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 Bill Text - SB-440 Private Works Change Order Fair Payment Act.

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 |Add To My Favorites |Track Bill | Version: 10/10/25 - Chaptered
 09/02/25 - Enrolled
 06/23/25 - Amended Assembly
 04/28/25 - Amended Senate
 02/18/25 - Introduced

 SB-440 Private Works Change Order Fair Payment Act.(2025-2026)

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 Date Published: 10/13/2025 02:00 PM

SB440:v95#DOCUMENTBill Start

 Senate Bill

 No. 440

 CHAPTER 583

 An act to add and repeal Article 4 (commencing with Section 8850) of Chapter 8 of Title 2 of Part 6 of Division 4 of the Civil Code, relating to works of improvement. 

 [
 Approved by

 Governor
 October 10, 2025.

 Filed with

 Secretary of State
 October 10, 2025.
 ]

LEGISLATIVE COUNSEL'S DIGEST

SB 440, Ochoa Bogh.
 Private Works Change Order Fair Payment Act.

Existing law contains various provisions relating to contracts for the performance of private works of improvement, including provisions applicable to a retention withholding by an owner from a direct contractor or by a direct contractor from a subcontractor. 

This bill would establish, until January 1, 2030, for contracts entered into on or after January 1, 2026, a claim resolution process, as specified, applicable to any claim by a contractor or subcontractor, as described, in connection to a work of improvement or site improvement, except as specified. The bill would define a claim for these purposes as a separate demand by the contractor or subcontractor, as described, sent by registered mail or certified mail with return receipt requested, for,
 among other things, a time extension for relief from damages or penalties for delay assessed by an owner under contract for a work of improvement or site of improvement. The bill would make related findings and declarations.

Digest Key

 Vote:
 MAJORITY 
 Appropriation:
 NO 
 Fiscal Committee:
 NO 
 Local Program:
 NO 

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 This act may be cited as the Private Works Change Order Fair Payment Act.

SEC. 2.

 Article 4 (commencing with Section 8850) is added to Chapter 8 of Title 2 of Part 6 of Division 4 of the Civil Code, to read:

 Article
 4. Claims and Disputes 

8850.

 (a) The Legislature finds and declares all of the following: 

(1) It is in the best interests of the state and its citizens to ensure that all construction business performed on a private works project in the state that is complete and not in dispute is paid in full and in a timely manner. 

(2) Delays in payment for works of improvement and site improvements impose significant financial hardships on contractors, particularly small businesses, disadvantaged business enterprises, and disabled veteran business enterprises.

(3) The lack of clear procedures for resolving disputes related to change orders often leads to costly litigation where a predetermined method could avoid such costs. 

(4) Prompt and fair payment promotes economic stability within the construction industry and ensures efficient project completion. 

(b) Notwithstanding any other law, this section shall apply to any claim by a contractor, or where authorized pursuant to this article, a subcontractor, in connection to a work of improvement or site improvement.

(c) For purposes of this section, the following terms apply:

(1) “Claim” means a separate
 demand by a contractor, or where authorized pursuant to this article, a subcontractor, sent by registered mail or certified mail with return receipt requested, for one or more of the following: 

(A) A time extension, including, without limitation, for relief from damages or penalties for delay assessed by an owner under contract for a work of improvement or site improvement.

(B) Payment by the owner of money or damages arising from work done by, or on behalf of, the contractor pursuant to the contract for a work of improvement or site improvement project and payment for which is not otherwise expressly provided or to which the claimant is not otherwise entitled.

(C) Payment of an amount that is disputed by the owner.

(2) (A) “Owner” means the owner who causes a building, improvement, or structure to be constructed, altered, or repaired, or that person’s successor in interest at the
 date a notice of completion is recorded, whether the interest or estate of the owner be in fee, as vendee under a contract of purchase, as lessee, or other interest or estate less th