Article 2Security Requirement

Section § 8710

Explanation

If you're a property owner hiring a contractor under specific circumstances, you must give the contractor some protections. First, provide security as a backup if you fail to pay as agreed, unless you mostly own the contracting company. Second, give them a certified copy of any construction loan documents from the bank, showing how much you've borrowed for the project.

An owner described in subdivision (a) of Section 8700 shall provide the direct contractor all of the following:
(a)CA Civil Law Code § 8710(a) Security for the owner’s payment obligation pursuant to the contract. The security shall be used only if the owner defaults on the payment obligation to the direct contractor. This subdivision does not apply to an owner that is the majority owner of the direct contractor.
(b)CA Civil Law Code § 8710(b) A copy, certified by the county recorder, of any recorded mortgage or deed of trust that secures the construction loan of a lending institution for the work of improvement, disclosing the amount of the loan.
property owner obligations direct contractor protection payment security loan documents construction loan disclosure majority owner exemption contractor payment default county recorder certification recorded mortgage deed of trust lending institution loan improvement work financing payment obligation contract security contractor payment assurances
(Added by Stats. 2010, Ch. 697, Sec. 20. (SB 189) Effective January 1, 2011. Operative July 1, 2012, by Sec. 105 of Ch. 697 and by Section 8052.)

Section § 8712

Explanation

This law says that if a property owner doesn't provide the necessary security as required, the contractor can send them a notice demanding it. This notice has to meet certain requirements. If the owner still doesn't provide the security within 10 days after the notice, the contractor is allowed to stop working until the owner takes care of it.

If an owner fails to provide or maintain the security required by this chapter, the direct contractor may give the owner notice demanding security. The notice shall comply with the requirements of Chapter 2 (commencing with Section 8100) of Title 1. If the owner does not provide or maintain the security within 10 days after notice demanding security is given, the direct contractor may suspend work until the owner provides or maintains the security.
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(Added by Stats. 2010, Ch. 697, Sec. 20. (SB 189) Effective January 1, 2011. Operative July 1, 2012, by Sec. 105 of Ch. 697 and by Section 8052.)

Section § 8714

Explanation

This section states that you cannot make a contract that ignores or rejects this chapter's rules because it's against the public interest.

It is against public policy to waive the provisions of this chapter by contract.
public policy waiver contract provisions chapter rules agreement restrictions ignore rules reject rules illegal contract terms contract limitations public interest protection
(Added by Stats. 2010, Ch. 697, Sec. 20. (SB 189) Effective January 1, 2011. Operative July 1, 2012, by Sec. 105 of Ch. 697 and by Section 8052.)

Section § 8716

Explanation

This law says that nothing in the current chapter changes or weakens the legal tools that builders and subcontractors use to make sure they get paid, like mechanics liens or stop payment notices. It also confirms that these rights include the main contractor's responsibility to pay subcontractors on time.

This chapter does not affect any statute providing for mechanics liens, stop payment notices, bond remedies, or prompt payment rights of a subcontractor, including the direct contractor’s payment responsibilities under Section 7108.5 of the Business and Professions Code.
mechanics liens stop payment notices bond remedies prompt payment rights subcontractor payment direct contractor responsibilities Section 7108.5 Business and Professions Code contractor payment obligations builder payment tools main contractor duties construction payment rights subcontractor rights construction industry
(Added by Stats. 2010, Ch. 697, Sec. 20. (SB 189) Effective January 1, 2011. Operative July 1, 2012, by Sec. 105 of Ch. 697 and by Section 8052.)