Private Works Change Order Fair Payment Act.

The 60-day deadline for claimants to furnish all claims after discovering the basis for the claim, along with the requirement to include the reason for the claim and the method of calculating time or compensation sought, was removed entirely.

The burden-of-proof provision requiring contractors or subcontractors to demonstrate by a preponderance of the evidence that any disputed claim was agreed upon by the owner or project manager was removed. This significantly lowers the bar for claimants to prevail on disputed claims.

The exemption for residential projects was narrowed. The old version exempted all 'residential or multifamily dwellings' and 'Type V construction.' The new version exempts only 'a residential project if the project is not mixed use and does not exceed four stories.' This brings many more residential and small commercial projects under the law's coverage.

The stop-work right in subdivision (k) was simplified. The old version specified the right applied 'if the owner fails to make payment of undisputed amounts due when and as required under this section.' The new version simply states contractors may suspend work 'until payment is received' following the notice procedure, removing the specific tie to undisputed amounts.

The definition of 'claim' was changed from 'a timely and separate demand' to simply 'a separate demand,' removing the timeliness requirement from the statutory definition itself.

The bill title was shortened from 'Private Works Construction Fair Payment and Dispute Resolution Change Order Fair Payment Act' to 'Private Works Change Order Fair Payment Act.'

The definition of 'Type V construction' (referencing Section 602.5 of Title 24) was removed, consistent with the removal of Type V construction from the exemption.

The language 'less retention where authorized by contract' was removed from both payment provisions (subdivisions d(3) and e(4)), meaning owners can no longer withhold retention amounts when processing undisputed claim payments within the 60-day window.

The definition of a 'claim' was narrowed. Previously it covered any money or damages arising from work done that was not otherwise expressly provided for. Now it specifically covers 'additional compensation by an owner for approved changes to the contractor's scope of work, whether disputed or undisputed.' This shifts the bill's focus from general payment disputes to change order disputes.

The residential exemption was significantly narrowed. The old version excluded all 'residential or multifamily dwellings' and all 'Type V construction.' The new version only excludes 'a residential project if the project is not mixed use and does not exceed four stories.' This means larger residential projects (5+ stories), mixed-use projects, and Type V construction above 4 stories are now covered by the bill.

The exclusion for public entities was expanded from a cross-reference to Section 9204 of the Public Contract Code to an explicit list including state agencies, CSU, UC, cities (including charter), counties (including charter), districts, special districts, public authorities, political subdivisions, public corporations, and nonprofit transit corporations wholly owned by a public agency.

The mediation selection process was simplified. The old version required each party to select a mediator, then those mediators would select a neutral third party, with each party bearing their own mediator's fees. The new version simply states that if the parties cannot agree on a mediator within the allotted time, 'the contractor may select the mediator to be used.'

The documentation requirement was restructured. Previously, furnishing reasonable documentation was embedded within the claim submission requirements alongside the reason for the claim and calculation method. Now it is separated into its own paragraph as a distinct obligation of the claimant.

The bill title was changed from 'Private Works Construction Fair Payment and Dispute Resolution Act' to 'Private Works Construction Fair Payment and Dispute Resolution Change Order Fair Payment Act' to reflect the narrowed focus on change orders.

Claims can now be brought by subcontractors in addition to contractors, where authorized under the article. Previously only contractors could bring claims.

New exemption: the section does not apply to construction of residential or multifamily dwellings or Type V construction (as defined in Title 24, Section 602.5). This removes a large category of private projects from coverage.

New burden of proof provision: a contractor or subcontractor bringing a claim must prove by a preponderance of the evidence that the disputed claim was agreed upon by the owner (or an agent reasonably believed to have authority) or by the project manager for minor changes not inconsistent with the original contract.

Claims must now be submitted within 60 days of the basis for the claim being discovered and must include at minimum: (1) the reason for the claim and (2) the method of calculating the time or additional compensation sought. Parties may agree to additional documentation and standardized forms.

Stop-work rights are narrowed: they now apply only when the owner fails to pay undisputed amounts due under the section, rather than any payment due under the contract. The 10-day notice of intent to stop work must also be sent by registered or certified mail.

Subcontractors must cooperate with the contractor in informal conference, mediation, and dispute resolution processes. The contractor must exercise good faith and cannot settle a subcontractor's claim without the subcontractor's written approval.

Payment of undisputed portions of a claim is now made 'less retention where authorized by contract,' meaning owners can withhold contractual retention from undisputed amounts during the 60-day payment window.

New interest provision: disputed amounts later found to be owed through dispute resolution bear interest at 2 percent per month from the date they would have been due had they not been disputed.

New provision preserving the right of either party to submit a statutory offer of settlement under Code of Civil Procedure Section 998, clarifying this section does not limit that right.

New provision: any disputed amount that the owner agrees to pay or that is found owed through dispute resolution becomes an undisputed amount for all timeline and process purposes from the date of agreement or finding.

If the owner refuses mediation, the contractor may now proceed directly to the stop-work process. If parties cannot agree on a mediator within the allotted time, the contractor may select the mediator (simplified from the prior multi-step selection process).

The bill was assigned Chapter 583 and the Governor's approval date (October 10, 2025) was inserted, reflecting its enactment into law.

Enrolled-bill header elements (Senate/Assembly passage dates, Secretary of the Senate and Chief Clerk signature lines, blank Governor receipt line) were removed in favor of the standard chaptered format.

The header 'STATE OF CALIFORNIA AUTHENTICATED ELECTRONIC LEGAL MATERIAL' was added, which is the standard designation for codified statutes in California.