Why This Legal Guide Is Important to Contractors and Suppliers
Mechanic's liens are a very effective legal tool for contractors, subcontractors, equipment lessors and suppliers. If you're having trouble getting paid in the construction industry, or if your credit policy isn't quite producing the paying customers you've always dreamed about, you can signifantly decrease your ratio of bad debts and your bottom line by paying attention to your lien rights.
Ever not get paid because the party who hired you couldn't get paid? Ever not get paid because the party who hired you filed bankruptcy?
A mechanic's lien can help you avoid these situations, allowing you to leapfrog the party who hired you, and in most cases bring a lawsuit or claim directly against the property owner.
Does This Guide Apply To Any Particular State or Type of Construction Project?
No. This guide is written to provide you with a general overview of preliminary notice requirements on all types of construction projects (federal, state and private), and in ever state.
The positive here is that if you're supplying materials or services to multiple states, this general overview will be helpful. The negative is that you still have to consult with each state's laws for specific requirements (as every state's notice requirements are different).
So What Is A Preliminary Notice Anyway?
As I mentioned, the right to file a mechanic's lien is a significant and powerful legal remedy. In their own way, every state balances the interest of the supplier or laborer (in getting paid for work) with the interest of the property owner (in not being required to pay twice for construction).
A large number of states finds a balance of these interests with its preliminary notice requirements.
In essence, they mostly work like this: To preserve your right to file a lien, you must notify certain parties that you are performing work or furnishing materials. The notification must occur immediately after you start work.
If you deliver the notice, you're allowed to later file a lien. If you don't, you have no lien rights at all.
Are Preliminary Notices Required In Every State?
No! They are absolutely not required in every state. Only some states require preliminary notices be delivered, and as of the date of this article, they are as follows: Alaska, Arizona, Arkansas, California, Florida, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Mexico, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee,Texas, Utah, Washington, Wisconsin, and Wyoming.
Check out this link for really great color-coded U.S. map of preliminary notice requirements.
How Do We File These Preliminary Notices?
Filing preliminary notices can be tricky because each state is different in its requirements for how the notice must be sent, who must receive it, when it must be sent, and what the form must say.
If you're only doing business in one state, and usually performing within the same tier, you may be able to get the form for your situation and have someone at your office learn the process and be in charge of sending them out (but really, why would you want to waste their time?)
If you're in multiple states or doing work on a lot of projects, you're likely going to need help. Getting the help is worth it! It frees your staff to do things they should be doing (i.e. making you money), and it leaves the technical and time-consuming notice work to someone who does it day-in and day-out.
Check out a company like Zlien, who files preliminary notices (including California 20-Day Preliminary Notices) all across the country. The way a company like this works is that you send it information about any new construction projects or supply contracts, and they will put together and deliver the notice for you.
It's a lot more convenient that rummaging through Internet articles about each state's notice requirements, as you can use the notice company's software to breakdown the lien laws, and figure out what gets sent, when and how.
Is There One Notice Form We Can Use In Every State?
Unfortuantely, no. While every state's forms are similiar and contain similiar information, they are not the same, and many states require that certain very specific language get put in the notice. Sometimes, they require the notice to be in a certain font size, in all caps, or bolded, making it really impossible to have one form for every state and every situation.
