(California Government Code)
DIVISION 2. SUBDIVISIONS
Chapter 5. Improvement Security
66499. (a) Whenever this division or a local ordinance
authorizes or requires the furnishing of security in
connection with the
performance of any act or agreement, if the developer
is not a nonprofit corporation described in subdivision
(c) of Section
66499.3, the security shall be one of the following
at the option of and subject to the approval of the
local agency and if the
developer is a nonprofit corporation described in subdivision
(c) of Section 66499.3, the security shall be one of
the following,
subject to the approval of the local agency:
(1) Bond or bonds by one or more duly authorized corporate
sureties.
(2) A deposit, either with the local agency or a responsible
escrow agent or trust company, at the option of the
local agency,
of money or negotiable bonds of the kind approved for
securing deposits of public moneys.
(3) An instrument of credit from an agency of the state,
federal, or local government when any agency of the
state, federal,
or local government provides at least 20 percent of
the financing for the portion of the act or agreement
requiring security, or
from one or more financial institutions subject to regulation
by the state or federal government and pledging that
the funds
necessary to carry out the act or agreement are on deposit
and guaranteed for payment, or a letter of credit issued
by such a
financial institution.
(4) A lien upon the property to be divided, created
by contract between the owner and the local agency,
if the local agency
finds that it would not be in the public interest to
require the installation of the required improvement
sooner than two years
after the recordation of the map.
(5) Any form of security, including security interests
in real property, which is acceptable to the local
agency and specified
by ordinance thereof.
(b) Any contract or security interest in real property
entered into as security for performance pursuant to
paragraph (4) or
paragraph (5) of subdivision (a) shall be recorded with
the county recorder of the county in which the subject
real property is
located. From the time of recordation of the written
contract or document creating a security interest,
a lien shall attach to the
real property particularly described therein and shall
have the priority of a judgment lien in an amount necessary
to complete
the agreed to improvements. The recorded contract or
security document shall be indexed in the Grantor Index
to the names of
all record owners of the real property as specified
on the map and in the Grantee Index to the local agency
approving the map.
The local agency may at any time release all or any
portion of the property subject to any lien or security
interest created by
this subdivision or subordinate the lien or security
interest to other liens or encumbrances if it determines
that security for
performance is sufficiently secured by a lien on other
property or that the release or subordination of the
lien will not
jeopardize the completion of agreed upon improvements.
(Amended by Stats. 1982, Ch. 657; Amended by Stats.
1988, Ch. 1308.)
66499.1. Except as provided in Section 66499.3, a bond
or bonds by one or more duly authorized corporate sureties
to secure the
faithful performance of any agreement shall be in substantially
the following form:
Whereas, The Board of Supervisors of the County of __________
(or the City Council of the City of __________) State
of
California, and __________ (hereinafter designated as
"principal") have entered into an agreement
whereby principal agrees to
install and complete certain designated public improvements,
which said agreement, dated __________, 19__, and identified
as project ______, is hereby referred to and made a
part hereof; and
Whereas, Said principal is required under the terms
of said agreement to furnish a bond for the faithful
performance of said
agreement.
Now, therefore, we, the principal and _______, as surety,
are held and firmly bound unto the County of __________,
(or
City of __________) hereinafter called ("__________"),
in the penal sum of___________ dollars ($__________)
lawful
money of the United States, for the payment of which
sum well and truly to be made, we bind ourselves, our
heirs, successors,
executors and administrators, jointly and severally,
firmly by these presents.
The condition of this obligation is such that if the
above bounded principal, his or its heirs, executors,
administrators,
successors or assigns, shall in all things stand to
and abide by, and well and truly keep and perform the
covenants, conditions
and provisions in the said agreement and any alteration
thereof made as therein provided, on his or their part,
to be kept and
performed at the time and in the manner therein specified,
and in all respects according to their true intent
and meaning, and
shall indemnify and save harmless __________, its officers,
agents and employees, as therein stipulated, then this
obligation
shall become null and void; otherwise it shall be and
remain in full force and effect.
As a part of the obligation secured hereby and in addition
to the face amount specified therefor, there shall
be included costs
and reasonable expenses and fees, including reasonable
attorney's fees, incurred by county (or city) in successfully
enforcing
such obligation, all to be taxed as costs and included
in any judgment rendered.
The surety hereby stipulates and agrees that no change,
extension of time, alteration or addition to the terms
of the
agreement or to the work to be performed thereunder
or the specifications accompanying the same shall in
anywise affect its
obligations on this bond, and it does hereby waive notice
of any such change, extension of time, alteration or
addition to the
terms of the agreement or to the work or to the specifications.
In witness whereof, this instrument has been duly executed
by the principal and surety above named, on __________,
19__.
Appropriate modifications shall be made in such form
if the bond is being furnished for the performance
of an act not
provided for by agreement.
(Added by Stats. 1974, Ch. 1536. Effective March 1,
1975; Amended by Stats. 1988, Ch. 1308.)
66499.2. A bond or bonds by one or more duly authorized
corporate sureties for the security of laborers and
materialmen shall be
in substantially the following form:
Whereas, The Board of Supervisors of the County of __________
(or City Council of the City of _________________),
State of California, and (hereinafter designated as
"principal") have entered into an agreement
whereby principal agrees to
install and complete certain designated public improvements,
which said agreement, dated ________, 19__, and identified
as
project ______, is hereby referred to and made a part
hereof; and
Whereas, Under the terms of said agreement, principal
is required before entering upon the performance of
the work, to file
a good and sufficient payment bond with the County of
______________ (or the City of ____________) to secure
the claims
to which reference is made in Title 15 (commencing with
Section 3082) of Part 4 of Division 3 of the Civil
Code of the State
of California.
Now, therefore, said principal and the undersigned as
corporate surety, are held firmly bound unto the County
of
___________ (or the City of _______________________)
and all contractors, subcontractors, laborers, materialmen
and other
persons employed in the performance of the aforesaid
agreement and referred to in the aforesaid Code of
Civil Procedure in the
sum of ____________ dollars ($________), for materials
furnished or labor thereon of any kind, or for amounts
due under the
Unemployment Insurance Act with respect to such work
or labor, that said surety will pay the same in an
amount not
exceeding the amount hereinabove set forth, and also
in case suit is brought upon this bond, will pay, in
addition to the face
amount thereof, costs and reasonable expenses and fees,
including reasonable attorney's fees, incurred by county
(or city) in
successfully enforcing such obligation, to be awarded
and fixed by the court, and to be taxed as costs and
to be included in the
judgment therein rendered.
It is hereby expressly stipulated and agreed that this
bond shall inure to the benefit of any and all persons,
companies and
corporations entitled to file claims under Title 15
(commencing with Section 3082) of Part 4 of Division
3 of the Civil Code,
so as to give a right of action to them or their assigns
in any suit brought upon this bond.
Should the condition of this bond be fully performed,
then this obligation shall become null and void, otherwise
it shall be
and remain in full force and effect.
The surety hereby stipulates and agrees that no change,
extension of time, alteration or addition to the terms
of said
agreement or the specifications accompanying the same
shall in any manner affect its obligations on this
bond, and it does
hereby waive notice of any such change, extension, alteration
or addition.
In witness whereof, this instrument has been duly executed
by the principal and surety above names, on __________,
19__.
(Added by Stats. 1974, Ch. 1536. Effective March 1,
1975.)
66499.3. Security to guarantee the performance of any
act or agreement shall be in the following amounts:
(a) An amount determined by the legislative body, not
less than 50 percent nor more than 100 percent of the
total estimated
cost of the improvement or of the act to be performed,
conditioned upon the faithful performance of the act
or agreement; and
(b) An additional amount determined by the legislative
body, not less than 50 percent nor more than 100 percent
of the total
estimated cost of the improvement or the performance
of the required act, securing payment to the contractor,
to the
subcontractors, and to persons furnishing labor, materials,
or equipment to them for the improvement or the performance
of the
required act.
(c) Whenever an entity required to furnish security
in accordance with subdivisions (a) and (b) is a California
nonprofit
corporation, funded by the United States of America
or one of its agencies, or funded by this state or
one of its agencies, the
entity shall not be required to comply with subdivisions
(a) and (b), if the following conditions are met:
(1) A letter or letters of credit are provided pursuant
to paragraph (3) of subdivision (a) of Section 66499
for 100 percent of
the contract of improvements or the contractor installing
the improvements has bonded to the nonprofit corporation
and the
local agency as coobligee the amount of 100 percent
of the contract for the faithful performance of the
work, and has further
bonded to the nonprofit corporation and the local agency
as coobligee an amount of not less than 50 percent
of the contract for
the payment of labor and materials, and those bonds
comply with the provisions of this chapter.
(2) All moneys under the control of the nonprofit corporation
and payable to the contractor by the nonprofit corporation
are
deposited in a depository complying with the provisions
of this chapter, and out of which moneys progress payments
are
conditioned upon:
(A) The contractor's certification to the nonprofit
corporation that all labor performed in the work, and
all materials
furnished to and installed in the work, have been paid
for in full to the date of the certification.
(B) The written approval of the nonprofit corporation.
(C) Review and approval of progress payment billings
by local government.
(D) Final payment to the contractor not being made until
30 days shall have expired after the filing and recording
of the
notice of completion of the work and acceptance of the
work by, and a waiver of lien rights provided by the
contractor to, the
local agency in writing.
(3) All certifications as to progress payments shall
be delivered through the United States mail to the
nonprofit corporation.
The term "progress payments" means payments
made in compliance with the schedule of partial payments
agreed upon in the
contract for the work. No less than 10 percent of the
total contract price shall be retained for the 60 days
following the filing of
the notice of completion.
(d) Subject to the limitations of Section 66499.9, an
amount determined by the legislative body necessary
for the guarantee
and warranty of the work for a period of one year following
the completion and acceptance thereof against any defective
work
or labor done, or defective materials furnished.
(Amended by Stats. 1982, Ch. 489. Effective July 10,
1982; Amended by Stats. 1988, Ch. 1308.)
66499.4. As a part of the obligation guaranteed by the
security and in addition to the face amount of the
security, there shall be
included costs and reasonable expenses and fees, including
reasonable attorneys' fees, incurred by the local agency
in
successfully enforcing the obligation secured.
(Added by Stats. 1974, Ch. 1536. Effective March 1,
1975.)
66499.5. If the required subdivision improvements are
financed and installed pursuant to special assessment
proceedings, the
local agency at its option may provide by local ordinance
that, upon the furnishing by the contractor of the
faithful
performance and labor and material bonds required by
the special assessment act being used, the improvement
security of the
subdivider may be reduced by an amount corresponding
to the amount of such bonds so furnished by the contractor.
(Added by Stats. 1974, Ch. 1536. Effective March 1,
1975.)
66499.6. Such money, negotiable bond or instrument of
credit shall be a trust fund to guarantee performance
and shall not be
subject to enforcement of a money judgment by any creditors
of the depositor until the obligation secured thereby
is performed
to the satisfaction of the local agency.
(Amended by Stats. 1982, Ch. 497. Effective July 1,
1983.)
66499.7. The security furnished by the subdivider shall
be released in whole or in part in the following manner:
(a) Security given for faithful performance of any act
or agreement shall be released upon the performance
of the act or final
completion and acceptance of the required work, or the
legislative body may provide for the partial release
of the security upon
the partial performance of the act or the acceptance
of the work as it progresses, under rules established
by the legislative body.
(b) Security securing the payment to the contractor,
his or her subcontractors and to persons furnishing
labor, materials or
equipment shall, after passage of the time within which
claims of lien are required to be recorded pursuant
to Article 3
(commencing with Section 3114) of Chapter 2 of Title
15 of Part 4 of Division 3 of the Civil Code and after
acceptance of the
work, be reduced to an amount equal to the total claimed
by all claimants for whom claims of lien have been
recorded and
notice thereof given in writing to the legislative body,
and if no such claims have been recorded, the security
shall be released
in full.
The release shall not apply to any required guarantee
and warranty period required by Section 66499.9 for
the guarantee or
warranty nor to the amount of the security deemed necessary
by the local agency for such guarantee and warranty
period nor to
costs and reasonable expenses and fees, including reasonable
attorneys' fees.
The legislative body may authorize any of its public
officers or employees to authorize release or reduction
of the security in
accordance with the conditions hereinabove set forth
and in accordance with such rules as it may prescribe.
(Amended by Stats. 1983, Ch. 1195; Amended by Stats.
1988, Ch. 1308.)
66499.8. In all cases where the performance of the obligation
for which the security is required is subject to the
approval of
another agency, the local agency shall not release the
security until the obligation is performed to the satisfaction
of such other
agency. Such agency shall have two months after completion
of the performance of the obligation to register its
satisfaction or
dissatisfaction. If at the end of that period it has
not registered its satisfaction or dissatisfaction,
it shall be conclusively deemed
that the performance of the obligation was done to its
satisfaction.
(Added by Stats. 1974, Ch. 1536. Effective March 1,
1975.)
66499.9. Any liability upon the security given for the
faithful performance of any act or agreement shall
be limited to:
(a) The performance of the work covered by the agreement
between the subdivider and the legislative body or
the
performance of the required act.
(b) The performance of any changes or alterations in
such work; provided, that all such changes or alterations
do not exceed
10 percent of the original estimated cost of the improvement.
(c) The guarantee and warranty of the work, for a period
of one year following completion and acceptance thereof,
against
any defective work or labor done or defective materials
furnished, in the performance of the agreement with
the legislative
body or the performance of the act.
(d) Costs and reasonable expenses and fees, including
reasonable attorneys' fees.
(Added by Stats. 1974, Ch. 1536. Effective March 1,
1975.)
66499.10. Where the security is conditioned upon the
payment to the contractor, his subcontractors and to
persons furnishing
labor, materials or equipment to them for the improvement
or the performance of an act and takes the form of
a deposit of
money or negotiable bonds, a suit to recover the amount
due the claimant may be maintained against the holder
of such
deposit. Where the security takes the form of a surety
bond, or surety bonds, the right of recovery shall
be in a suit against the
surety. Where the security takes the form of an instrument
of credit, the cause of action shall be against the
financial institution
obligating itself on such instrument of credit.
(Added by Stats. 1974, Ch. 1536. Effective March 1,
1975.)