Preliminary notices are a cornerstone of the mechanics lien process. In many states, including California, a preliminary notice must be sent in order to retain the ability to file a valid and enforceable mechanics lien, if the need arises.
And, the parties that receive the preliminary notices — typically general contractors, property owners, and lenders — rely on notices to paint a picture of all of the parties that are working on the project.
California has a relatively simple preliminary notice deadline but is strict in the required content. Read on to learn everything you need to know about the California 20-day preliminary notice.
What Is a California 20-Day Preliminary Notice?
In California, if you provide materials or labor to a construction project, you are generally allowed to file a mechanics lien on that project in the event of non-payment. In some circumstances, however, California law requires that certain parties must first send preliminary notice in order to preserve that mechanics lien right.
[Note: Although a law change that went into effect on July 1, 2012, changed the terminology to simply, “Preliminary Notice,” you’ll still find folks in California construction calling the notice by other names such as the “California Preliminary 20-Day Notice” or the shorter “Preliminary 20-Day Notice.” Old habits die hard, I guess.]
The California preliminary notice requirements are similar to the requirements of other states, and they serve to notify the property owner that a claimant has the right to file a mechanics lien against the property in the event of non-payment. California preliminary notices — like all preliminary notices — are really good-faith, collaborative documents that are designed to benefit the property owner, the general contractor, and other top-tier project stakeholders.
Free Download: California Preliminary Notice Form
Click on the form image to download a free copy of the California Preliminary Notice form to use on your projects and jobs!
Why Send a California Preliminary Notice?
The bottom line is this: in California (and about 37 other states), sending preliminary notice is required in order to maintain the right to file a mechanics lien on a construction project.
Failure to provide notice is all but fatal to a mechanics lien right in the state of California. California requires GCs, subcontractors, and suppliers to send 20-day preliminary notices in order to retain the right to file a mechanics lien, give stop notice, or assert a claim against a payment bond.
However, aside from the fact that preliminary notices are required in the state of California, notices also support good working relationships, as they make sure that owners, lenders, and general contractors know who is working for them (this is especially beneficial on large projects). When a mechanics lien is filed on a project, it’s like a heart attack — the consequences (especially for the property owner) can be severe.
There is a bit of a stigma with notices, in that some contractors do not want to send the notice because they fear that it will create animosity on the part of the notice recipients. This perception could not be any further from the truth. Preliminary notices are sent all day, every day in our industry.
This is the reason why preliminary notices were invented in the first place — to protect property owners from the risk of a lien filing from an unknown party. Sending notice establishes a line of communication that gives all of the parties a better opportunity to prevent any payment issues from developing into full-blown problems.
The goal is to facilitate a smooth payment process for everyone on the project, ensuring timely, accurate payments while avoiding mechanics liens and other major problems.
Successful companies who make money always send preliminary notices. So don’t be afraid of sparking animosity when you send your notice! You’ll actually be doing a favor for all of your notice recipients.
An Added Benefit: Send Notice and Get Paid Faster
As we discussed above, sending preliminary notice is essential in California, because it’s the first step that’s required to secure lien rights on a project. But securing lien rights, while important, is hardly the only benefit that sending notice provides.
There is another, hugely important benefit of sending preliminary notices: construction companies that send preliminary notices get paid faster than the companies that don’t. Significantly faster. That’s because, when you send a preliminary notice, you are prioritizing your invoices by making sure you are visible, and providing evidence that you “run a tight ship.”
And the result of getting paid faster? BETTER CASH FLOW.
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.
When preliminary notices are required to retain the right to file a valid mechanics lien (as is the case in California), and those notices aren’t sent, those parties are the ones that can be strung along a bit longer for payment if cash flow becomes an issue. (And in construction, cash flow is almost always an issue).
Who Must Send a California Preliminary Notice? Who Receives It?
The following parties must send a 20-day preliminary notice:
- General Contractors (only if there is a construction lender involved on the project)
- Material Suppliers
- Equipment Renters
Laborers are not required to send notice in the state of California.
Subcontractors and material suppliers are required to send a 20-day preliminary notice to the following recipients:
- The Property Owner (or reputed owner)
- General Contractor
- Construction Lender (if there’s a lender involved on the project)
California law states that general contractors (or any party with a direct contractual relationship to the owner) are only required to send preliminary notice to the construction lender (if there is one on the project).
It’s a good practice to notify the tenant on any tenant improvement project.
Really, the best practice is to use preliminary notices to keep everyone on a project notified.
If a required party is non-existent (such as no lender on the project), then there is no need to send notice to that party.
What Information Is Included in a California Preliminary Notice?
California’s lien law requires that preliminary notices contain specific information. This includes all of the following:
- Name and address of the owner or reputed owner
- Name and address of the prime contractor
- Name and address of the construction lender, if any
- Description of the site sufficient for identification, including the street address of the site, if any
- Name, address, and project role of the claimant (“claimant” = the party giving notice)
- The name and address of the party that contracted with the claimant
- General statement of the work provided
- An estimate of the total price of the work to be provided
- A specific, 235-word statement in BOLDFACE TYPE (see below):
NOTICE TO PROPERTY OWNER EVEN THOUGH YOU HAVE PAID YOUR CONTRACTOR IN FULL, if the person or firm that has given you this notice is not paid in full for labor, service, equipment, or material provided or to be provided to your construction project, a lien may be placed on your property. Foreclosure of the lien may lead to loss of all or part of your property. You may wish to protect yourself against this by (1) requiring your contractor to provide a signed release by the person or firm that has given you this notice before making payment to your contractor, or (2) any other method that is appropriate under the circumstances. This notice is required by law to be served by the undersigned as a statement of your legal rights. This notice is not intended to reflect upon the financial condition of the contractor or the person employed by you on the construction project. If you record a notice of cessation or completion of your construction project, you must within 10 days after recording, send a copy of the notice of completion to your contractor and the person or firm that has given you this notice. The notice must be sent by registered or certified mail. Failure to send the notice will extend the deadline to record a claim of lien. You are not required to send the notice if you are a residential homeowner of a dwelling containing four or fewer units.
Word to the Wise: These requirements are set forth in California’s Lien Law, and this law tends to be strictly enforced in the Golden State. Therefore, it’s important that your preliminary notice meets all of these requirements, or you may be at risk of losing your right to file a mechanics lien.
Keep in mind:
- California does not require amended or supplemental preliminary notices if the estimate of total price is exceeded or changes.
When Do I Send a California Preliminary Notice?
You are required to send your preliminary notice within 20 days of first furnishing labor and/or materials.
This means that if you send your notice later than 20 days after first providing labor or materials, the notice only protects lien rights for the preceding 20 days. For example, if you send a preliminary notice on Day 25, you cannot file a lien for any labor or materials provided on Days 1 through 5, but you are good to go from Day 6 to the end of the project.
Organized companies file these notices as soon as they get the project information. They file them on every project. The harsh truth is that entities in the construction industry never know if or when they will be paid. These required notices need to be sent early on.
There is a bit of a stigma with notices, in that some contractors do not want to send the notice because it will create animosity. This perception could not be any further from the truth. Preliminary notices are sent all day every day in our industry. Successful companies who make money always send preliminary notices.
Can You Send Notice Early in California?
Can preliminary notice be sent before you begin furnishing, or would that be a premature notice? The answer here is yes, it’s fine to send preliminary notice early in California.
Can You Send Notice Late in California?
Better late than never! It is much better to maintain lien rights for recent work than for no work at all. A “late” notice will cover the work performed on the project beginning 20 days prior to when the notice as sent. Better to get some protection than none at all. It’s only too late to send a preliminary notice in California if your work ended more than 20 days previously.
A few takeaways about sending California Preliminary Notices:
- Best practice is to send preliminary notice as soon as you commence work.
- The preliminary notice must be sent within the 20-day notice period, and actual delivery is not required within the period. The requirement is considered met if properly sent within the period.
How Do I Send a Preliminary Notice in California?
Send your notice by registered or certified mail, express mail, or overnight delivery by an express service carrier. No need to worry about a return receipt. The date that counts is the mail date, not the delivery date, so make sure you retain proof you mailed your notice.
If the owner is out of state and the above methods do not work, you can send the owner’s notice via certified or registered mail to the construction lender or original contractor.
The most cost-effective way is to send via United States Postal Service “certified mail.” This will give you a tracking number to confirm delivery and cost under $5.00.
Declaration of Delivery – Required
Hundreds of thousands of preliminary notices are sent every year in California by construction companies on their own, and they nearly always forget a very crucial requirement: Filling out and signing a Declaration of Delivery.
A California declaration of service or delivery is a very simple document. It’s simply a signed statement by the person who performed the service (i.e. the person who mailed the notice) identifying themselves, identifying when the notice was sent, identifying that it was a preliminary notice sent, identifying who it was sent to, and identifying how it was sent.
Are There any Exceptions to California’s Preliminary Notice Requirements?
As a general rule, if you did not contract directly with the property owner on a California construction project, you must deliver a 20 Day Preliminary Notice within 20 days of first furnishing labor and/or materials to the construction project.
However, there is one, limited exception recognized by California courts, though you must be extremely careful. As a result of a 1984 court case, the courts held that an owner with actual knowledge of a particular party’s involvement with a construction project cannot challenge a mechanic lien based on not having notice that the particular party was on the project.
In other words, this means that, if you were required to send notice but failed to do so, you may still have lien rights if the property owner knew you were on the project, knew you were performing work, and had that knowledge within 20 days of you first starting to furnish the labor and/or materials. However, this exception is not a guarantee — it only means that you may have a chance of proceeding with a lien claim (if you failed to send notice).
Conclusion — Free Resources
California is the largest state in the country with a massive economy and a huge construction industry within the state and surrounding region. Thousands of California-based construction companies utilize Levelset to better manage their payment process, send documents (especially 20-day notices), secure their lien rights, and especially, to get paid.
We have some additional resources and information available for your below. And if you have more questions or even if you don’t know where to turn, we’re always here to help.