Preliminary Notice Rarely Required in Georgia
In Georgia, it can be said that the general rule regarding Preliminary Notices is that they are not required. As such, under most circumstances, a party providing services or materials to a private construction project can file a Claim of Lien without ever delivering a notice to the property owner or general contractor.
As with every general rule, however, there are certain exceptions. In limited circumstances, Preliminary Notices may be required on private construction projects.
In Georgia, Preliminary Notices are required when:
(1) The claimant does not have contractual privity with the owner (i.e. is a general contractor) or the general contractor (i.e. is a subcontractor). Therefore, the claimant is a lower-level sub or supplier; and
(2) The Owner or Contractor has filed a Notice of Commencement within 15 days of first performing work on the project.
If these two conditions are met, a preliminary notice must be sent to the Contractor and the Owner via registered or certified mail. The notice must be sent within 30 days of the first delivering of services of materials by the claimant or from the filing of the Notice of Commencement (whichever is later).
If required, failure to send a preliminary notice is fatal to the claimants ability to file a mechanic’s lien.
Express Lien sends & files preliminary notices for $35.00 each. You can also download the form for no charge.
7 Habits of Contractors Who Lose Money…and How to Break Them
The Construction Commando’s “Contractor’s Secret Weapon” published an article with this title that described seven instances when contractors lose money on a project. While the article was drafted to an audience of California contractors, the habits apply nationwide.
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
Did You Know? Filing Preliminary Notices
Many California contractors know that they are sometimes required to sent 20-day Preliminary Notices to the property owner and general contractor to preserve their lien rights (read related article about preliminary notice requirements in California).
Did you know that you can go a step further from simply sending this notice…and actually file the notice with the county recording office?
The benefit of filing the preliminary notice with the county recorder is that the county recorder will mail to the filing party (you) a notification if and when the property owner files a notice of completion or cessation. As discussed on the Express Lien blog, the filing of these documents can affect your Liening Window. Receiving notification of its filing from teh county recorder, therefore, can be an enormous asset.
While this is a great benefit, be weary of relying on the recorder completely. The law is clear that your lien period will not be extended if the recorder fails to make this mailing to you.
Express Lien, Inc. delivers preliminary notices to property owners and general contractors for $35.00 per notice. We can file your prelim notice with the county recorder and request notification of any future relevant filings for an additional $75.00 per notice.
All Notices Are Not Created Equal: Prelim Notice v Notice of Intent to Lien
In the world of construction liens, the word “Notice” gets frequent use. The technical nature of each state’s notice requirements, however, are often misunderstood.
In general, there are 2 types of “notices” required by lien statutes: Preliminary Notice & Notice of Intent to Lien.
Preliminary Notice vs. Notice of Intent to Lien
A “Preliminary Notice” must usually be provided to the notified party before work begins on a construction project, or within a certain time frame from when materials and/or materials are first furnished.
A “Notice of Intent to Lien,” on the other hand, must usually be provided to the notified party before filing a lien, usually 7-15 days before the filing.
As you can see from these simple definitions, the requirements are extremely different. And it’s safe to assume that if your project and state requires notice, the failure to send it will result in the forfeiture of your company’s lien rights.
When Is Notice Required?
Every state’s requirements are different – and unfortunately, quite technical. Not only does the technical nature of lien statutes make them difficult to understand and interpret, but they also result in sometimes absurd consequences.
Here are some general notice trends:
- Frequent Rule #1: Almost every state has notice requirements when work is being performed on an “owner-occupied” residence. In theory, this is to protect homeowners from getting burned and having to pay contractors twice. Some states (like Pennsylvania) even prohibit liens against single family homeowner residences. If you’re working on an “owner-occupied” residence – check your state’s lien laws.
- Frequent Rule #2: The further down the chain you are, the more likely notice is required. Across the nation, there are more notice requirements for subcontractors than prime contractors, and more notice requirements for sub-subcontractors and suppliers than 1st tier subcontractors. If you’re contracting with a subcontractor – check your state’s lien laws.
ExpressLien.Com has one of the best free resources for construction lien laws in the United States. View our FAQs, state lien law outlines and summaries, and even download free lien forms on our public wiki: http://wiki.expresslien.com.
If you’re looking for information about your state, you can go to the state directory at http://states.expresslien.com, or simply enter http://yourstate.expresslien.com in as a URL. Of course, in place of “your state,” you should enter your state’s name.
Notice Chart
Here is a quick-glance “notice chart” giving you shorthand rules about the notice requirements in the states we service. Click Here.
California Preliminary Notice
In California, if you provide materials or labor to a construction project, you are generally allowed to lien that project in the event of non-payment. In some circumstances, however, California law requires that a claimant provide notice to certain parties to preserve its rights to lien.
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:
- In direct contract with the owner; or
- 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.
