As you might recall, in August we wrote that filing California liens could become more expensive. Last week, it became official. By passing SB 2, it will cost between $75 and $225 to record documents relating to real property (except for sales). This more than doubles the cost of filing California liens, and it’s effective immediately. Several other affordable housing bills were also passed.
California Affordable Housing Bills
California is in the midst of a housing crisis. It’s gotten so bad that even some highly paid Google employees live in the parking lot. That’s a fun little story, but the problem is serious- homelessness, soaring rent, and exorbitant home prices have pushed the California legislature to find a solution. These bills attempt to solve that issue.
SB 2
Senate Bill 2 has drawn harsh criticism, and for good reason. First, here’s the positive: it’s expected to raise $250M a year. That money will be put toward aiding the housing crisis. Ready for the bad? It more than doubles the cost of recording documents (including mechanics liens).
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The Senate Bill 2 would tack on a $75 fee at the time of recording any real estate instrument, paper, or notice required or permitted by law. That $75 fee applies to each parcel, and can rise to as much as $225 (which is the cap). Property sales will not be subject to the fee, but all other recordations will.
The fees will be used for a variety of uses. 10 % will be used to address affordable homeownership/ rental housing opportunities for agricultural workers. 20% will be spent on affordable owner-occupied workforce housing. The remaining 70% will go toward: development of affordable rental and ownership housing, acquiring and rehabbing foreclosed/vacant homes, reserves for future housing developments, emergency shelters, aiding homeownership opportunities, and a handful of other uses.
The Others
A helpful breakdown can be found here.
Several other affordable housing bills were passed in attempt to alleviate the California housing crisis. SB 3 opens the door for a future statewide housing bond to pay for neglected affordable housing programs. SB 35 pushes cities to help with the shortage of housing supply. SB 166 requires cities to supply enough sites for construction – it prohibits a city or county from allowing the number of sites dedicated to housing from falling short of benchmarks. SB 167 strengthens California’s Housing Accountability Act. Finally, SB 540 amends planning and zoning laws to speed up the approval process for housing developments.
Takeaway
The housing crisis is serious issue, so these California affordable housing bills are hopefully a step in the right direction. However, adding $75-$225 to filing fees will be tough for contractors, subs, and suppliers. These fees will add up in a hurry and could very well discourage lien claimants from protecting their right to payment. Successful claims might be able to recoup those amounts, but filing fees cannot be included in a lien claim itself. The margin for error is already tight when filing lien claims, and California mistakes just became more costly.
For more on California’s construction payment laws, check out our California Resources. Not in California? Select your state.
