Do I Have to Send Preliminary Notice?
One of things that makes managing preliminary preliminary notices so difficult is that the requirements vary from one state to the next. Not only that, but even the name for a preliminary notice can change from state to state. Thus, in Michigan, a preliminary notice is called a “Notice of Furnishing,” while in Florida it’s called a “Notice to Owner.” And in California and Arizona, a preliminary notice is commonly known as a “20 Day Notice.”
But with all of the complexity, perhaps the most important, state-specific requirement about preliminary notices is whether they’re required to be sent on a construction project or not. We’ve got an infographic that answers that question for subcontractors in all 50 states.
Which States Require Preliminary Notice for Subcontractors?
If your a subcontractor working on a construction project, the short answer to this question is, “most of them.”
In fact, almost 75% of the states have a preliminary notice requirement for subcontractors. This includes most of the busiest states in the country for construction activity, including California (the entire West Coast, really), Florida, and Texas.
Why Send Preliminary Notice?
The biggest reason to send preliminary notice — and the reason why sending notice is “required” in certain states — is to secure your mechanics lien rights on a project.
This does not mean that you have to file a mechanics lien. What this means is that sending a notice preserves your right to file a mechanics lien on a project just in case something goes wrong with the payments you are owed on that project.
In fact, actually filing a mechanics lien is pretty rare. But when you need it, you better believe that you’re going to be glad that it’s there (“it” being the right to file the lien), because there’s no other tool that’s as effective as a mechanics lien when it comes to making sure you get the money you’ve earned on a project.
Get Paid Faster
Sending notice has another huge benefit that probably doesn’t get the attention that it deserves. And that benefit is this:
Companies that send preliminary notice get paid faster than companies that don’t.
And here’s why: Most large or sophisticated property owners, and nearly all developers or large GCs, go to great lengths to track who is filing and not filing notices in order to know which parties have protected lien rights and remain in a secured position.
So, when it comes down to who is going to get paid first on a project, the companies that have secured their lien rights (by sending preliminary notice) are always going to be paid before the companies that haven’t, because the fear of a possible mechanics lien is just that great.
The companies that didn’t secure their lien rights are always going to be better candidates for delayed payments, because without the ability to file a lien, there’s nothing they can really do to make the payment come any faster.
More Preliminary Notice Resources
In addition to the infographic download (available above), we’ve got a ton of help available for you regarding preliminary notices. You can start by reading some of the other preliminary notice articles we have available. For even more information, visit the Lien and Notice FAQ section on our website.
And last but certainly not least, you can always have a chat with us. If you like to talk to an expert, click the button below to schedule a time to chat.