What is a Preliminary Notice and Why is it So Important?
Whether it is required by the state your construction project resides in or not, it is best practice to send a preliminary notice to the paying party.
Among many benefits, filing a preliminary lien notice can help you get paid faster— if done so correctly.
In this guide, we will explain the important role of preliminary lien notices and provide insight on how you can send out preliminary lien notices without ever needing to lift a finger.
We Take the Legwork Out of Preliminary Lien Notices — Get Paid Faster With Flexbase
When it comes to filing your preliminary lien notice, don’t waste precious time filing manually only to risk making mistakes that can affect your ability to get paid further down the road.
Flexbase can automatically generate the correct forms error-free and submit your preliminary lien notice on your behalf so you can focus on getting the job done and getting paid for it.
By sending automatic payment reminders and sending your preliminary notice via certified mail, email, and text, Flexbase can help you get paid faster. Schedule a free demo today.
What is a Preliminary Notice?
Unless you have a Midas touch for construction, you’ve probably found yourself in a situation where it was a struggle to get paid for a construction project. This is a common problem in the construction industry.
In order to protect contractors’ and tradespersons’ livelihoods, every state offers legal recourse through a mechanics lien. However, there are several critical steps you must follow to be able to file a mechanics lien, which includes filing a preliminary notice.
A preliminary notice notifies the owner or general contractor that in the event of non-payment for a construction project, the contractor or other party will reserve their right to file a mechanics lien.
Depending on which state the construction project is being executed, a preliminary notice can also be referred to as:
- Materialman's Notice to Owner
- Notice of furnishing; or
- Notice to Owner.
When Does a General Contractor Need To File a Preliminary Notice?
Many states require contractors to send preliminary notices before a specific time period has ended. Failure to provide a preliminary notice within the given timeframe can have devastating consequences, like not receiving full coverage or having the ability to file a mechanics lien.
Let’s take California law, for example. In California, a preliminary notice must be filed within 20 days of providing labor or materials. If the preliminary notice is sent after this 20-day period, then only the work completed within 20 days prior to the mailing date on the notice is covered.
Are There Preliminary Notice Requirements?
Preliminary notice requirements can vary from state to state and in some cases, even county by county. Not meeting all of the requirements for filing a preliminary notice can affect whether or not you get paid.
Luckily, Flexbase takes the stress out of filing preliminary notices in your jurisdiction by automatically generating the correct forms within the legal requirements so you can avoid costly mistakes.
Does Every State Require Contractors to Send a Preliminary Lien Notice?
Many states, like Florida, require contractors to send a preliminary lien notice.
It’s extremely important to ensure you file a preliminary lien notice if required. If you are completing a project in a state that requires a preliminary lien notice and fail to send one, you can lose your right to file a mechanics lien later on.
4 Reasons Why General Contractors Should Send A Preliminary Lien Notice
Even in instances where preliminary notices aren’t required, it is in your best interest to still send one. Preliminary notices can help you reduce the risk of not getting paid, among many other benefits such as:
- Speeding up the payment process
- Avoiding filing liens
- Safeguarding your rights to file a lien if needed
- Increasing Communication
- Demonstrating a sense of preparedness and professionalism
#1: Speed Up the Payment Process
Undergoing a mechanics lien can be a painful process for all parties involved.
Sending out a preliminary notice can light some fire underneath the paying party and let them know you are being vigilant about payments.
A preliminary notice will help you get paid faster and avoid having to take the next step of having to file a mechanics lien.
#2: Avoid Filing Liens
Once you file a lien, a construction lawyer becomes involved. This can cost you thousands of dollars and wasted time trying to get paid. A preliminary notice is a great step to reduce the chances of needing to file a mechanics lien.
#3: Safeguard Your Rights to File a Lien
If you are in a state where preliminary notices are a requirement and fail to file one before the deadline, you can lose your right to file a mechanics lien.
If you try to file a lien without sending a required preliminary notice, the other party can challenge your claim in court and the judgment will most likely not be in your favor.
#4: Increase Communication
Managing construction projects can be difficult. With hundreds of documents and forms being passed back and forth, it is easy for the line of communication to become blurred.
Preliminary notices can give general contractors insightful information that helps them:
- Coordinate people on the job site
- Plan for schedule changes
- Make timely payments
It Shows Preparedness and Professionalism
A sloppy, disorganized subcontractor is every property owner and general contractor’s worst nightmare.
By sending a preliminary notice on time, you can display a level of professionalism and organization that shows you mean business. Being prepared can signal to the property owner or general contractor that you have set standards and procedures and place value in communication.
How Do You File a Preliminary Notice? A Step-by-Step Process
When filing a preliminary notice, it is important that every step goes without a hitch. One small mistake, even a typo, can invalidate your preliminary notice and make it harder to file a mechanics lien if needed.
Let’s go through the process of manually filing a preliminary lien notice step-by-step.
Step One: Gather State Requirements
If your state requires you to send a preliminary notice, you’ll have a specific set of requirements that you need to follow, including:
- Sending the preliminary notice within a specific time frame
- Sending the preliminary notice to the right people
- Providing accurate information in a specific manner
While state requirements will vary, preliminary lien notices typically include:
- The name and contact information of your company
- The name and contact information of the property owner
- The name and contact information of the general contractor
- The name and contact information of the lender (if there is one)
- The bond surety company (if there is a bond)
- The address of the property and/or legal property description
- Description of labor and materials that you are providing
- The price estimate
Step Two: Calculate Your Deadline
It’s important to understand when your deadline for submitting a preliminary notice is. Your deadline will depend on which state your construction project takes place in.
In most states, failure to send a preliminary notice before your deadline is up will waive all of your rights to file a mechanics lien in the future. However, some states like Arizona and California are more forgiving by a small margin.
In these states, your lien protection will be limited to labor and materials provided just 20 days prior to the mailing date of the notice and everything thereafter.
Step Three: Deliver The Preliminary Notice
Most states have acceptable forms of delivery clearly laid out.
The best method of delivery is to send the preliminary notice via certified mail with a return receipt requested. This way, if a conflict arises, you have a record of service.
Most states will also allow preliminary lien notices to be hand-delivered, but this can make delivery harder to prove in the event of a conflict.
Who the preliminary notice is delivered to can also vary by state. Most states will require you to send the notice to the property owner, hence why preliminary notices are referred to as a Notice to Owner in some states. Other states may require you to send the preliminary lien notice to the general contractor instead.
It is best practice to send the preliminary lien notice to all parties involved with payment. You can’t really put a preliminary lien notice in too many hands, but if you fail to get it to the right person, you’re in for trouble.
Flexbase Makes Sending Preliminary Notices Easy and Efficient
When it comes to filing preliminary notices, one small mistake can put you at risk of not getting paid. Flexbase takes human error out of the equation.
With Flexbase, you’ll never have to worry if you have the proper forms to file a preliminary notice in your state. The software automatically generates the correct forms and even sends the notice via:
- Certified mail
- Email; and
- Text
When using Flexbase, you can rest assured that your preliminary notice is filed correctly and can do exactly what it is supposed to — protect you in the event that you don’t get paid.
It’s Like Having Additional Support for Your Accounting Team — Flexbase Gets You Paid Faster
Getting paid in the construction business is a historically slow process, but Flexbase can help change that.
With constant communication with property owners and contractors, Flexbase can help you get paid faster. Before a preliminary notice is ever sent out, Flexbase will automatically send payment reminders on your behalf.
In the event that the other party does not pay after receiving a preliminary notice, Flexbase will also help you automatically start the process of filing a mechanics lien without involving an expensive construction lawyer.
Schedule your free demo with Flexbase today and speak with one of our experts about how Flexbase can help your construction business overcome common challenges with receiving payment.
