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Preliminary Notice

DEFINITION

Notice by a contractor or servicemen that indicates they have the right to file a mechanic’s lien on the hiring party’s real property in the event the servicemen is not paid for services provided.

EXPLANATION

A preliminary notice is a notice that must be supplied to a property owner by a contractor informing the owner of the contractor’s right to file a mechanic’s lien. It must be provided prior to filing a mechanic’s lien or a contractor’s right to a mechanic’s lien becomes void.

A preliminary notice is not valid until a property owner defaults on a payment. If this occurs, a contractor must supply a notice within 20 days of first providing labor or materials on a property. If a notice is supplied outside of the 20 day period, a mechanic’s lien will only cover the portion prior to at least 20 days of performed work.

A preliminary notice must be given to a property owner in person or through certified mail in order to confirm that it has been received.

A preliminary notice must contain the following:

Name of contractor

Name of property owner

Job site address

Description of work to be performed

Description of material, labor, and other vital data required to perform the work

Cost of service

Stop Notice and Preliminary Notice

A stop notice is a notice that traps, or “stops”, funds that have not yet been paid to a contractor on a construction project in an attempt to ensure payment. A contractor must file a preliminary notice prior to serving the stop notice.

A stop notice is typically imposed to prove or strengthen a parties claim to a property. While a mechanic’s lien prevents a property from being sold, transferred, or refinanced, a stop notice traps the funds on the project which means the property owner cannot spend any construction money on the project or pay other contractors until they pay the party that files the stop notice. Its purpose is to bring the alleged violating party to the negotiating table.

Unlike a mechanic’s lien, a stop notice does not attach to a property or cloud a property’s title. Rather, the legal obligation created by the notice is independent of the property on which work is performed and attaches only to money that has not been paid. Such notices are not recorded on property records, and instead sent to a project manager.

To avoid the potential for wrongful liens and disputes between contractors and hiring party’s, the payment structure for work performed should be clearly defined and have specific phrases in the agreement such as beginning on and ending on. Material used and origination of products and services should also be clearly defined and understood by both parties.

The placement of a mechanics lien would be invalid if the work claimed to be performed was partially completed, wrongly performed, required supplies that were not used and other factors which were not followed based on the contract.

Preliminary Notice

Subcontractors and/or material suppliers have up to 20 days following the time work began or materials were given to serve the hiring party a Preliminary Notice. A preliminary notice must be served in person or sent by certified mail.  The details of the transaction should be documented in an agreement. Preliminary notices after the 20-day period are invalid and unenforceable thereby terminating the right of the subcontractor to place a mechanics lien against the landowner’s property.

The notice of a mechanics lien should be included in the lien claim. Claims should indicate the amount owed, the description of services rendered, the claimant’s property address, and a signature of the serving party.

The lien will stay attached to the property until its debt is satisfied. If the required steps are not fulfilled by the contractor, subcontractor, or material supplier the claim may be invalid. To invalidate a claim the landowner can petition the court for the removal of the lien.

The law’s liberal interpretation of workers and contractors’ rights means that almost anyone can record a mechanics lien whether valid or not, however hiring parties have the right to dispute invalid claims.

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