NTO-Phobia: the Fear of the Preliminary Notice
The Fear: A common fear expressed by contractors, subcontractors and material suppliers everywhere is “My customer will get upset if I send a preliminary notice”. A preliminary notice (sometimes referred to as a Notice to Owner (NTO) or Notice to Customer), shouldn’t upset anyone, especially if the intent of the document is properly explained.
What is a Preliminary Notice?
A preliminary notice is a document, written to comply with statute, sent to the owner and/or prime contractor as a precondition to filing a mechanic’s lien or serving a bond claim. This document notifies the owner that their property is being improved by the goods and/or services your company is providing.
All too frequently, the owner of the property is unaware that a supplier has provided goods and/or services, until the preliminary notice is served. A preliminary notice does not indicate there is any current payment problem; in fact, the preliminary notice is an aid in retaining rights in the event a payment problem arises.
Yes, the service of a preliminary notice is the first step in the mechanic’s lien filing process, but it is not a mechanic’s lien.
A preliminary notice can be considered a courtesy, advising the owner of the supplier’s involvement in providing quality products and services. The purpose of the notice is to benefit the owner so that they may obtain lien waivers from all subcontractors and suppliers as the project progresses, so that the owner’s interests are also protected.
Did You Know
In the state of Florida the preliminary notice is titled “Notice to Owner;” in the states of Ohio, Georgia and Michigan, the preliminary notice is titled “Notice of Furnishing.” Combine these titles to define the notice: “THE NOTICE OF FURNISHING TO THE OWNER”.
At the End of the Day
The service of a preliminary notice is simply a legal tool for you to use to secure your receivables. Your goal is to ensure payment from your customers in a timely fashion; the mechanic’s lien process was created to protect you and help you reach your goal.
By the Way
Remember, the time frames for serving your notice vary on a state-by-state basis. Be sure to have current information regarding timetables and information requirements. Serve your preliminary notice; it will serve you well.