The Basics of Preliminary Notice in Construction
At some point in your contracting or construction career, you've probably had at least one experience with trying to get paid in a timely manner. Unfortunately, there are some instances where people just don't pay, or they take their time paying the bill. The good news is that there is recourse through what's known as a mechanic's lien. Before you can use it, though, you've got to understand how it works
What is a Mechanic's Lien?
In the construction finance world, a mechanic's lien is a way for contractors to make
sure that they get paid. They can file this lien once the nonpayment has been escalated,
and doing so will start the process of helping the contractor get their money. Of course,
you can't exercise this benefit if you didn't provide the project owner with what is known
as a preliminary notice.
What is a Preliminary Notice?
This isn't actually a notice of intent to file a lien. Preliminary notice simply refers to the
fact that you've provided a document that advises your legal rights of recourse if you
don't get paid. In addition to being a good business practice, there are also some states
where this notice is required if you are later going to file a mechanic's lien to collect the
money that you are owed.
The rules are different in each state and some states don't require this notice. It's important to know the rules where you work so that you can proceed accordingly. For example, Texas contractors will send notices based on what their role is in the job. California contractors have 20 days to file this notice.
What if I Don't File?
The next question people have is whether they can still get paid if they didn't file a
preliminary notice or otherwise outline their rights to file a mechanic's lien to get paid.
You do need to offer this notice, but you still probably have the right to file a lien even if
you didn't in the first place.
It might be a good idea to work with an attorney or a company that understands preliminary notice, as well as the ins and outs of construction financing and billing. They can make sure that you have all the paperwork filed and delivered on time. This will also help you have a better understanding of your role as a contractor on the project.
How to Send Notice
It's a fairly simple process to send this notice. They're usually delivered by certified or
registered mail so that the sender has proof of delivery. You should also keep a copy of
the notice and the receipt from sending. You will want to familiarize yourself with the
state requirements for preliminary notice where you live so that you can get things done
the right way, the first time around.
With our experienced staff, we will assist you in both submitting and tracking your state's required legal documents to protect your lien rights and help with your receivables. We strive to work with your subcontractors and contractors, no matter what size the construction company, to ensure payment by utilizing existing lien laws as leverage to make sure you get payment, along with securing lien rights. You can find Nationwide Notice, Inc. online or give us a call to learn more. If you'd like more information regarding preliminary notices, contact Nationwide Notice, Inc.