California Enacts Private Works Change Order Fair Payment Act for Private Construction Projects

Short summary

California enacted the Private Works Change Order Fair Payment Act (Civil Code §8850), establishing a mandatory multi-step claims and dispute-resolution process for private construction contracts starting January 1, 2026. The law imposes strict deadlines for claim review, payment of undisputed amounts, informal settlement conferences, and mediation, with 2% monthly interest on retroactively owed amounts. Standard industry forms like AIA and DBIA do not yet reflect these non-waivable procedures, so contract modifications are recommended.

• •New mandatory claims-resolution process for California private construction projects effective Jan 1, 2026
• •Strict deadlines: 30-day owner response, 60-day payment of undisputed amounts, mandatory mediation before litigation
• •2% monthly retroactive interest on disputed amounts later determined to be owed; standard AIA/DBIA forms need modification

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