Civ. Code, § 8726 · Article 3. Form of Security
Civ. Code, § 8726
Text — As published in the Legislative Counsel's database, tables dated October 18, 2026 (pubinfo_2025.zip)
An escrow account under this chapter shall satisfy all of the following requirements:
(a) The account shall be designated as a “construction security escrow account.”
(b) The account shall be located in this state and maintained with an escrow agent licensed under the Escrow Law, Division 6 (commencing with Section 17000) of the Financial Code, or with any person exempt from the Escrow Law under paragraph (1) or (3) of subdivision (a) of Section 17006 of the Financial Code.
(c) The owner shall deposit funds in the account in the amount provided in Section 8728. This chapter does not require a construction lender to agree to deposit proceeds of a construction loan in the account.
(d) The owner shall grant the direct contractor a perfected, first priority security interest in the account and in all funds deposited by the owner in the account and in their proceeds, established to the reasonable satisfaction of the direct contractor, which may be by a written opinion of legal counsel for the owner.
(e) The funds on deposit in the account shall be the sole property of the owner, subject to the security interest of the direct contractor. The owner and the direct contractor shall instruct the escrow holder to hold the funds on deposit in the account for the purpose of perfecting the direct contractor’s security interest in the account and to disburse those funds only on joint authorization of the owner and the direct contractor, or pursuant to a court order that is binding on both of them.
Notes and commentary — not statutory text
History
Added by Stats. 2010, Ch. 697, Sec. 20. (SB 189) Effective January 1, 2011. Operative July 1, 2012, by Sec. 105 of Ch. 697 and by Section 8052.
Source of truth
- Edition
- As published in the Legislative Counsel's database, tables dated October 18, 2026 (pubinfo_2025.zip)
- Official file
- https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV§ionNum=8726.
- Text hash
- sha256 abd21a3e6434f6bbe60abd73a2039c45b6922283b8e77edf1db2e4da3098f89d
- Composed by
- compose_ca.py 2026-10-22: the Legislative Counsel's CAML content files read by a tokenizer (caml_readers.reader_a); an independent xml.etree reading (caml_readers.reader_b) agrees on every section
This section cites
Provisions in this library that the text above cites, as it prints each citation. A range cited as “ss. 61.13-61.16” links its first and last provisions.
Cited by 1 provision
Provisions in this library whose text cites Civ. Code, § 8726. Each shows the citation as that text prints it.
Civil Code
Procedural information only. Not legal advice and not a substitute for the advice of an attorney. Confirm the current text with the official publisher before relying on it.