Preliminary lien services, or more commonly referred to as "pre-lien notices," are a simple precaution that can protect your contractor's mechanic's lien rights. These documents can be sent to property owners, general contractors and top project stakeholders, usually near the start of a job.
They also provide an opportunity to set up a communication channel between your company and the project owner, and are used in determining whether or not a claim for payment can be filed on a jobsite. In fact, most states require you to send a preliminary notice before you can file a mechanic's lien on a construction project.
A pre-lien notice can be sent by certified mail, and you may also deliver it in person or on the jobsite. The notice should be sent to the property owner, general contractor and financial institution.
The best way to deliver a pre-lien notice is via certified mail with return receipt requested. The return receipt ensures that you have proof of service if disputes arise later. In addition, it makes it easier to serve a pre-lien notice on the property owner or general contractor.
Systems at: https://crmlsi.com/ automates the process, making it simple and fast to complete the paperwork required by each state.
Preliminary lien notices vary by state, and a few states have different requirements than others. Some have specific notices that you must provide to the owner and the general contractor, while others have a different list of people or businesses you need to send the notice to.
Some states will not allow you to serve a preliminary notice on a property owner without the help of a lawyer. In these cases, it is essential that you have a lawyer on staff or a third-party provider who will serve the notice.
In California, for example, a preliminary 20-day notice is a document that should be sent by certified mail or hand delivered to the property owner, general contractor and any financial institution before a mechanic's lien can be recorded. The purpose of the notice is to inform the property owner that a contractor has lien rights and that payment is needed if he or she fails to pay a subcontractor or supplier for materials or labor. Open this page for additional reading.
While there are no statutory penalties for serving a preliminary 20-day notice, failure to comply with the notice requirements can result in a denial of your claim. This is especially true in California, which requires you to serve a notice within 20 days of the first material or labor furnishing to a construction project.
Most importantly, a good preliminary notice can prevent a dispute between you and the property owner or general contractor that can delay your payments. It helps the property owner know who to contact for payments and that you will get paid when your work is complete. To get more information in relation to this topic, open this link: https://en.wikipedia.org/wiki/Debt_collection.
