California's Preliminary Notice Scheme
What is a Preliminary Notice?The California preliminary 20-day notice is sometimes referred to as the preliminary notice, the pre-lien, the pre-lim, or the 20-day notice. The purpose of the notice is to alert the property owner, the construction lender, the bonding company and the prime contractor of the existence of subcontractors and material suppliers, and that these contractors and suppliers have lien rights.
You cannot record a valid mechanic's lien, or file a stop notice, unless you have served the preliminary notice. Obtain the information you need to serve the preliminary notice from the prime contractor when you sign the contract, from the building permit and/or from the county recorder's office.
California Civil Code Sections 3097 and 3098 list the requirements for the preliminary notice.
Who Should Serve A Preliminary Notice?On private works, subcontractors and material suppliers are required by California Civil Code Section 3097 to serve the preliminary notice on the owner, the prime contractor, the construction lender and the bonding company.
All tiers of subcontractors and material suppliers have to serve this notice. A prime contractor who has been hired by the property owner has a contractual relationship with the property owner, and does not have to serve the notice because the property owner is aware of the contractor.
Specialty contractors doing business with an owner-builder should serve this notice to the owner and the construction lender.
On State of California and local public works, first tier subcontractors do not have to serve a preliminary notice.
If you have any doubt as to whether you are required to serve the notice, serve the notice. If you have any doubt as to who gets the notice, give it to everyone.
Where Can I Obtain a Preliminary Notice Form?I have a preliminary notice form on my web site, http://www.mccarthylawcorp.com. Local builders' exchanges sell the forms, and there is software available to generate custom forms. In addition, there are services that will file the form for you.
When Should I Serve a Preliminary Notice?You should serve the preliminary notice as soon as you have the necessary information, preferably before you start the job. There is no such thing as serving the preliminary notice too early.
If you fail to serve a preliminary notice within the first 20 days after you furnish labor and/or material, serve it as soon as possible afterward. This will ensure your lien rights for labor and materials furnished during the 20 day period prior to service of the preliminary notice.
How Do I Serve a Preliminary Notice?The best method is by certified mail. After you mail the notice, keep your copy and the post office receipt in a safe place. This is your insurance policy. The law requires you to prove that you sent the notice. The recipient does not have to receive the notice for you to be protected.
Should I Record the Preliminary Notice?If you file the preliminary notice with the county recorder, the recorder will notify you when a notice of completion or a notice of cessation is recorded. Do not rely solely on the recorder. You should also keep track of the time in case the recorder is slow or makes an error. Subs have only 30 days (primes have 60 days) after a notice of completion or a notice of cessation is recorded to record a mechanic's lien or serve a stop notice.