Construction Payment Blog

Comprehensive Collection of Construction Payment & Lien Rights resources

Only Sent One Preliminary Notice? You Might Have Lost Lien Rights

Last Updated on

Reading Time: 3 minutes

In many states, sending preliminary notice is a one-time requirement, a boxed to be checked off and forgotten. Sure, the timing requirements or deadline calculations may be difficult, and complicated when the potential claimant has multiple projects in multiple states, but once the notice has been sent (correctly and on time) it can be forgotten until the next step in the process, filing the lien itself. To the surprise of some in the construction industry, however, this is not always the case.

 Multiple Preliminary Notices?

In some states, multiple preliminary notices are required for the same project. This can be confusing for parties who are unaccustomed to furnishing labor and/or material in those states, and can lead to a loss, or at least a diminishing, of lien rights. These multiple notices are often triggered by the noticing party furnishing labor and/or materials to the project in more than one month. It’s important for potential lien claimants to know when more than one notice may be required, and make sure the appropriate deadlines are being tracked, and complied with.

So, given this information, which are the states in which lien claimants should be sure to pay special attention?

Texas

It’s no secret that Texas has some of the most complicated notice requirements around, and much of what makes the requirements complicated is the repeating/multiple notice requirements. In Texas, not only are multiple notices required when labor and/or materials are furnished in more than one moth, but multiple notices may also be required even if the work is performed or materials delivered in a single month – as noted by the chart below.

texas-construction-notice-chart-requirementsA couple specific things are worth noting: 1) All applicable 2nd and 3rd month notices are required after each month in which labor and/or materials are furnished for which the potential lien claimant remains unpaid; and 2) Parties who did not contract with the property owner or the GC are required to send the same notice in both the 2nd month AND 3rd month after each month in which they furnished labor and/or materials. The notice given in the 2nd month following furnishing must be given to the GC, and the same notice, when given in the 3rd month following furnishing, must be given to both the GC and the property owner. These notices are all due on the 15th day of the applicable month, which leads to potential lien claimants in Texas focusing a lot of attention on preliminary notices mid-month.

Tennessee

While Texas might have the most famous of the multiple preliminary notice requirements, other states may require multiple notices, as well. One such example is Tennessee. The notice scheme in Tennessee requires parties who did not contract directly with the property owner to provide a preliminary Notice of Nonpayment to the owner and GC within 90 days after the last day of each month in which the claimant furnished labor and/or materials to the project. Specifically, T.C.A. § 66-11-145(a) states as follows:

Every remote contractor with respect to an improvement . . . shall serve, within ninety (90) days of the last day of each month within which work or labor was provided or materials, services, equipment, or machinery furnished and for which the remote contractor intends to claim a lien under this chapter, a notice of nonpayment for the work . . .

Tennessee, while requiring multiple notices if materials and/or labor was furnished in multiple months, is at least explicit in that requirement, which is more than can be said for the statutory notice requirements of the next state on the list.

Louisiana

Louisiana also has a multiple preliminary notice requirement, at least according to the Louisiana First Circuit Court of Appeals. We have recently discussed the J. Reed Constructors, Inc. v. Roofing Supply Group, LLC case, and noted the court’s determination that the preliminary notice requirement for material suppliers was triggered by each month in which material was supplied. 

It is not a stretch to read multiple notices into the legislature’s intent, but the court’s determination that the language of the state is clear and unambiguous is a bit deceiving. The statute at issue states that the notice of nonpayment must be delivered:

on or before seventy-five days from the last day of the month in which the material was delivered…

While it is true that Louisiana’s Notice of Nonpayment seems philosophically aligned with the repeating notices in Texas and Tennessee, the statute is worded in the singular, rather than the plural, so it is not outside the realm of possibility to read the statute as only requiring one notice, sent with 75 days from the last month in which materials were delivered. A simple change to the wording of the statute, that the notice was required  “on or before seventy-five days from the last day of the months in which the material was delivered . . .” (emphasis added), or  “on or before seventy-five days from the last day of each month in which the material was delivered . . .” (emphasis added) would make the statute actually unambiguous.

Conclusion

It’s important for potential lien claimants to consider the fact that in multiple states (and not just the ones listed in this article) preliminary notices may not be a one-and-done deal. Multiple notice requirements are the norm in some states, and failure to comply with the requirements to provide notices based on each month in which labor and/or material was furnished can result in a forfeiture or diminishing of lien rights.

Last Updated on Dec 03, 2018
Published on Jul 16, 2014

by

Nate, along with being a husband, father, Eagle Scout, Teen Jeopardy! contestant, and musician, is the Chief Legal Officer and General Counsel at zlien, a vertical SaaS platform designed to help construction industry participants by promoting a collaborative construction payment process. Nate was recently recognized as one of the nation's Top General Counsels, and is working to get better at it every day. Nate is a licensed attorney in Louisiana and Texas, and a graduate of Stanford University (B.A.) and Tulane Law School (J.D.). He manages and oversees the Lien Genome and zlien's products, processes, and resources, directs the Construction Payment Blog, protects zlien's interests and intellectual property, and performs general counsel duties.

Leading Thought on Construction Payment, Delivered To Your Inbox

zlien's Construction Payment Blog helps professionals in the construction industry navigate complicated payment issues. Join over 20,000 people who read our blog each month and subscribe.

Subscribe

Read Next