The Clock is Ticking: SB 440 Takes Effect January 1, 2026
The new year brings a mandatory shakeup to California’s private construction industry. Effective January 1, 2026, Senate Bill 440 — the Private Works Change Order Fair Payment Act (“SB 440”) — will govern how contractors and owners resolve disputes over change orders and time extensions. Codified as new Civil Code §8850, this law imposes strict, non-negotiable timelines backed by severe financial penalties. For all private contracts signed on or after this date, the old way of handling delayed change order reviews is over.
What Claims Are Covered? Know the Scope
It is critical to understand that SB 440 does not apply to every dispute on your project. This law is narrowly focused on providing mandatory protections only for claims related to changes in the scope of work.
A “claim” that triggers the §8850 process is a formal, documented demand for one or more of the following:
- A Time Extension: Including relief from owner-assessed delay damages.
- Payment of Additional Compensation: For approved changes to the scope of work.
- Payment of a Disputed Amount: A specific payment that the owner has challenged or withheld.
If your claim falls into one of these categories, the following mandatory deadlines apply.
The Two Non-Negotiable Deadlines
The Critical Nuance: When Can a Deadline Be Extended?
The law prohibits parties from waiving these protective timelines in the initial contract. However, the legislature included a crucial provision for practical flexibility:
- Civil Code §8850(d)(3) explicitly allows the owner and contractor to mutually agree, in writing, to extend the 30-day Claim Review Period for a specific, complex claim after that claim has been submitted.
This is a key tool for project health: it allows owners and contractors to collaborate on reviewing complicated claims without tripping the deemed denial penalty, provided they formalize the extension.
Prepare Your Business for 2026
This law rewards preparation and punishes delay. All owners, developers, contractors, and subcontractors must take immediate action to align their procedures with §8850.
Conclusion: A New Era for Private Construction
SB 440 marks a turning point in California private construction contracts and aligns with previous changes applicable to public works by implementing a process for handling change-order claims that rewards responsiveness and collaboration. Awareness, proactive contract revision, and process and claim training are essential to avoid the applicability of step penalties for delayed payment.
[View source.]
