California Construction Law: Important Changes Ahead

A number of significant changes to California construction statutes take effect over the next year. The first group of changes caps the amount of retention that can be withheld on public projects and shortens the time in which progress payments to subcontractors must be statutorily made on public and private projects, both of which took effect January 1, 2012. Second, sweeping modifications to California law governing mechanics liens and stop notices become effective July 1, 2012. Third, subcontractor interest groups championed major modifications to California's "anti-indemnity" statutes—modifications that are generally very protective of subcontractors. The ramifications are so far reaching that these changes do not go into effect until January 1, 2013. Contract forms and contract administration need to be adjusted in light of each of these changes to avoid inadvertent forfeiture of important rights and unenforceable contract provisions.