Preliminary notices are commonly understood as a potential requirement to preserve mechanics lien rights on private construction projects, both residential and commercial.
But on a public works project, a mechanics lien is not the applicable remedy for companies to help settle payment issues, and therefore, it’s not uncommon for parties to be confused as to whether a preliminary notice should be sent when working on a public works project.
While it’s always a good idea to send preliminary notices on every project to promote visibility, whether a preliminary notice is required to reserve the right to make a claim against a payment bond is a different question. Just like mechanics lien laws, “Little Miller Acts“ (the laws that govern bond claim on public projects) vary from state to state. Some general guidelines regarding preliminary notice on public projects can be found below.
One sub-set of public works projects are federal projects. Projects on which the U.S. government or some federal agency is a party are governed by the Miller Act. If you are working on a federal project governed by the Miller Act the question of whether a preliminary notice is required is crystal clear: “No.”
Preliminary notice is not required prior to making a claim pursuant to the Miller Act, provided that you are a party protected by the act. First and second tier subcontractors and suppliers to the GC or a first tier sub are extended protection under the Miller Act, and there are no associated preliminary notice requirements (GCs and third-tier subs and suppliers do not have rights). As noted above, however, while it may not be required to preserve the right to make a valid claim – it is always a good idea to send preliminary notice to promote visibility.
Did You Contract Directly with the Public Entity?
If you contracted directly with the public entity in charge of the work, your ability to recover earned but unpaid money is likely limited to a lawsuit against the public entity directly. Since the GC’s generally required payment bond is for the benefit of the subs and suppliers down the chain (and it makes no sense to attempt to recover against your own bond) a lawsuit is usually the only way to proceed. Accordingly, there is no preliminary notice requirement for direct contractors on public projects as there is no bond protection.
Note, however, that sending a demand letter prior to initiating suit is generally advisable, and a demand letter is really like a preliminary notice to a lawsuit.
What State Is the Project In?
The last general piece of information to look at in determining whether a preliminary notice is required on your public works project is in which state the project is located. As with mechanics liens, each state’s “Little Miller Act” or public works lien statutes (if applicable) are different. Knowing the requirements of the states in which you do most of your work (if you do not furnish labor or materials nation-wide) can cut down on the time required to determine whether a prelim is needed. For example, if your work centers around California and Arizona it’s easy to know that you need to deliver a 20-day preliminary notice on public projects just like on private jobs. However, if you do a lot of work in Illinois, you won’t have preliminary notice requirements for public jobs in that state.
Whether or not a preliminary notice is required for a public project can be a state-by-state determination. But, whether or not there is a specific preliminary notice requirement, it’s always a good idea to send one. Promoting visibility, and making yourself known, is the best way to grease the payment wheels and avoid payment issues to begin with. After all, it’s better to get paid without the necessity of making a bond claim – that way, everybody’s happy.