It’s easy to lose track of time – in fact, it happens to me all the time. When a busy, complicated construction job gets underway, it’s even easier to lose track of time as well as the dates of specific project milestones.
The day when the work begins should be relatively easy to pinpoint – but if you don’t write it down, you’d be surprised how easily it disappears into the calendar. Even more important than knowing dates is knowing who’s on the job, what work they’re doing, and when.
A Notice of Commencement kills those two birds with one stone. Plus, there are other benefits to the document.
Today, we’re going to discuss the Notice of Commencement as it relates to construction projects taking place in the state of South Dakota. Read on for more.
Who Files a South Dakota Notice of Commencement?
In South Dakota, a Notice of Commencement (also known as a Notice of Project Commencement) may be filed by the owner, any direct contractor (typically the GC or prime), or some other authorized agent or representative of the owner. Notice that “may” in the last sentence – it’s not a required filing. But read on – there are some huge benefits to posting a South Dakota Notice of Commencement.
Why File a Notice of Commencement in the First Place?
How can a Notice of Commencement afford the owner or GC protection? Well, it could limit the number of potential lien claims.
For instance, in South Dakota, if a Notice of Commencement is filed, a Notice of Furnishing (read: preliminary notice) is then required to be sent by potential lien claimants. A lien cannot be filed unless the claimant has sent a Notice of Furnishing to the general contractor and the owner. The Notice of Furnishing must be sent no later than 60 days after the last day of work or last furnishing of labor and/or materials.
Wait — Where Does This Filing Take Place?
Good question! The Notice of Commencement is filed with the register of deeds of the county where the project is located. Also, the notice must be posted at the job site and include the following statement:
“The contractor on this project has filed a notice of project commencement at the county courthouse. Any sub-subcontractor and any supplier to a subcontractor shall comply with the notice provisions of §44-9-53 before filing liens in connection with this project.”
When Is It Filed?
South Dakota’s Notice of Project Commencement must be filed within 30 days of the commencement of work. Not too bad! Some states require this filing prior to the performance of any work.
What Info Is Included in the Notice of Commencement?
We’ll pull straight from the law books on this one. Based on § 44-9-50 of South Dakota’s mechanics lien statute, the following information must appear on the Notice of Commencement:
(1) The name and address of the person filing the notice of project commencement;
(2) The name and address of the owner or developer;
(3) A general description of the improvement; and
(4) The location of the project, including the legal description of the property.
In the end, while a Notice of Commencement is not required in South Dakota, it’s a great way to create an undisputed marker of when a job started. Plus it can serve as an additional protective layer for GC’s and property owners – liens won’t pop up “out of nowhere”, and disputes can be nipped in the bud.
It may feel like it’s a bad thing for potential lien claimants since it creates a preliminary notice requirement. But that isn’t the case!
In fact, it’s the opposite – more communication (in this case, via a Notice of Commencement and subsequent Notice of Furnishings) lead to healthier projects with better outcomes. When a Notice of Commencement is present, owners and contractors benefit from knowing everyone up and down their payment chain. When this payment chain is clear, payments move to subs and suppliers more quickly. Honestly some form notice should really be sent on every project. So ultimately, utilizing a South Dakota Notice of Commencement sounds like a win-win.