A Beginner’s Guide to the Preliminary Notice
Generally, the first step in the mechanicʼs lien process is to serve preliminary notices to various parties within the ladder of supply. It’s important to note that a preliminary notice is not a mechanic’s lien, but rather a prerequisite to filing the lien that identifies you as a supplier of labor and/or materials to the construction project. It’s also not a legal document that will affect your customer’s creditworthiness, unlike a mechanic’s lien which is formally filed with the state and/or county.
A preliminary notice goes by different names depending on the state in which it’s served. Some alternative names include: notice to contractor, notice to owner, notice of furnishing and prelien notice. Be careful not to confuse a preliminary notice with a notice of intent to lien.
Know the Difference: Statutory vs. Non-Statutory
Statutory notices establish your right to lien in the event of non-payment. They are governed by state law and typically must be served upon the general contractor and/or project owner within the specified timeframe. However, it’s recommended you serve the notice upon all parties within the ladder of supply to increase transparency and prioritize your payment. In states where a preliminary notice is required, failure to send a notice or meet the stated deadline can invalidate your right to file a mechanic’s lien on the project.
Currently, 43 states in the U.S. and one province in Canada have provisions for a preliminary notice to be served prior to filing the lien. However, not all 43 states require a notice for every project type (private vs. public). Be sure to review the statutory requirements carefully.
Non-Statutory notices are not required by state law and are served upon all parties within the ladder of supply. This type of notice is strictly a precautionary measure intended to prompt timely payment. Failure to serve a non-statutory notice does not affect your mechanic’s lien rights.
Include Thorough & Accurate Job Info in Your Preliminary Notices
Collecting thorough and accurate job or project information is a critical part of the mechanic’s lien process. Job information is any and all detail pertaining to a given construction project. You should obtain this information prior to serving your notice to ensure it’s as complete as possible. It’s important to review the statute carefully, as missing or omitting required job information such as the furnishing dates, claim/contract amounts, party specifics, and material descriptions can leave you in an unfavorable position when it comes time to file a lien on the project.
Don’t Delay – Meet Your Deadlines!
As with many other aspects of the mechanic’s lien process, the deadline to serve your preliminary notice varies state by state. In most cases, your notice must be served within a set timeframe from when labor and/or materials are first furnished on the project. For example, a private project in the state of Ohio requires the preliminary notice to be served within 21 days from first furnishing, while a private project in Florida has a more lenient requirement of 45 days.
Some states, such as Texas and Louisiana, require a preliminary notice to be sent for every month that payment is not received. These states require greater management of deadlines which can slightly complicate the process.
Forget the Format? No Way!
Just as preliminary notices vary in name, type and deadline, each state has its own specific formatting requirements. Some states are particular about seemingly small details such as font size and bold/italic/underlined words or phrases. There have even been cases where companies lose their mechanic’s lien rights due to something as detailed as margin size. Review & re-review formatting requirements so you don’t lose your lien rights.
Make No Mistake – Serve Your Preliminary Notices Correctly
In most cases, preliminary notices must be sent by certified mail with return receipt requested or by registered mail. It’s important to save a copy of the notice and receipt so that if/when you file a mechanic’s lien on a project, you can prove compliance with the statute. Be aware, in several states, notices must be posted to an online registry.
- A statutory preliminary notice establishes your right to lien in the event of non-payment
- If serving a notice is not a statutory requirement, serve a non-statutory notice
- Be sure your notice includes thorough & accurate job information
- Be on time! Notice deadlines are critical
- Make sure your notice meets any and all formatting requirements
- Play it safe and send all notices by certified mail with return receipt requested, or as otherwise dictated by statute
Want more information on the mechanic’s lien process, or need assistance drafting & serving a preliminary notice? Contact NCS today!