Recent California Construction Industry Developments
We hope you and your family are well during these times. With the ongoing pandemic and related federal, state, and local laws effecting every aspect of business operations, we wanted to provide a quick update on the current situation as it relates to the California construction industry.
California’s statewide “Stay at Home” Order exempts all construction work as “Essential Critical Infrastructure Workers”. This means that construction crews are continuing to operate while taking common precautions of social distancing and extra hygiene. However, various California counties and cities have issued their own “Shelter in Place” or similar orders that only exempt certain types of construction – most commonly “essential infrastructure”, public works, healthcare and residential construction. For example, on March 31st, San Francisco Bay Area health officials issued a sweeping new order banning a range of commercial and residential construction that had previously been exempt from stay-at-home mandates.
With the inevitable halt of certain construction projects, it’s important that those who provided material and/or labor, keep track of certain lien rights in order to secure payment. For general contractors, sub-contractors, and suppliers, one of the most popular and effective ways to secure payment is through the recording of a mechanics lien. Under the law, the cut off time to record a mechanics lien is ninety (90) days from completion of the project. If the project is halted, a cessation of labor for a continuous period of sixty (60) days is deemed to be an equivalent to the completion of the work. While, the “clock” starts from the completion of a project, a cautious policy would be to record a mechanics lien within ninety (90) days from last furnishing of labor or material to a project. This policy especially protects indirect parties who provided material or services during construction because once labor and/or supplies are provided to the project, it is difficult to track when exactly the project was completed. It’s important to stay vigilant during this time in tracking lien rights and communicating to your counsel recent information on specific projects that you believe may need lien rights secured.
As always, stay safe and healthy.