The unfortunate truth is that slow payment and non-payment are the construction industry’s most common issues. Many parties furnishing labor or furnishing materials for a construction project will have to file a mechanics lien at some point or another to secure payment. However, some states require you to send a notice to owner in order to protect your right to lien. Which states require a Notice to Owner (NTO), and how should an NTO be delivered?
Continue reading to find out.
Which States Require NTOs?
We’ve covered this topic at-length our Preliminary Notices FAQs and Resources page. You can refer to that page for detailed information about your state’s Notice to Owner statutes.
The following states require you to send an NTO to retain your lien rights:
How do You Send a Notice to Owner?
Sending a Notice to Owner (NTO) is a complicated affair. The document has a lot of criteria. Contractors and suppliers must ensure they send the correct form with the required information to the appropriate recipients.
Importantly, however, a notice to owner must be mailed in a certain way and within the required time frame. Keep in mind that, given the US Postal Service’s recent 10-year plan announcement, construction businesses should prepare for additional delivery delays.
If a claim of lien or bond claim is later required, the lienor will certainly have to prove they met the notice requirement in full. The mailing method will be highly relevant to that burden. With this in mind, how must lien claimants mail their notices to owner documents to the owner of the property?
This post examines the underlying requirements. This includes the burden of proof, the difference between certified mail and certified mail return receipt requested, and ultimately, how you can sleep at night knowing your lien rights are in-tact.
How Does The Law Require You Send A Notice To Owner?
The primary question for prime contractors, general contractors, subcontractors, and material suppliers preparing or sending a “notice to owner” or “preliminary notice” to figure out exactly how the law requires you to send your notice to owner. Determining this is not as straight-forward as it may seem.
The required method of delivery may differ depending a few factors. This includes the project’s state, the project’s type, the role the sending party is playing on the project, and the role and tier of the party who receives the notice. Accordingly, the answer is never as simple as “send it by certified mail”. Each time you prepare a mail piece, even when the mail pieces are for the very same project, you should analyze all of these factors to qualify how you must label and send that mail piece.
There’s a Lot at Play
Louisiana is a great example of this difficulty. Even on the same type of construction project (i.e. commercial projects), you may send the NTO with either certified mail or certified mail return receipt requested depending on whether the party is delivering materials, renting equipment, or performing labor as a subcontractor (Compare La. R.S. § 4802 with § 4822).
Another good example is provided in Washington, where preliminary notices on Washington private projects need only be sent by regular certified mail, but preliminary notices on Washington state projects must be sent by certified mail with return receipt requested.
Putting these nuances aside, mechanics lien and bond claim statutes typically require you to send notices by certified mail, registered mail, or certified mail with return receipt requested. Less often, a statute may also require sending parties to use the “restricted delivery” service. These mail types are all quite different, and those choosing between them must understand the differences. More importantly, you should understand what evidence you’ll need in order to prove the mail reached the intended recipient.
It may seem like the easy answer is to just label a mail piece with the most “comprehensive” service. As this post will make clear, however, there is never an easy answer.
What’s the Difference Between Certified Mail and Certified Mail Return Receipt Requested?
Too often, the term “certified mail” is used interchangeably with “certified mail with return receipt requested.” We have a great article on the Construction Payment Blog that explains the differences between these two mailing services in detail: Certified Mail v. Certified Mail Return Receipt. As outlined in this article:
Regular certified mail allows the sending party to track the delivery of a mail piece and find out exactly when and where the item was delivered…[and] requires the recipient’s signature [which is] stored with the post office and kept on record…but is not mailed back to you as a standard practice…
“Return Receipt Requested” is an additional service that you can add to a standard certified mail piece. Everything remains the same except that the signature record is mailed back to the sender.
There is very little practical difference between certified mail and certified mail with return receipt requested. In both instances, the United States Postal Services stores the signature record.
If a statute explicitly requires delivery by certified mail with return receipt requested, the sender must comply with that hard requirement. Otherwise, however, there are a series of reasons why you shouldn’t add a “return receipt requested” to the mailing.
Is it a Best Practice to Just Always Send Every Mail Piece by Certified Mail Return Receipt Requested?
In terms of legal advice, attorneys love to tell clients do certain things “in an abundance of caution”. If you ask a lawyer, you’ll likely be told to send the mail piece with the “return receipt requested” service. There are a few unfortunate reasons for this. Mostly, this is a lazy CYA (i.e. “Cover Your Ass”) answer that seems like it will be enough in the event of a dispute over the mail piece.
However, as this section will explore, this is not the correct nor best answer. In fact, it is very likely a bad answer.
1) Why do more and spend more than you should?
Sending a mail piece with return receipt requested when you don’t have to is like running a marathon but running 35 miles instead of the required 26, just to make sure. Running the extra 9 miles is an arbitrary extension of the requirement. There’s no stopping you from just running 40 miles, or 45 miles, or more. It’s the same if you add extra services to a mail piece.
The additional “return receipt requested” service also comes with extra expense and headache.
Regarding expense, the service adds between $1.35 (electronic) and $2.70 (traditional) to the cost of the mailing. This can really add up for a company who sends a medium or high volume of preliminary notices. For example, let’s look at companies that send notices on approximately 10,000 construction projects each year. They would wind up spending about $50,000 in superfluous postage. That’s a measurable amount of money to waste.
Regarding headache, you increase the overhead of the mailing if you add the service. This results in more work on your end. This would happen during the sending process, whereby companies must go through some extra effort and expense to prepare the mailing with the return receipt service. However, the real headache is in the potential liability associated with the mail piece after you send it.
2) Choosing to send with return receipt requested can actually create unnecessary burdens and legal obligations
Ever heard of the saying “what you don’t know can’t hurt you?” It may be appropriate for those deciding whether to add the “return receipt requested” service to their certified mailing.
When you send mail with the “return receipt requested” service, you receive a signature that demonstrates who received the mail. This could create a new duty for the sender to review that signature and verify that it’s from the intended recipient. If the signature is not the appropriate recipient, there is some precedent that puts the sending party on notice that the document did not get correctly delivered.
As precedent for this, consider a Michigan appeals court’s discussion in Thomas Indus. v. C & L Elec. (1996). In this case, the “notice” information was placed onto a supplier’s standard packing slip. The supplier argued that delivery of the notice information through this slip was sufficient and a separate notification was not required. The primary reason why the court rejected this argument was because there was “no evidence that the packing slips were received or seen by…the persons who would have received and been responsible for receiving the notice” at the receiving company.”
This potential duty to review the return receipt signature and make corrections is explained well by an Ohio court in Seemiller v. Amato, as follows:
Seemiller v. Amato, 82 Pa. D. & C.4th 353, 354 (C.P. 2007)
“[w]hen any notice…is either returned without the required receipted personal signature of the addressee or under other circumstances raising a significant doubt as to the actual receipt of such notification by the named addressee or is not returned or acknowledged at all, then…the [sender] must exercise reasonable efforts to discover the whereabouts of such person or entity and notify him.”
Fulfilling a state’s NTO requirement mandates that a sender exert a “reasonable effort” to transmit the notice. In most states, the statutes dictate that you can deposit the mail with the standard certified mail service and satisfy this reasonable effort standard. However, if you elect to add the “return receipt requested” service, you threaten to increase your responsibility. That’s because it places an unnecessary burden on your shoulders to review all of these return receipt cards and make sure the signing party is the party who received and signed the mailing.
3) It will almost never change the outcome of an actual case
Upon receipt of a “return receipt” signature, many will presume that the recipient is then incapable of denying receipt. However, this is not the case, and recipients can still argue they didn’t receive the notice or have any “actual notice” of the document. Despite this, courts have consistently found that the actual delivery of the notice is immaterial.
This happened in a 1999 Georgia case that made it all the way to the Supreme Court. In that case, a notice was sent by certified mail with return receipt requested and signed for. The recipient still argued that they did not get the notice and that due process was violated. Fortunately for the sender, the Georgia court didn’t even have to get into the nuance of whether the return signature was or was not actually the intended recipient’s signature. That’s because the Georgia Supreme Court called the actual receipt of the notice immaterial to the compliance requirement:
Parks v. Bank of N.Y., 279 Ga. 418, 420 (2005), see also McCollum v. Pope, 261 Ga. 835 (1992).
…this Court plainly determined that when…[a notice is] mail[ed]…correctly addressed…the actual receipt, or want of receipt,..is immaterial to the right[s].
In this particular case, the Georgia Supreme Court was considering a statute that actually did require certified mail with return receipt requested (Ga. Code Ann. § 44-14-162.2). Nevertheless, despite the explicit requirement in Georgia that “return receipt requested” be attempted, proving actual delivery was unnecessary.
When return receipt is unnecessary, the fact that you have one will almost never positively change the outcome of the case. As the Georgia Supreme Court case states, this is because the way you deliver is typically irrelevant to whether or not you met the requirement.
The Burden of Proof to meet Notice to Owner Requirements
The NTO is a precautionary document, and you’ll never need it until you need it. Nevertheless, you’ll need to prove you sent the notice sooner or later. In fact, if you aren’t taking measures to prove that you met the requirement, then you might as well not send the notice at all. Without such proof, any sent notices will ultimately be worthless.
This begs the questions, however, of what exactly you’ll need to prove a state’s notice requirement was met.
Since you need to send most Notice to Owner documents by certified mail, the required “proof” usually centers around whether the sender has the burden of prove that they mailed the document correctly, or whether or not the the recipient actually received it. This area of construction law is pretty well developed. Courts across the country have very predictable rules about what a sender must prove when delivering a notice through mail. These rules are sometimes referred to as a “presumption of delivery” or a “mailbox rule.”
The typical way courts will prove compliance with a mailing requirement was nicely explained by a Minnesota appeals court in a case analyzing the sufficiency of a lien notice:
Har-Ned Lumber Co. v. Amagineers, Inc., 436 N.W.2d 811, 815 (Minn. Ct. App. 1989)
Generally, service is complete when the paper is properly mailed…The risk of failure of the mail is on the person to whom it is addressed. Certified mail is a service that provides a mailing receipt to the sender and a record of delivery at the office of address. The use of certified mail fills the function of ensuring receipt by a person of suitable age or discretion at the person’s last known address and is thus reasonably calculated to provide notice to the affected person. While service by certified mail raises a presumption of actual notice, such notice may be found where the certified mailing is properly directed to the intended recipient, even though not actually received by them. Due process requires only that notice be reasonably calculated to reach interested parties.
The Courts use this aforementioned phrase over and over again when they analyze a statutory mailing required. “The vast majority of states and courts adhere to this interpretation of any notice mailing requirement, and the reasoning behind the rule is further explained by a 1981 Maine case, Cummings v. Oakland, 430 A.2d 825, 829 (Me. 1981):
Cummings v. Oakland, 430 A.2d 825, 829 (Me. 1981)
The words “shall notify” taken by themselves, may in some contexts import a requirement of actual notice or receipt of notice by the person to whom notice is to be given. Such import is negatived, however, where other language specifies the manner in which the notice is to be given. In such context, the clear intent of the language is that utilization of the notice mechanism provided for in the statute satisfies the statutory requirement of the giving of notice. In short, if the municipality sends the notice by one of the methods prescribed by the statute, it has given notice within the contemplation of the statute.
This construction is supported by the fact that the statutory language at no point refers to receipt of the notice by the property owner or to acquisition of “actual knowledge” by the property owner.
When sending a Notice to Owner document, companies should concern themselves less with taking an “abundance of caution” approach. They should also look to the statute and case law to determine the most critical question: Is there anything to suggest that the default rule, above explained, would be over-ruled by something specifically requiring proof that the notice was actually received. If actual receipt must be proved, adding return receipt service, as well as restricted delivery service, is a good idea. Otherwise, however, the best practice is to send the document by standard certified mail only.
Examples: When You Must Only Prove A Notice Was Sent
In most states, you only need to prove that you sent the documents correctly if you sent an NTO or a preliminary notice.
This is frequently made clear within the statutory requirement itself, as is the case in California, where California Code § 8116 explicitly provides that preliminary notice is “deemed to have been given…when deposited in the mail” in the appropriate manner. If the statute isn’t explicit like this, the courts will interpret whether the sender has a burden to prove the sending or receipt of the notice by analyzing the statutory language in a way similar to the above examples in Maine (Cummings v. Oakland) and Minnesota (Har-Ned Lumber Co. v. Amagineers, Inc.).
As long as the statute doesn’t specifically require an “actual receipt”, you’ll only need to prove it was properly sent.
In the state of Washington, for example, the court in Baker v. Altmayer, 70 Wn. App. 188 (1993), review denied, explained that the states preliminary notice to owner laws did not infer a requirement for “actual notice” or receipt of notice by the owner. The sending party was “not required to show actual receipt of the notice,” but instead needed to prove only that the item was deposited in the mail in the manner required by the statute.
In Florida, anyone with a direct contract with the owner (known as “persons in privity”) does not need to send an NTO in order to retain lien rights. Additionally, groups on the job site like landscape architects, interior designers, and engineers need not send NTOs because they only have lien rights when they have a direct contract.
If you’re a materialman, sub-subcontractor, or any other party who doesn’t have a direct contract with the owner, you need to send a notice to owner in the State of Florida. You can either do so by certified mail or personal delivery. There is no mention in the Florida statutes that require you to include the “return receipt requested” service. For a deeper dive into Florida law, see our page about the Florida Notice of Commencement.
You can find another example in Georgia where the statutory Notice to Owner and Notice to Contractor simply requires that you send the notice by standard certified mail. There are other Georgia statutes that require you to send notices by certified mail with return receipt requested (i.e. Real property sale made on foreclosure § 44-14-162.2, Tort claims against the state § 50-21-26, Enforcing mandatory education on parents of children § 20-2-690.1, etc). However, even when “return receipt requested” service is necessary in Georgia, the Supreme Court still held that successful delivery is “immaterial.” See, for example, Parks v. Bank of N.Y., 279 Ga. 418, 420 (2005), see also McCollum v. Pope, 261 Ga. 835 (1992).
Finally, an interesting Minnesota case highlights how much more important it is to follow the sending requirements than to prove actual receipt. In Pella Products, Inc. v. Arvig Tel. Co., 488 N.W.2d 316, 318 (Minn. Ct. App. 1992), a Minnesota court determined that even though a party acknowledged a first-class mechanics lien statement, they didn’t meet the requirement because the sender didn’t use certified mail exactly! As stated by the Georgia court in the Parks case…actual receipt is immaterial. The requirement is to send the document according to statutory specifications.
Examples: When You Must Prove A Notice Was Actually Received
There are some exceptions to the general rule that you must merely send a notice in order to be effective. However, as you’ll see from the below examples, these exceptions only apply when there is statutory language within the notice law explicitly excepting the notice from the general rule and mandating actual receipt.
You can find statutory examples of this in Kansas and Ohio.
In Kansas, K.S.A. § 60-103 specifically enumerates that: “[t]he term ‘restricted mail’ as used in this chapter means mail, sent postage or other delivery fees prepaid, that is endorsed on its face pursuant to applicable postal regulations so that the sender will receive a return receipt notification with the date and address of delivery, and, if the addressee is a natural person, only the addressee or an authorized agent will receive the mail.” In interpreting this statute, a Kansas court in Owen Lumber Company v. Chartland (2007) rejected the “presumption of delivery” principal since the legal provision in the construction lien law explicitly required return receipt. Specifically, the court stated that “[w]ith respect to mechanic’s liens, the restricted notice requirement of Kan. Stat. Ann. § 60-103 replaces the presumption of delivery with the sureness of proof by the return receipt.”
In Ohio, Ohio Revised Code § 1311.19 (A)(2) has language similar to the Kansas example, whereby it implies a requirement for use of “return receipt requested” with the requirement for delivery by “[c]ertified or registered mail, overnight delivery service, hand delivery, or any other method which includes a written evidence of receipt.” Reviewing this language, an Ohio court has determined that it is sufficient to overrule the “mailbox rule” or “presumption of delivery rule” that would otherwise apply. In Hanson Aggregates Davon, LLC v. J & H Reinforcing & Structural Erectors, Inc., 2014-Ohio-4832, ¶ 18 (Ct. App.) the court stated that “[t]he statute clearly contemplates that mailing a document by certified mail will provide written evidence of receipt. Thus, we cannot conclude that requiring Appellant to provide written evidence of receipt is contrary to a plain reading of the statute, when actual receipt is disputed by Appellees.”
Other Notable Courts
Other courts that have exempted certain lien statutory notices from the general presumption of delivery rule include Maryland, which requires actual receipt pursuant to a 1991 case, Mardirossian Family Enterprises v. Clearail, Inc.. It also includes Illinois, where the burden is on the sending party to prove receipt of a notice whenever a statute calls for the use of “return receipt requested” service. Nat’l City Mortg. v. Hillside Lumber, Inc., 2012 IL App (2d) 101292, ¶ 1, 359 Ill. Dec. 388, 389, 966 N.E.2d 1076, 1077.
In fact, a good general rule of thumb is that if the statute specifically calls for the use of “return receipt requested” service, then the courts will exempt the notice from the general presumption of delivery rule and require proof of actual receipt. Conversely, if the statute does not call for “return receipt requested” service, the general presumption of delivery rule will apply.
Nevertheless, the presumption of delivery rule is so strong in American jurisprudence that many courts will apply it even when a statute explicitly calls for the use of return receipt requested service. Such is the case in Georgia, where the Georgia Supreme Court calls the actual delivery of a legal notice “immaterial” so long the sender mailed it pursuant to statutory requirements (i.e. Park). It is also the case in Colorado, where a mechanics lien statement must be sent by certified mail, return receipt requested; but even then, proof that the mail piece was sent according to the requirement is enough because, otherwise, “adding the implied requirement of actual receipt to this statutory scheme would likely have the paradoxical effect of creating uncertainty and controversy, if not rendering meaningless the alternative to personal service which the statute expressly authorizes.” 6S Corp. v. Martinez, 831 P.2d 509, 511 (Colo. App. 1992).
More Sophistication About How You Send and Track Notice To Owners Overall Will Best Protect Your Lien Rights
A successful Notice to Owner program is just a microcosm of a successful security right program. A company should strive to always be in control of their security position, such that when an account starts to age, leveraging the security right will be available.
In regards to delivering the Notice to Owner, this means you need to have certainty that the correct document was sent in the correct way to the correct parties, and ultimately, that you have the proof you’ll need to meet your burden in court. However, as demonstrated in this article, having this type of certainty about a Notice to Owner delivery is not simple. You cannot satisfy this requirement with an “abundance of caution” approach. The best approach is a tailored, intelligent, and managed approach.
This all boils down to the importance of sophistication about how you track and send your Notice to Owners.
Sending a Notice to Owner is a complicated process. On a case-by-case basis, you must determine what type of notice document to send, who to send it to, when to send it, and how to send it. Each of these determinations can present complexities, and that is especially true for the last determination: how to send the NTO.
You may send Notices to Owner with different mail types like certified mail, registered mail, or mail with “return receipt requested service” or restricted delivery service. You may also deliver Notices to Owner by hand, with overnight delivery, the sheriff, or other service methods.
Too often, the different options in how you can deliver a notice will confuse senders, and you see this most commonly when parties decide whether to send a mail piece by standard certified mail or certified mail with “return receipt requested”. Also, an “abundance of caution” approach that includes the “return receipt requested” service, however, may be more than unnecessary; it may also add unnecessary burdens and legal obligations on the sender.
Companies should be familiar with the necessary burden of proof to send a notice, and should use a sophisticated technology product, like Levelset’s platform, to handle all of the nuances and to maintain the entire process with a high degree of system integrity.