SB 440 establishes a claim resolution process for claims by a contractor or subcontractor related to a work of improvement or site improvement. This resolution process can be used until January 1, 2030 for contracts entered into on or after January 1, 2026.
For purposes of SB 440, a claim is a written demand by a contractor or subcontractor for one or more of the following: (1) a time extension; (2) payment by the owner of money or damages that is not expressly provided for but that arises from work done by the contractor pursuant to the contract; or (3) payment by the owner of a disputed amount. An owner is the owner of the building, improvement, or structure to be constructed, altered or repaired; an owner does not include a public agency.
The resolution process outlined by SB 440 first involves the owner reviewing the claim. If the owner disputes portions of the claim, then the contractor or subcontractor may demand an informal conference. If disputed portions of the claim remain after the informal conference, then that portion of the claim must be submitted to nonbinding mediation. Finally, if the mediation is unsuccessful, then the disputed portion of the claim will be subject to any dispute resolution procedures included in the contract between the parties or by final judgment if no such procedures exist.
(SB 414 adds Article 4 (commencing with Section 8850) to Chapter 8 of Title 2 of Part 6 of Division 4 of the Civil Code.)