CaliforniaSB 4402025-2026 Regular SessionSenateWALLET

Private Works Construction Fair Payment and Dispute Resolution Act.

Sponsored By: Rosilicie Ochoa Bogh (Republican)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 1 benefits, 0 costs, 3 mixed.

Interest and stop-work for nonpayment

Undisputed amounts not paid on time earn interest at 2% per month. Disputed amounts later found owed also earn 2% per month from when they should have been paid. To estimate interest, multiply the unpaid amount by 0.02 and by the number of months overdue. If payment is still not made, you may suspend work without penalty after two mailed notices: first a notice that payment is due, then, 30 days later, a 10‑day notice of intent to stop work. Send these notices by registered or certified mail. These rules apply to contracts signed on or after January 1, 2026.

Faster claim steps for private projects

To start a claim, send a separate written demand by registered or certified mail with return receipt. The owner must review it and, within 30 days, state in writing what parts are disputed and undisputed. Any undisputed part must be paid within 60 days of that statement. If you disagree or the owner does not respond, you may demand an informal meeting by registered or certified mail; the owner must schedule it within 30 days and then issue a follow-up statement within 10 business days. Any remaining dispute goes to nonbinding mediation; you split mediation costs equally and must agree on a mediator within 10 business days, or the contractor may choose one. If the owner fails to respond on time, the claim is deemed denied without any finding on the merits. A contract cannot waive these rights, but both sides may agree in writing to skip the meeting or mediation and go to court or binding arbitration, and may add extra steps that do not conflict with these timelines. If the owner refuses mediation, the contractor may use stop‑work remedies. These rules apply to contracts signed on or after January 1, 2026.

Subcontractor claims through the contractor

If a subcontractor cannot sue the owner because there is no direct contract, the contractor must present the subcontractor’s claim when asked in writing. The subcontractor must provide timely documents and cooperate in meetings, mediation, or other steps. The contractor must act in good faith, may not settle the claim without the subcontractor’s written OK, and must tell the subcontractor within 30 days whether it filed the claim and why not. Subcontractors keep their lien and stop‑work rights. This applies to contracts signed on or after January 1, 2026.

Which private construction claims are covered

These rules cover claims on private construction and site improvement jobs. They apply only to contracts signed on or after January 1, 2026. The law does not cover claims against state or local public owners, or a residential project that is not mixed use and is four stories or less. The owner must name a project manager to direct work and make changes; if none is named, the owner serves as project manager. The owner may also name a representative. This article is repealed on January 1, 2030, and the special rules end on that date.

Sponsors & Cosponsors

Sponsor

Rosilicie Ochoa Bogh
Republican • Senate

Cosponsors

Jeff Jeff Gonzalez
Republican • House

Roll Call Votes

All Roll Calls

Yes: 172 • No: 0

Senate vote • 8/29/2025

Item 285 — Senate SFLOOR

Yes: 37 • No: 0

House vote • 8/21/2025

Item 149 — Assembly AFLOOR

Yes: 77 • No: 0

legislature vote • 7/15/2025

Vote in CX13

Yes: 12 • No: 0

Senate vote • 5/15/2025

Item 133 — Senate SFLOOR

Yes: 34 • No: 0

legislature vote • 5/6/2025

Vote in CS53