Preliminary notice requirements are common throughout the U.S. These requirements serve to both provide visibility to the property owner of parties that may otherwise go unnoticed, and to protect the noticing company’s ability to file a valid mechanics lien. While some type of notice, whether a general preliminary notice shortly after starting work or a Notice of Intent to Lien after payment has become due, is extremely common, the requirements of what information must be presented on the notices can differ significantly.
Since the delivery of proper preliminary notices is crucial to protecting security rights, it’s important that the correct required informations contained on the notice. However, since preliminary notice serve an additional function related more to making the construction payment process fair – promoting visibility – the required information can sometimes cause consternation on the part of noticing parties who do not wish to “rock-the-boat” with the property owner or GC. Specifically, some preliminary notice requirements mandate that the noticing party include a dollar amount on the face of the notice, generally either the total contract amount (whether known or estimated), or a claim amount. This can be scary, and may seem to shift the preliminary notice from conciliatory and promoting fairness and visibility, to antagonistic. While that view is understandable, the inclusion of a dollar amount on a preliminary notice, where required, is not antagonistic, and provides the property owner and/or GC with good information with which he or she can better manage the project payments and make sure everyone gets paid what they are owed.
States Requiring Dollar Amounts
While specifically requiring a dollar amount on preliminary notices is not the majority position, it’s more common than one may think. Around 1/4 to 1/3 of states require some dollar amount to be included on preliminary notices (whether required, best-practice, or optional), depending on project type. These states are: Alabama, Arizona, California, Colorado, Georgia, Illinois, Louisiana [public projects only], Massachusetts, Minnesota, Nebraska, New Hampshire, New Jersey, Rhode Island, South Carolina, South Dakota, Texas, and Virginia.
While some companies, specifically those that work in states other than those listed above, may not be aware of the requirement to include a dollar amount on certain preliminary notices, it’s not an uncommon requirement. Listing an contract or potential claim amount on the preliminary notice when required allows the property owner and/or GC to manage funds to make sure everybody gets paid fairly, and gets paid what they deserve; and that’s only fair.