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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.

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