Sending and receiving preliminary notices should be a positive experience. For contractors, receiving preliminary notices from parties down the chain provides a clear picture of the project’s payment chain. For subs and suppliers, preliminary notices open lines of communication up the chain. Plus, if payment disputes arise on the project, these notices will also preserve the right to use more force (such as a mechanics lien or bond claim) in payment negotiations down the line.
While sending preliminary notice is a widely recognized industry best practice, not all of the states’ lien laws contain provisions requiring that preliminary notices be sent (on construction projects). However, from time to time these laws can change, and that’s exactly what happened recently in the state of Iowa. Specifically, in April 2018, Iowa’s lien law now requires preliminary notices on public projects in order to make a payment bond claim. Read on for a quick summary of this change.
Preliminary Notice Now Required on Iowa Public Projects
Let’s talk specifics for Iowa construction companies that work on public projects [read more about project type] by answering the following questions:
1 Who must send notice?
2 What info is contained on the notice?
3 Who must receive it?
4 When to send?
5 What happens if notice is NOT sent?
1. Who must send notice? Only those working on a project who have no contract with the general contractor must send notice.
2. What’s on the notice? The name, address, and phone number of the party sending notice must appear on the notice. Also, the name of the hiring party must be present. That’s really it! It’s a simple notice.
3. Who must receive notice? Notice must be sent to the general contractor on the project – the party who was hired directly by the public awarding authority.
4. When is notice sent? This notice must be sent within 30 days of first furnishing.
5. What happens if notice NOT sent? If notice isn’t sent and a party goes unpaid on a public project, a bond claim won’t be an available option. In fact, neither will a retainage claim. Further, when it comes time to make a payment bond or retainage claim, the claimant who sent this notice must also support the claim with a certified statement that the general contractor received the notice. Claimants, repeat after me: “I’m gonna send it!”
More Important Info for Iowa Subs and Suppliers
Who can make a bond claim? Only subs and suppliers hired by the general contractor or a first-tier subcontractor are able to make a payment bond claim against the general contractor’s bond in Iowa.
What’s the deadline for a bond claim? It depends. If the public entity has made payment, they must receive a claimant’s bond claim within 30 days of the completion of the project/acceptance of work. If payment has not been made, a claim may still be filed.
Who’s it sent to? A bond claim is only required to be sent to the officer, board, or commission authorized to let contracts for the project. However, if the improvement is for a highway, the claim should be sent to the county auditor letting the contract. Regardless, it’s a good idea to send the bond claim to both the general contractor and the surety.
But when’s the deadline to bring suit? Like a mechanics lien, a bond claim doesn’t require that suit be initiated. However, if payment is still not forthcoming after a bond claim is made, then initiating suit may be necessary. In Iowa, a claimant must initiate suit no earlier than 30 days after the completion/acceptance of work, but no later than 60 days after…so, between 30-60 days after completion.