Long Answer:

What Types of Notices Are There?  Are They Mandatory?

While the term “notice” gets used a great deal in construction circles, many contractors do not understand what is meant by “notice.” Is it a “notice of intent to lien?” Is it a pre-work “preliminary notice?”  All notices are not the same, and that was the subject of a useful blog post on this Construction Lien Blog: All Notices Are Not Created Equal: Preliminary Notice v. Notice of Intent to Lien

This is a great comparison of the differences between preliminary notices (which are sent at the start of a project before any payment is overdue) and notices of intent (which are sent when you unpaid).  Notices are not required in every state, and for the states that do require notices, the types of notices required a different.

A run-down of which states require notices and which do not are available on this blog here: Is Notice Required In My State? List of Notice and Non-Notice States. Remember also that our LienPilot can calculate your notice requirements based on your job information.

How Are Preliminary Notices Sent?

This is a very important question. In fact, if your state requires certain notices, and you send them but send them incorrectly, it may be just as bad as not sending them at all. Accordingly, sending the notice as required by statute is very, very important.  And you guessed it: Delivery requirements are different in every state.

It’s safe to say that most states require preliminary notices be sent by certified mail, or certified mail with return receipt requested. There are some instances, however, when notices must be sent by registered mail only, by mail with restricted delivery, hand delivered by courier, and/or actually filed with the county recorder.

Just as important as delivering the notice correctly is proving that you delivered the notice. California has some pretty strict requirements in this regard, which can give you an idea of what you’ll confront in proving preliminary notice delivery elsewhere.  We wrote a blog post about this here:  Strict Proof of Delivery May Be Required for Construction Notices.

It’s this simple:

1. You put in your project information (state, your role, project type);
2. The Wizard tells you the applicable notice requirements and lien deadlines
3. You select from the list of associated documents

Zlien’s database of lien and notice deadlines and requirements is more extensive and accurate than any other database in the country.

Take a look at these screen shots to see how the first 2 screens of the Wizard works:

Step 1: Inputting Your Project Information

The first step is easy.    The Wizard asks four basic questions about your project – the state where you are working,  your role in the project, who hired you, and what the type of project.

Lien laws vary state-by-state, but they also vary depending on those other three factors.   It is common for states to impose heightens notice requirements for residential projects…and oftentimes, notices are required only from subcontractor and those without a contract with the owner (rather than from everyone).

Step 2: Getting Applicable Notice and Lien Requirements for Your Project

With the small amount of information you provided, the Wizard pulls and displays from its database only the information, requirements and deadlines that are relevant to your project.

Once you’ve read over the notice and lien requirements, you’ll be ready to choose the type of document you want to file or send.   Even this component of the Wizard is tailored to your project, as only the documents relevant to you and your project will display.

Watch It On Video

Screen shots just not doing it for you?

Take a walk-through of these first two steps on video:

And remember, a database is just a database.   It has limitations.   We feel great about our product and its ability to display to you the relevant laws, notice requirements and lien deadlines.   However, there will never be a substitute for a real live attorney reviewing your specific project.  Zlien is not a law firm.

When representing property owners, savvy construction attorneys will recommend that these statutes be utilized to protect the owner from future liens.

An example of these types of statutes can be found in Delaware, under the Code Title 25, Section ¶2705.  The statute provides simply as follows:

The owner of any structure built, repaired or altered by any contractor or subcontractor may require such contractor or subcontractor from time to time to furnish and submit to him a complete and accurate list in writing of all persons who have furnished labor or material, or both, in connection therewith, and who may be entitled to avail themselves of the provisions of this chapter. Should any such contractor or subcontractor fail to furnish such list for 10 days after demand made therefor by such owner, he shall be entitled to receive no further payments from the owner until such list be furnished and shall not be entitled to avail himself of any of the provisions of this chapter.

What does this mean?

Well, quite simply, if an owner makes this “demand” in writing, the contractor or subcontractor ought to immediately comply or risk losing the ability to file a lien.

Unlike Delaware, Louisiana has a reverse requirement…allowing the contractor or subcontractor to burden the property owner with future performance with the risk of penalty for non-compliance.

La. R.S. 9:4822(K) provides that any person with lien rights may give a certain notice to the property owner, and if provided properly, the owner will be required to notify that person within 3 days of the filing of a notice of termination, the substantial completion or the abandonment of the work.  Of course, these events trigger time requirements under the lien statute.

What happens when an owner fails to provide this notice?   They are liable for “all costs and attorney’s fees for the establishment and the enforcement of the claim.”

Working on a private project in either state?  Both the Delaware and Louisiana notice can be ordered from Zlien today.

According to the blog, this requirement already exists for subcontractors, and the purpose of the amendment would be to extend the requirement to contractors who contract directly with the property owner.

The Illinois Construction Law Blog does weigh the pros and cons of the bill.

In their discussion, they mention that the bill makes sense because homeowners cannot be considered as sophisticated as commercial property developers.

On the other hand, however, since the bill would only require notice before filing the lien, the blog states that notice could be given the day before the lien is filed. Of this time frame, the author asks “what protection does that afford the home-owner?”

A similar requirement exists in Louisiana, according to Wolfe Law Group’s Construction Law Monitor. They describe the requirement as follows:

Notice is required whenever you are working on a residential project, and you contract directly with the owner of the property, who also lives in the residence.

The type of notice required is called the “Notice of Lien Rights.”

The Notice of Lien Rights to be sent to owners in residential projects is very important, because the law requires that it be provided before work begins, and not as a condition to your construction contract.

Read full article here.

The difference between the Louisiana requirement and the requirement in Illinois, however, is that in Louisiana notice is required before work begins, and in Illinois, its required only before filing the lien. Perhaps the goals of the Illinois legislature would be better achieved by a rule similar to that of Louisiana’s?

Nevertheless, for the time being, the requirement does not exist at all for contractors in Illinois, and is only a twinkle in the legislature’s eye. You can track the progress of the bill at this link.

It will be to any contractors’ benefit to review this article online, access which habits apply to you, and make an effort to avoid the costly mistakes.  Any progress will help increase your bottom line.

The seven habits highlighted are:

1)    The “Gentlemen’s Agreement” – A Handshake and Your Word.   Bottom line:  Get it in writing.
2)    Using Contracts that Fall Short of the Legal Requirements.
3)    Not Getting Every Change Order in Writing.
4)    Failing to invoice immediately.
5)    Failing to serve a preliminary 20-day notice (pre-lien construction notices)
6)    Don’t Worry – They Will “Take Care of You” on the Next Job
7)    It isn’t good “customer service” to record a Mechanic’s Lien

The first paragraph of the report’s summary nicely explains the challenges facing legislatures when drafting and re-drafting lien laws:

The Lien Law Study Committee was born out of concern for homeowners coupled with respect to private enterprise.   Indeed, there are frustrated and worried homeowners who have had liens filed against their real property despite the fact that these homeowners have paid in full for services rendered.   Conversely, there exist disappointed, hard-working homebuilders, subcontractors and suppliers who have provided goods and services yet have received no payment.

The bill – which is described as a “fair and balanced lien law” by the Georgia Lien Rights Coalition, was passed by the Georgia legislature earlier in 2008.

The bill (Senate Bill 374) will become law in Georgia on March 31, 2009.  It’s important that contractors, subcontractors, suppliers, property owners and all others affected understand the changes, as it can affect each’s lien rights.

Great summaries of the changes are provided by the Georgia Lien Rights Coalition on its site.

General Changes:

1. Lien Deadlines are worded in days instead of months.  So, for example, instead of requiring a lien to be filed within an ambiguous “3 months,” liens must now be filed 90 days from labor, services or materials last supplied to the property;
2. Day Counting is now more consistent with Georgia law.  If a deadline fills on a weekend or public holiday, it will be extended to the next business day.  Previously, the deadline would be moved up to the preceding business day.
3. Definitions are clarified.

Changes that Benefit Suppliers or Subcontractors

1. Notice of Bond to Remove Lien: Previously, a property owner could bond out a lien without ever notifying the subcontractor or supplier.  The new rules close this lophole by requiring property owners to notify lien claimants that the lien has been bonded off the property.
2. Deadlines: All deadlines in the Georgia lien laws are made clearerby the new bill.  Here are some important deadline changes:
   1. Liens must be filed within 90 days from labor, services or materials last supplied to the premises (previously 3 months);
   2. Notice of Lien filing must be sent to property owner within 2 business days from filing of claim of lien;
   3. Lien must be perfected within 365 days from w hen lien filed (previously 1 yr from labor, services or materials last supplied);
   4. Notice of lawsuit to perfect lien must be delivered to owner within 30 days (previously 14 days).

Changes that Benefit General Contractors and Homebuilders

1. Prior law was inconsistent and confusing as to whether general contractors or homebuilders were required to receive copies of filed liens.  The new law states that when a “Notice of Commencement” is filed on the project, the general / homebuilders must receive notice of the lien.
2. The Lien Waiver Forms have been made more clear, with bold, capital letters explaining what the waiver means.

Changes that Benefit Property Owners

1. New Notice of Contest: Owners can now send a “Notice of Contest” to contractors who file a claim of lien.  The notice sets forth that the Owner contests the debt, and requires that a lawsuit to perfect the lien be filed within 60 days.  If a suit is not filed within the 60 day period, the lien is invalidated.
2. Expiration Date on Lien: The new rule requires that the Claim of Lien itself include a statement as to when it expires.

For more information about the revised law, you can view the Senate Bill 374 here, and you can read about hte new rules at the Georgia Lien Rights Coalition website.

Zlien continues to monitor the lien law changes in Georgia, as it does in every state.  When the new rules go into effect on March 31, 2009, the Zlien, Inc. forms will be updated to meet the new requirements.

Our service prepares and files Claims of Lien for contractors, subcontractors and suppliers throughout the state of Georgia.  We also send Notices of Lien to the interested parties, can prepare and send Notices of Contest for Georgia property owners, and prepare and file lawsuits to perfect your construction liens.

Save your company time and money, and ensure that your Georgia liens are filed professionally with Zlien.

A common and extremely valuable tool to preservation of payment in contracting is the right and power to lien a project. Wolfe Law Group has written several articles which can be found on this website, its public blog and its public wiki, related to the practice of lien preservation and enforcement. Briefly, a lien is a privilege over a piece of property which secures a person’s right to payment. If you provide materials, supplies, labor or other qualifying services to improve a parcel of property, you may have a legal right to recover the debt owed to you against the actual property improved. In that sense, a lien operates similar to a mortgage.

Lien claimants have been warned that there are preparatory requirements which must be fulfilled prior to filing a lien. You may read about the basic requirements put upon contractors under RCW 60.04, by clicking here:

Washington Lien Law

Unfortunately for contractors, but fortunately for homeowners and small commercial developers or builders, RCW 18.27, the chapter dealing with the registration of contractors, requires additional obligations of the contractor prior to starting a project.

Under 18.27.114, a contractor must provide an owner with a Model Disclosure Statement prior to initiating work valued at over $1,000.00 on four or less residential units or homes. Additionally, any commercial project under the price of $60,000.00 places the same obligation upon the contractor.

A copy of the Model Disclosure Statement can be found by clicking right here. This document should be provided to the owner prior to the initiation of work and the contractor should secure the signature of the owner on a copy which should be retained for at least three years.

Wolfe Law Group suggests that as a contractor, you should include a copy of this form, along with the Notice of Lien forms found here, in each of your contracts, or if your company uses a simple proposal, order, or initial invoice, along with that document.

The failure to satisfy RCW 18.27.114 could result in a lien filing being deemed improper or even illegal, and the owner recovering its attorney fees and filing costs from yourself as filer.

Many of you may wonder: “Have I lost my right to lien a project because I failed to deliver this form?” There is no definitive answer to this question. However, a review of RCW 18.27.090, illustrates that certain persons are exempt from the protections of Chapter 18.27.

Under RCW 18.27.090(5), “sale of any finished products, materials or articles which do not become fixtures” is exempt. Therefore, it seems that materials bought and consumed at the site would be exempt.

Further, under RCW 18.27.090(11), “an owner who contracts for a project with a registered contractor…” Additionally, several cases have indicated that Courts are willing to permit contractors to satisfy the purpose of 18.27.114 through other means.

So, it seems that your outstanding projects may be safe. But, recent changes in the law in 2007 have aimed at gearing down on contractor freedom, tightening the bolts on the requirements of 18.27.114. Therefore, we cannot stress enough the importance of including this document in your initial bid, order, agreement or contract.

This notice is commonly referred to as “Preliminary 20-day Notice,” and contrary to popular belief, the notice must be sent to the required parties before work begins, and not simply before a lien is filed.

What is Preliminary 20-Day Notice?
California Civil Code § 3097 provides that notice “means a written notice from a claimant that is given prior to the recording of a mechanic’s lien…”

The California preliminary notice requirements are similar to the requirements of other states, and they purport to serve the following general purpose: to notify the property owner that the property may be liened in the event of non-payment.

A construction lien carries severe consequences to the property owner. If a property owner pays the general contractor, and it fails to pay its subs, through a construction lien the owner may be obligated to pay twice on the project! Most states require preliminary notice to ensure that the owner is notified of who is and who is not working on his property.

The form of California’s Preliminary Notice
California statute requires that preliminary notices contain specific information. Civ. Code § 3097(c) provides that the notice must contain the following:

• General description of the labor, service, equipment or materials furnished, or to be furnished, and an estimate of its total price;
• Name and address of person furnishing the labor, service, etc.
• Name of person who contracted for the purchase of that labor, service, equipment, etc.
• Description of the jobsite sufficient for identification
• The following statement in bold face type:
  NOTICE TO PROPERTY OWNER

  If bills are not paid in full for the labor, services, equipment or materials furnished or to be furnished, a mechanic’s lien leading to the loss, through court foreclosure proceedings, of all or part of your property being so improved may be placed against the property even though you have paid your contractor in full. You may wish to protect yourself against this consequence by (1) requiring your contractor to furnish a signed release by the person or firm giving you this notice before making payment to your contractor, or (2) any other method or device that is appropriate under the circumstances. Other than residential homeowners of dwellings containing fewer than five units, private project owners must notify the original contractor and any lien claimant who has provided the owner with a preliminary 20-day lien notice in accordance with Section 3097 of the Civil Code that a notice of completion or notice of cessation has been recorded within 10 days of its recordation. Notice shall be by registered mail, certified mail, or first-class mail, evidenced by a certificate of mailing. Failure to notify will extend the deadlines to record a lien.

Since these requirements are set forth by statute, and lien statutes are typically strictly construed, it is important that your preliminary notice meet the requirements of Civ. Code §3097(c).

A Free Template of a California Preliminary Notice form can be downloaded here: California Preliminary Notice Template & Proof of Service Affidavit

Who Must Provide Notice
As discussed above, not everyone is required to provide this preliminary notice. There are many circumstances when a contractor or supplier can lien a project when they have not sent preliminary notice.

The key question, therefore, is clearly this: Who must provide Preliminary Notice?

The general rule of thumb in California is that Preliminary Notice is required by anyone who is not:

1. In direct contract with the owner; or
2. Performing actual labor, as an employee or as part of a labor union.

In other words, if you are an actual laborer or the party who contracted directly with the owner, you need not send preliminary notice to file a lien.

Interestingly, California courts have very liberally construed the phrase “direct contract with the owner” to include other parties aside from those who actually signed the contract with the owner.

In California, any contractor or materialman is presumed to be under “direct contract” with the owner so long as the owner has actual knowledge that construction work is being performed on his property! Kim v. JF Enterprises (App 2. Dist. 1996) 50 Cal. Rptr. 2d 141, 42 Cal. App. 4th 849.

Where to Send Notice
Assuming you are required to send Preliminary Notice, the California statutes stipulate exactly who is required to receive that notice to properly preserve a contractor or supplier’s lien rights.

The Preliminary Notice should be sent to:

• The Owner (or reputed owner);
• The Original Contractor (or reputed original contractor); and
• The construction lender, if any.

When to Send Notice
Perhaps the most important question about preliminary notice in California concerns when the statutes require that notice be delivered by a contractor or supplier.

In California, notice must be given not later than 20 days after the claimant has first furnished labor, services, equipment or materials to the jobsite.

After the expiration of these 20 days, the claimant may still send notice, but it will only be effective as to the labor, services and materials supplied or provided within 20 days prior to the service of the notice (and thereafter).

Therefore, if you are required to provide preliminary notice under California statutes, it’s imperative that you deliver the notice as soon as practical. Waiting until 20 days after you begin work will jeopardize your rights to lien for unpaid work.

How to Send Notice
California statutes specifically provide a method for sending notice to the receiving parties.

The notice can be sent by delivering the document personally, by leaving it at the residence or place of business of the party with some person in charge, or by registered or certified first-class mail.

If the owner is out of state and the above-methods do not work, you can send the owner’s notice via certified or registered mail to the construction lender or original contractor.

It is important to keep good records of delivery, as the statutes also provide a specific method to prove the preliminary notice was delivered. According to §3097.1, proving delivery of preliminary notice must be as follows:

• If served by mail, by proof of service affidavit accompanied by return receipt card or a photocopy of the record of delivery;
• If served personally, by proof of service affidavit.

A proof of service affidavit is an affidavit by the person making service (the person who hand delivered the notice or mailed the notice). It should state the time, place and manner of service and the facts showing that the delivery was made in accordance with statutes.

Unfortunately, the notice requirements are oftentimes confusing and technical. It is important, however, that your organization understand these requirements. If you lien a project without following these notice procedures, you will have filed an improper lien, and this could subject you to owing the property owner damages, penalties and/or attorneys fees.

The notice requirements in Washington are actually quite clear – the general rule is simply that everyone is required to provide notice to the owner (and/or contractor) except for those who are specifically excluded.

This post breaks the notice requirements into two categories. Category one is the catch-all, and regards all types of projects that do not fall into category two. Category two regards construction projects for the improvement of an existing owner-occupied residential property.

Category One – The “Catch All”
Category one projects are all of those projects that do not fit within category two. This, therefore, includes every commercial project, and virtually every new residential project.

Washington statutes provide that written notice of a right to claim a lien must be given to the owner or reputed owner in every circumstances except:

1) Persons or companies who contract directly with the owner or owner’s agent;

2) Laborers for any claim that is based solely on labor; and

3) Subcontractors who have contracted with the prime contractor

To properly deliver notice, the notice must be in writing and must be given to the owner either through certified or registered mail and/or personally delivered.

For the sake of clean record-keeping, it’s a good practice to send the notice via certified mail with return receipt requested, and to keep record of the certified mail number. If you send the notice via hand delivery, you will want to get signed acknowledgment of receipt to later prove that the notice was sent.

Category two projects are very limited in scope. They include only improvements to existing owner-occupied single family residences.

The following are examples of Category Two projects:

• Improvement of kitchen to existing structure on a single family residence that is owned by the person occupying the home;
• Adding a new room or new addition to existing structure on a single family residence that is owned by the person occupying the home.

The following are examples of projects that are not Category two projects:

• Improvement of kitchen to an existing structure on a single family residence that is occupied by a tenant, and not the owner of the property;
• New construction of owner-occupied residence.

When a project can be classified as a “Category Two” project, notice is required from the following parties:

1) Persons who do not contract directly with the owner-occupier, or their agent.

Therefore, if you are a handyman and you contracted directly with the owner, you would have the right to file a lien without providing the owner with a notice of lien rights. However, if you are a subcontractor hired by a handyman to do electrical work in a category two project, you would be required to provide notice of lien rights.

Summary
The goal of the Washington statute’s notice requirements is to protect the owner from being liened by a contractor who is not authorized to perform work on the property and/or by a contractor with no direct link to the owner.

When a contractor is hired by the owner directly, there is no need for that contractor to notify them that work is being performed at their property; the owner should know this as a result of the contract.

When not hired directly by the owner, however, to satisfy the purposes of the statute the contractor is usually required to provide notice to the owner that work is being performed. There are a few exceptions, as above-noted.

What is Notice?

In Louisiana, the lien statutes are drafted with a certain balance. On the one hand, the statutes were created to grant those involved with the construction of a project a privilege on the properties they build or improve. On the other hand, however, the statutes have mechanisms within to protect the property owners from being liened improperly, or otherwise without notice.

Unfortunately, the notice requirements are oftentimes confusing and technical. It is important, however, that your organization understand the notice requirements of the Private Works Act.

Contracting with the Owner / Resident

The type of notice required is called the “Notice of Lien Rights.”

This notice, again, is required when the following elements are present:

1) Work is being done on a residence;
2) You contracted directly with the owner of the residence. In other words, you are not subcontractor on the project;
3) The owner lives in the residence.

The Notice of Lien Rights to be sent to owners in residential projects is very important, because the law requires that it be provided before work begins, and not as a condition to your construction contract.

Lessor of Equipment or Other Movables

For example, if you lease equipment to a subcontractor, you are not required to deliver an additional copy of the lease to the subcontractor within 10 days of delivery because they will – presumably – already have a copy of the lease. However, you would be required to send a copy of the lease to the general contractor and the owner.

This puts those other parties on notice that you have leased equipment/movables to someone for the work at the jobsite, and if such notice is sent, you will have preserved your right to file a lien in the case of non-payment.

Seller of Movables / Materials / Equipment / Etc.

If the materials sold are incorporated into a commercial project, there are no notice requirements.

If the materials sold are incorporated into a residential project, and you would be liening a residence, LA RS 9:4802(G)(2)-(3) requires that you deliver a notice of nonpayment to the owner of the property at least ten (10) days before filing the lien. The notice must: