contracts with expatriate corporations or their subsidiaries. The purpose is to discourage companies from reincorporating in tax haven countries to avoid their fair share of California taxes. “Expatriate companies” are defined as companies that have moved in name and on paper only to a tax haven country where they have no substantial business activities. Statutes of 2003, Chapter 657, SB 640, Burton, effective January 1, 2004.

Disabled Veteran Participation Goals Are Established

Military and Veterans Code §999.2 provides that contracts awarded by any state agency (including school districts when they are expending state funds for construction and professional services) shall have statewide participation goals of not less than 3 percent for disabled veteran business enterprises. This measure establishes definitions and requirements for certification as a disabled veteran business enterprise. Section 999.9 makes it a crime to participate in falsely obtaining certification or contracts as a disabled veteran business enterprise. Section 10115.9 is added to the Public Contract Code to enable a limited liability company to be certified as a disabled veteran business enterprise. Statutes of 2003, Chapter 632, SB 1008, Machado, effective January 1, 2004.

Remedy Is Provided Against Agencies that Misrepresent ‘Public Work’

Labor Code §1726 is amended to permit a contractor to recover damages from a public agency that misrepresented to the contractor that a job was not “public work,” provided the awarding body was given written notice by the Department of Industrial Relations that the job was “public work.” Section 1781 is added to the Labor Code to enable a contractor, under stringently restricted circumstances, to bring an action to recover from the awarding body damages incurred because a project is identified as a “public work” for the first time after bidding. Statutes of 2003, Chapter 804, SB 993, Poochigian, effective January 1, 2004.

HOUSING, LABOR, OTHER TOPICS

Legislature Authorizes $1.5 Billion in Bonds to Finance Payment of Worker’s Compensation Claims Against Insolvent Insurers

Article 14.26, commencing with §1063.70 is added to the Insurance Code to require the California Infrastructure and Economic Development Bank to issue up to $1.5 billion in bonds. The proceeds are to be deposited in the “Workers Comp Bond Fund.” The funds are to be used exclusively to finance payment of worker’s compensation claims against insolvent insurers.

Section 1063.72 provides that “the workers comp bond fund... shall not be subject to the rules or procedures of any fund in the state treasury, and application of the fund shall not be subject to the supervision or budgetary approval of any officer or division of state government.” Section 11873 of the Insurance Code is amended to provide that “the positions funded by the state compensation insurance fund are exempt from any hiring freezes and staff cutbacks otherwise required by law.” Statutes of 2003, Chapter 635, AB 227, Vargas, effective January 1, 2004.

Employer Penalties Are Increased

Under existing law, an employer who fails to pay wages is penalized $50 for a first violation and $100 for subsequent violations. Labor Code §210 is amended to increase the penalties to $100 and $200.

Existing law imposes a $100 penalty on an unlicensed contractor who employs a worker to perform services for which a license is required. Labor Code §1021 is amended to increase the penalty to $200.

Existing law imposes a penalty of $100 on a licensed contractor who employs an unlicensed contractor. Labor Code §1021.5 is amended to increase the penalty to $200.

Existing law penalizes an employer who pays less than the minimum wage $50 per pay period. Labor Code §1197.1 is amended to increase the penalty to $100 per pay period. Statutes of 2003, Chapter 329, AB 276, Koretz, Effective January 1, 2004.

Confidential and Supervisory Employees May be Subject to Agency Shop Agreements

Under existing law, confidential and supervisory employees are not subject to agency shop arrangements of public agencies. Government Code §3502.5 is amended so as to make confidential and supervisory employees subject to agency shop arrangements. “Management” employees still are exempt. Statutes of 2003, Chapter 311, AB 1141, Diaz, effective January 1, 2004.

Limitations Period Is Extended for Hazardous Material and Toxic Substance Cases

Section 340.8 is added to the Code of Civil Procedure extending the statute of limitations to two years after the plaintiff becomes aware of, or reasonably should have become aware of, the physical cause of an injury caused by a hazardous material or toxic substance and should have become aware of “sufficient facts to put a reasonable person on inquiry notice that the injury was caused or contributed to by the wrongful act of another, whichever occurs later.” Media reports of hazardous materials or toxic substances do not, in and of themselves, constitute sufficient facts “to put a reasonable person on inquiry notice….” Statutes of 2003, Chapter 873, SB 331, Romero, effective January 1, 2004.

Deadline for Fourth Revision to Housing Elements Is Extended by One Year

Government Code §65588 is amended to extend by one year the time within which local governments must enact the fourth revision of the housing element of the general plan. Statutes of 2003, Chapter 58, SB 491, effective July 14, 2003.

Law Penalizing Trespass Does Not Apply to Licensed Land Surveyors

Penal Code §602.8 defines the crime of trespass. Subdivision (c) is amended to provide that licensed land surveyors engaged in practice are not subject to prosecution for trespass. Statutes of 2003, Chapter 101, AB 924, Maldonado, effective January 1, 2004.

Requirements for Loans Made by the California Housing Finance Agency Are Loosened

Existing law requires that the security for a loan made by the California Housing Finance Agency have priority over any covenant, condition, restriction, limitation or agreement. The priority requirement is deleted, and the agency is authorized to make unsecured loans to local public entities. Health and Safety Code §51065.5, Statutes of 2003, Chapter 193, SB 353, Ducheny.

Requirements for CID Manager Certification Are Tightened

Business and Professions Code §11502 is amended to provide that in order to be called a “certified common interest development manager,” a person must have successfully completed an educational program and passed an examination covering common interest development law, employment law, risk management, finance, budgeting, contract negotiation, supervision, strategic planning and ethics. The educational programs and examinations are to be provided by professional associations and post-secondary educational institutions. Statutes of 2003, Chapter 147, AB 1423, Dutra, an urgency statute effective August 1, 2003.

Developers Must List Accessibility Features

Section 17959.6 is added to the Health and Safety Code to require developers of housing projects to provide to buyers a list of accessibility features. The list is to be made available according to a standard form to be developed by the Department of Housing and Community Development. It is to include some 30 items such as accessible handles on doors, visual fire alarms, doorbells, adjustable closet rods and shelves, and repositionable sink and countertop work space. Statutes of 2003, Chapter 648, AB 1400, Wolk, effective January 1, 2004.

Material Requirements for Alteration and Repair Are Liberalized

Health and Safety Code §17958.8 is amended to require local ordinances governing alterations to and repair of existing buildings to permit retention of the original materials and methods of construction as long as they complied with the code requirements in effect at the time of construction. Statutes of 2003, Chapter 474, AB 1034, Mullin, effective January 1, 2004.

Public Agencies Must Comply with Solar Energy Requirements

Under existing law, any covenant, condition or restriction contained in a deed or other instrument that prohibits or restricts the installation of a solar energy system is void and unenforceable. Civil Code §714 is amended to provide that a public entity that fails to comply may not receive funds from a grant or loan program for solar energy and forbids local public agencies to exempt residents from the requirements. Statutes of 2003, Chapter 290, AB 1407, Wolk, effective January 1, 2004.

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