A heads up to professional designers, contractors and property owners in California: You may want to review the language in your contracts. The California legislature recently passed Senate Bill 496, extending indemnity protections for design professionals to private jobs, as well as the protections they have always enjoyed on public contracts.
Who does the law cover?
The law extending indemnity protection to private contracts covers the following design professionals officially licensed under Division 3 of the California Business and Professions Code:
- Building architects and businesses offering architectural services
- Landscape architects businesses providing landscape architectural services
- Engineers and business entities offering professional engineering services
- Land surveyors and business entities offering surveying services
What does the new law say?
SB 496 is an amendment to Section 2782.8 of the California Civil Code relating to indemnity. Prior to passage, the law said that design professionals working on public contracts for any municipal or state entity could not be held liable for "defend(ing) the contracting public agency under an indemnity agreement, including legal costs, except in cases when the design professional is found negligent or guilty of willful misconduct. The amended version now includes indemnity protections for private contracts, beginning with any contracts entered into after January 1, 2018.
The wording of the amended version of the law is as follows;
"For all contracts, and amendments thereto, entered into on or after January 1, 2018, for design professional services, all provisions, clauses, covenants, and agreements contained in, collateral to, or affecting any such contract, and amendments thereto, that purport to indemnify, including the duty and the cost to defend, the indemnitee by a design professional against liability for claims against the indemnitee, are unenforceable, except to the extent that the claims against the indemnitee arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the design professional. In no event shall the cost to defend charged to the design professional exceed the design professional's proportionate percentage of fault." (Bold emphasis ours.)
In short, beginning next January, contracts for private projects are now included in the original law dating back to 2007 and amended in 2011.
Review the standard language of your contracts
Perhaps most important, is the clause that specifically states that terms of these provisions may not be "waived or modified" by the parties when drafting the contract. So, if you are a general contractor or property owner for private projects, you will need to review standard contract language that formerly allowed you to waive indemnity protections, except under conditions that fall within the scope of the amended law.
However, the law continues to stipulate that design professionals are not completely off the hook. Parties may still come to agreement on waivers and contractual provisions that are not "expressly prohibited" by the amended law.
Contact us with further questions about this amendment.