Half-Dozen Lien Laws Went Active on Jan. 1

With the new year came a handful of changes to construction lien laws, mainly in the western United States:
  • Texas' H.B. 2093: Dramatically limits the ability of other parties on a private or public construction project to transfer risk to subcontractors when subcontractors are not at fault. The law bans broad-form indemnity clauses in private and public construction contracts and mandates that "a consolidated insurance program that provides general liability insurance coverage must provide completed operations insurance coverage for a policy period of not less than three years." The law also makes additional insured requirements in construction contracts "void and unenforceable," except on consolidated insurance programs and for personal injury claims.
  • Texas' H.B. 1456: Creates statutory lien waiver forms, both conditional and unconditional, for progress payments and final payment on construction projects. As a result, subcontractors and their clients will not have to manage an unpredictable patchwork of lien waiver forms.
  • California's S.B. 293: Effectively caps retainage on subcontractors at 5% on state and local public contracts entered into through the start of 2016. The new law improves prompt payment law by requiring upper-tier contractors on public projects to pay lower-tier contractors within seven days of receiving a progress payment.
  • Oregon's S.B. 384: Intended to be a "clean up" of the private prompt pay statutes, and is not meant to make any major substantive changes to this area of law. The bill helps clarify the circumstances in which attorney fees for claims for "payment of interest" can be recovered and corrects an omission in which the established time for final payment, the fourth of the four established prompt payment deadlines, did not have an opt-out provision.
  • Oregon's S.B. 382: Changes the notices that construction lien claimants must send to lenders. First, it defines the term "mortgagee" to be only those persons whose names and addresses appear in the county's real property records. It can also include an assignee, but only if the assignee's name and address are shown in the county's real property records. The bill was proposed in part due to the issues surrounding the Mortgage Electronic Registration System. The bill also clarifies that a construction lien claimant needs to send statutorily required notices only to those mortgagees whose names and addresses are shown in the county's real property records.
  • Alabama's H.B. 56: Requires companies with state contracts to begin using the federal E-Verify system to confirm employees' legal status to work. It also provides that companies will have their business licenses suspended after a first violation and permanently revoked after a second violation of the law.

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