Three Great Reasons Why You Should Serve Non-Statutory Notices
If you are furnishing to a construction project, you probably already know the immense benefit of serving preliminary notices to protect your mechanic’s lien and bond claim rights. But what should you do if there isn’t a required preliminary notice? Do nothing? Of course not. You should serve a non-statutory notice and I have three great reasons why!
What are Non-Statutory Notices?
First, let’s address the difference between statutory and non-statutory. Statutory is “enacted by statute” and statute is the law. So, if we say you need to serve a statutory notice to protect your lien rights, we are referring to the preliminary notice that is required by the statute or law. That means, if something is non-statutory, it is not required by statute or law
A non-statutory notice is a notification to an owner that its property has been or will be improved by the goods or services supplied.
There are instances where a preliminary notice isn’t required. If you are furnishing to a project in a state where there is no statutory or required notice, we recommend you serve a non-statutory notice.
“Um, why would I send a notice if it’s not required?” I’m glad you asked!
#1: It Promotes Transparency
By serving a notice, you are giving everyone in the ladder of supply a heads up that you are furnishing material or services to the project. Often, parties toward the top of the ladder (like the owner and GC) have no idea who the various suppliers and subcontractors are. View this notice as a courtesy to those parties. You are letting them know you are involved and while you don’t anticipate any payment problems, you do expect to be paid timely.
#2: Makes You a Payment Priority
This ties into number one. Because you are notifying everyone of your involvement, you are also making yourself a payment priority. How? Well, now they know your company name, they know what you are providing to the project, they know how to get in touch with you, and they know that you know how to protect yourself in the event you aren’t paid.
Think of it another way – what if something goes awry with the GC, and the owner starts remitting payment to the subs and suppliers directly. Don’t you want to be front of mind for the owner? Better yet, wouldn’t it be nice if the owner has all contact information for you because they received a notice about your involvement? Think of all the subs and suppliers the owner doesn’t know about – how quickly are those folks going to get paid? Probably not very quickly; in fact, it’s more likely that those folks would have to proceed with a lien or a bond claim.
Which leads me to number 3.
#3: Reduces the Need for Mechanic’s Liens and Bond Claims
Although I just covered this, let me recap. If the owner/GC gets a copy of your notice, they know you’re on the job and they know they need to pay you, which means you will likely be a payment priority (front of the line). And that means you are less likely to need the leverage of a mechanic’s lien or a bond claim.
Need a 4th Reason? How About a Sample?
Need a fourth reason? Non-statutory notices are an excellent way to pick up additional project information. Let’s face it, job information (aka project information) can be tough to find. Wouldn’t it be nice if you could just throw the “ASK” out there? An easy way to ask for additional information is to include it right within your non-statutory notice.
Here’s a sample notice with the “ASK” included:
Dear Sir or Madam:
[Company Name] has or will be furnishing [description of materials or services being furnished] for the above construction project.
We serve notices on all projects to promote transparency and open communication. Transparency helps ensure payment for the materials and/or services we have supplied, and we want you to be fully informed about who may have lien rights on your property.
Please understand, this is in no way a reflection on the credit worthiness of any party. If you have any questions about this notice, or if you can provide any additional information (such as a copy of payment bond) or notice incorrect information, please contact us.
[Company Address, Phone/Fax, Email]