Our customers often ask, How Do I File a Retraction Letter? or, Am I Required to Send a Retraction Letter?
The truth is, retraction letters are sort of a made up document in the construction industry. They have almost no legal power, and they exist more for the psychological assurance of parties that receive pre lien notices. That being said, retraction letters are real and widely used, so we cannot ignore them. Read on to learn why people send retraction letters and common myths.
What is a Retraction Letter?
A retraction letter is a document that withdraws, or rescinds, a previous claim. In the world of construction and mechanics lien rights, a retraction letter is most often used to retract a preliminary notice or a notice of intent to lien.
Consider this scenario: you subcontract on a project, you do your work, you send an invoice, and you’re not paid. You’re not alone. Plenty of people and businesses experience late payment. You communicate back-and-forth with your customer to wrestle payment, but not luck. So, you send a Notice of Intent to Lien. This gets your customer’s attention (and the attention of the property owner), and after some more back-and-forth, you collect your money. For assurance, your customer asks you to send a retraction letter, retracting the notice of intent to lien.
You might also be asked to send a letter retracting a preliminary notice, though this is less common.
The Law Does Not Require Sending Retraction Letters
State lien statutes do not require potential lien claimants to send retraction letters. In fact, retraction letters almost never have legal implications. There are two reasons for this:
1. Notices Cannot Be “Released” With a Retraction Letter. The vast majority of lien notices are akin to letters, sent in the mail directly to the general contractor, property owner, or other project participant. These notices do not encumber the property. They protect lien rights or give warning of the threat of a lien. The handful of notices that are filed with a county recorder cannot be reversed by sending a retraction letter. To cancel these notices, the claimant must file an additional notice, just as they would file a lien cancellation.
2. Lien Statute Does Not Reference Retraction Letters. Therefore, a lien statute doesn’t assign any power or consequence to them, and sending a retraction letter does not explicitly reverse the effect of sending a notice. While a clever lawyer might be able to argue otherwise with the right judge, this is unheard of and highly unlikely.
Why Send a Retraction Letter?
So, if retraction letters don’t have any real consequences, and the law doesn’t require them, then why should you send them? The short answer is: because your customer asked. Retraction letters put people at ease and support healthy working relationships. So, if your customer asks for one, why not?