Being a part of the construction industry is truly wonderful... when your customers pay you. But what about those times when your customer isn't willing to pay you for a job well done? Unfortunately, walking around muttering #*$%& won't pay your bills... ;-)

Filing a mechanic's lien on the owner's property is often your last chance to collect on the money that is owed you. This is where the importance of the preliminary notice becomes most clear.

If you don't process your preliminary notice, most often the penalty is that you are not allowed to file a mechanic's lien on the owner's property. [If you're in California and you don't process a preliminary notice, you are in violation of the contractor's license law!]

Not being allowed to file a mechanic's lien means that you could very well lose out 100% and collect absolutely none of the money that is owed you!!

Read on, you'll be shocked at how easy it is to get "stiffed" when you don't protect your right to lien...

In the world of construction, while it is expected that you'll be paid for your work, unfortunately there are times when payment is not so easily forthcoming. These are the times when the preliminary notice is important.

The main purpose of the preliminary notice is to announce that you and your company are present and that you have a financial interest in the property. Even though your general contractor knows that you are involved, his customer (presumably the owner of the property) may not know. It's your legal responsibility to tell the owner (and the rest of the financially interested parties) that you have this claim.

Here's why:

You've finished the job, and your general contractor is refusing to pay you. After you've gone to court and you've won your judgment, who is going to make sure that you get paid?

Don't look at the judge, he's a judge, not a bill collector. Sure he ruled in your favor, maybe even awarded you more than what you were asking for (hah!), but he's not going to reach into the guy's checking account and get your money for you.

Don't look at the guy who owes you, he didn't want to pay you to begin with, remember? He's not going to write you a check, not if the judge doesn't make him do it. Well..., not a good check anyway. You see, he knows what you now know, the judge isn't going to reach into his checking account and get your money for you.

So... now you're back to where you were before you went to court - the guy still owes you and he still won't pay you! (except that, in addition to still not being paid, now you're in debt to your attorney). What to do, what to do ??

Short of a broken knee cap or two, about the only thing you can do is file a lien on the property you did the work on. BUT, only if you processed your preliminary notice.

Important: Even if the Owner has paid your customer in full, you still file the lien.

It's the legal responsibility of the Owner to insure that everyone gets paid. This may mean that the Owner/Lender has to require lien releases/waivers; pay bills with joint checks; place phone calls to the creditors to verify that they have indeed been paid; etc. That's why you still lien, because the Owner didn't do what he was supposed to do, which was to make sure that you got paid. He can't say that he didn't know you were owed money, because you have proof (the proof is explained a bit further on) that he received your notice.

Now let's take a look at the importance of processing the preliminary notice in a timely manner. The preliminary notice MUST be mailed out within the time allowed by the law. This time-frame varies from state to state, so you must check to see what the requirement is in the state the job is located in.

Couple examples: It's my understanding that in Oregon the notice must be processed within 8 days of the first shipment or incurrence of labor costs, whichever applies to your situation. I'm told that Alabama and Alaska require that these notices be processed before the first shipment or incurrence of labor costs. In California, we have 20 days.

The lien statutes in most states must be followed precisely, courts do not afford much latitude with respect to timelines and compliance with statutory forms.

As mentioned above, the time-frame for California is 20 days. For contractors, this means you've got to process and mail that notice within 19 days of the first day you either start work or supply material to the project (or place the material order if it's a special order item), whichever comes first. For material suppliers, this means within 19 days of the first day you supply material to the project (or order it if it's a special order item).

The California 20-day preliminary notice covers all work, material, etc. for up to 20 days prior to the postmark date on the mailing of the preliminary notice. So, if you've been on the job for 30 days and are just now sending the preliminary notice, you'll be covered for 20 days back (or from after the first 10 days forward).

If you mail the notice within the time-frame allowed [by the state the project is located in], then you can lien for 100% of what is owed you. If you mail the notice after the time limit, then you'll only be able to lien for the portion of the project that is covered by your preliminary notice.

Now, as I say elsewhere through this website, I am not an attorney nor do I give legal advice. I strongly suggest that you contact a legal professional to advise you for your specific situation(s). This series of articles is designed to present and detail the various methods available for processing your preliminary notices, not to provide legal advice.

When sending preliminary notices, an original MUST be sent to each of the parties involved such as, the general contractor, the owner, the lender/surety if applicable, the lease hold owner, the trust fund, etc. etc., and it must be mailed certified or registered.

Note: While requesting (and paying for) the return receipt is not required, I highly recommend that you do. If you leave it to the post office to keep track of the receipt but the post office loses the receipt (of course this is hypothetical because we all know that the post office never loses anything, right?). You have to be able to provide proof that your notice was mailed and received, and you can't do it without that receipt. I've included, within this series, a system that will help you to keep track of those return receipts.

To whom do you send these preliminary notices?

The person/entity you contracted with should provide you with a list of the parties involved in the project (commonly referred to as "the preliminary information" or "prelim info"). When we first started out, I was super uncomfortable asking general contractors for this information. Their "attitude" was usually that of the offended (like, how dare you prelim my job), and that just made me more uncomfortable.

Now, six years later, it doesn't bother me one bit when they are unhappy with preliminary notices. I just tell them that if they don't want me to issue a preliminary notice then they will need to have me paid in less than 20 days from the day I start. ;) (I say 20 days because I'm in California, you'll need to check with the state your project is located in if it isn't California).

Don't be uncomfortable when requesting the prelim info, it's your right to have that information and their duty to provide it to you.

It's very important to note, if an entity that should receive your preliminary notice does not (no matter the reason), you could lose your right to file a mechanic's lien on the property, in any and all cases. Included in this series is an article written by Attorney-at-Law David Barnier, titled "Mistaken Identity", which outlines a couple different court cases on this very issue.

Don't lose your right to lien! You can:

A) Research the information using a program such as NetDetective

B) Process the preliminary notice(s) yourself using our form

C) Use a computer program to prepare and process your preliminary notices

D) Hire a company that will research, send (perfect and protect) preliminary notices for you

Some jobs we prelien ourselves and other jobs we hire a service company to process the prelien notices for us. I've compiled a series of articles on this subject, each of which has a link below. After you've read the information, if you have more questions, please do not hesitate to contact me! :)

Part 2 looks at the importance of researching your preliminary information. Look below for a list of all of the articles available in this section.

Thank you for visiting our site. I hope that this series of articles is helpful to you! I'm always happy to receive feedback, so please do send me a note if you have anything you'd like to tell me. Thank you!! :)

Diane