SB 440 does not cover the typical house. An ordinary single-family home, a standard tract, and a non-mixed-use apartment building of four stories or fewer are outside the new change order law.
That is the line most summaries miss.
The residential exclusion requires both conditions
SB 440 created the Private Works Change Order Fair Payment Act. It applies to private construction contracts entered into on or after January 1, 2026.
The residential exclusion says: “This section shall not apply to the construction of a residential project if the project is not mixed use and does not exceed four stories.”
Read the conjunction. The exclusion applies only when both conditions are true:
- The project is not mixed use.
- The project does not exceed four stories.
Both true means SB 440 does not apply.
Flip the test and the covered group is broader. A residential project is covered if it is mixed use, or if it exceeds four stories. Either one is enough. A ground-floor-retail-over-apartments project is covered. A five-story residential building is covered.
Some published summaries say a residential project must be mixed use and exceed four stories. That is not what the statute says.
Residential home improvement work excluded from SB 440 still has its own paperwork rules. For example, SB 517 requires the subcontractor disclaimer on every change order, not just the original contract.
Commercial and tenant improvement jobs are covered
The residential exclusion does not touch nonresidential private work. Commercial, retail, office, industrial, and tenant improvement projects are covered regardless of story count.
Public works are not covered. The statute’s definition of “owner” expressly excludes state agencies, cities, counties, districts, public authorities, the California State University, the University of California, and the other listed public entities. Public works change orders remain on their separate track.
For a C-10 shop doing mixed residential and commercial work, the result is job specific. You cannot assume the same claim procedure applies across your backlog.
An email does not start the SB 440 clock
The delivery method is part of the statutory definition of a claim. A claim must be a separate demand sent by registered mail or certified mail with return receipt requested.
A text does not qualify. An email does not qualify. A note on an invoice does not qualify. A conversation with the superintendent does not qualify.
No compliant mailing, no statutory clock.
A claim can seek one or more of three things: a time extension, payment for work performed, or an amount that is disputed. The time-extension category matters when utility energization timing delays your electrical scope or an inspection delay affects the schedule.
The payment category also makes disciplined pricing of electrical work and change order scope more than an estimating issue. Your mailed demand must state what you are asking for.
The owner gets 30 days to answer
Within no more than 30 days, the owner must provide a written statement identifying the disputed and undisputed portions of the claim.
The undisputed portion must be processed and paid within 60 days after the owner issues that written statement. An undisputed amount not paid on time bears interest at 2 percent per month. That is 24 percent per year. That is the law’s financial pressure.
Silence does not leave the claim pending forever. If the owner fails to respond within the required time, the claim is deemed denied in its entirety. Denied. Not undecided.
For the disputed portion, the owner must schedule a meet and confer conference within 30 days. Any remaining dispute then goes to nonbinding mediation. The owner and claimant split the mediation costs equally.
Stopping work requires two waiting periods
SB 440 creates a stop-work right for contractors and subcontractors, but it is not permission to walk off the job immediately.
The sequence is specific. Payment becomes due. Thirty days pass. The contractor or subcontractor then sends a 10-day written notice of intent to stop work.
Both waiting periods matter. So does the written notice. This right reaches subcontractors, which matters when your C-10 company is working under a general contractor rather than directly for the owner.
A subcontractor must send the claim through the general
A subcontractor without privity with the owner does not go straight to the owner. The subcontractor may send the contractor a written request to present the subcontractor’s claim.
The contractor then has 30 days after receiving that request to notify the subcontractor in writing whether the claim was presented.
That gives you an answer deadline. It does not let you bypass the general contractor. Put the pass-through request in writing and calendar the response date.
The contract date decides whether the law applies
SB 440 applies to “contracts entered into on or after January 1, 2026.” The change order date does not control.
A contract signed in December 2025 is outside the statute even if construction and the disputed change order occur in 2026.
The law was approved by the Governor on October 10, 2025, and chaptered as Chapter 583. It added Civil Code Sections 8850 and 8851. Section 8851 says the article remains in effect only until January 1, 2030, when it is repealed unless extended.
A waiver of these rights is “void and contrary to public policy.” You do not have to negotiate for the protection, and a contract clause cannot make you surrender it.
SB 440 also sits beside other 2026 rules affecting contractor money and exposure, including SB 61’s 5 percent retention cap on private construction and AB 1002’s consequences involving wage judgments and contractor licenses.
Change your claim procedure before the next dispute
Check the contract execution date first. If it predates January 1, 2026, stop. SB 440 does not apply.
Next, test the project type. For residential work, ask whether it is not mixed use and four stories or fewer. If both are true, the project is excluded.
For a covered job, send every statutory claim by registered or certified mail with return receipt requested. Keep a dated copy showing when it was mailed and exactly what it requested. Calendar 30 days and 60 days from the send date.
If you are a subcontractor, send the pass-through request to the general in writing and calendar the general’s 30-day answer. Do not rely on the email chain. It starts none of these deadlines.
