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WHAT TO KNOW ABOUT PRELIMINARY NOTICE IN CONSTRUCTION
If you are in the construction business, it's essential to understand a preliminary notice
and why you need to file one. Professionals who overlook or skip this part of the
process risk facing non-payment for services rendered. Here are the essentials to know
about a preliminary notice in the construction industry.
What Is a Preliminary Notice?
A preliminary notice is a part of securing your lien rights in the construction industry. These notices are also known as the Notice of Right to File a Lien. They are called preliminary notices because, in most cases, they are filed at the beginning of a project before you begin the actual work.
What Should Be Included in A Preliminary Notice?
Depending on the state, the information that must be included in a preliminary notice
can vary. Usually, the name of the notifying professional who hired them and the
property owner's information are included on a preliminary notice. The notices also
generally contain information about the general contractor on the project and the
amount of money due to the notifying professional.
Your state may require that you use specific language when submitting a preliminary
notice. If you neglect to use the language the state requires, your preliminary notice
could be invalid. It's good practice to ensure you know your state's statute regarding
preliminary notices if there is one.
Why Should You File a Preliminary Notice?
A preliminary notice is crucial for securing your lien rights and minimizing your financial
risks when taking on a new construction project. Construction is a credit-heavy industry
and suffers from late or missed payments relatively often. If you don't exercise your lien
rights, you will have little recourse for collecting payment unless you want to file an
expensive lawsuit and take your chances with the courts. Filing a preliminary notice
protects your rights to file a lien should your payments be withheld.
Protecting your rights also gives notice to people higher up the chain in the contractor's
hierarchy, so they are aware you expect to be paid and plan to do what is necessary to
ensure you are paid. Sometimes, the top of the chain doesn't know that subcontractors
have been hired because they leave those decisions to people actually on the job site.
Filing a preliminary notice lets them know you are on the job.
Should You Send A Preliminary Notice?
Even if a preliminary notice isn't a requirement in your state, it can be beneficial to file
one anyway. A preliminary notice promotes transparency between the parties. Part of
transparency is communication. Having a preliminary notice on file also helps you avoid
filing a lien which is preferable as it means you are receiving payment on time.
Wrapping It Up
A preliminary notice is a tool used by construction professionals to help ensure on-time
payments for service. It helps preserve your right to file a construction lien. If you'd like
more information regarding preliminary notices, contact Nationwide Notice, Inc.
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 helping 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.