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When a Notice of Commencement is filed on a construction project, it affects everyone on the job, from the property owner down to material suppliers. If you’re a subcontractor that works in a state where the Notice of Commencement is used, it’s important to understand how this notice affects you, and where to find it.
A Notice of Commencement (NoC) is a document that designates the official start date of a construction project.
In most cases, the general contractor or property owner is responsible for compiling the information required for the Notice Of Commencement. They must typically file it with the county office where the project is taking place, and post it at the jobsite.
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What a Notice of Commencement means for subcontractors
Depending on the state, it can affect subcontractors in a number of ways. When the owner or GC files a Notice of Commencement, it may affect you by:
- Requiring you to send preliminary notice
- Shortening the deadline to file a lien
- Change the priority of your mechanics lien
Where to find it
On almost all jobs in states that use a NoC, it can be found in one of two places:
- Posted at the construction site in a visible location
- On file at the county recorder, county clerk, or assessor’s office in the county where the project is taking place
States that use Notice of Commencement
Where it’s required
Seven states legally require the filing of a Notice of Commencement to establish the official start date of a project and to serve notice to the public that the project has been started:
In each of these states, a Notice of Commencement must be filed when a project is started in order for any party to file a mechanics lien.
Where it’s optional
There are four other states where creating and filing a NoC is an option, but not required:
These 4 states allow the use of a NoC as a voluntary way to help protect owners and contractors by limiting the filing of mechanics liens when the project is complete.
As a subcontractor, it is beneficial to you to thoroughly understand rules in your state. When a NoC is filed, it often creates additional notice requirements, shortens deadlines, and/or affects lien priority.
What Do Subcontractors Need To Know In Each State?
As a supplier or subcontractor, it is important to get a copy of the Notice of Commencement early in your involvement on the job. It has all of the project information you will need down the road if it is necessary to file notices, liens, or other critical documents.
If a NoC is filed, a subcontractor’s lien priority may change. All mechanics liens filed on the project relate back to the date of the NoC’s filing. As a result, all lien claims from subcontractors and suppliers have the exact same priority. Additionally, the amount of a lien cannot exceed the unpaid balance on the project.
If a NoC is not filed, the priority of the lien is based on the date of the filing of the lien. Whichever lien is filed first has higher priority. As a subcontractor, it benefits you to file a lien early if a NoC has not been filed.
If the property owner has a designee and/or a lender, you must send a Notice to Owner to them as well. Both of these parties, if they exist, will be identified on the Notice of Commencement.
When a NoC is filed, subcontractors must send a Notice to Contractor when they start on the job. Without the Notice to Contractor, subcontractors lose their lien rights, so make sure you fill one out.
However, if a NoC is not filed, all subcontractors and suppliers on the project automatically have lien rights – without a requirement to deliver preliminary notices.
Iowa requires a Notice of Commencement, but only on private residential projects. If a NoC has been filed, a subcontractor must submit an Iowa preliminary notice to make a mechanics lien claim.
If the GC fails to file a NoC within 10 days of the start of the project, they lose their lien rights. In that event, subcontractors must post the NoC in conjunction with their preliminary notice. This is due to a regulation that states that a NoC is required in order for a preliminary notice to be filed.
In Louisiana, a Notice of Commencement is called a Notice of Contract. The GC is required to file it on construction projects over $100,000. For subcontractors, it affects the deadline to file a lien.
When a Louisiana Notice of Contract is filed, subs have 60 days after the Notice of Termination to file a mechanics lien. If a Notice of Termination is not filed, then the 60-day deadline starts upon Substantial Completion.
If the GC fails to file a Notice of Contract appropriately, then subcontractors and suppliers have 6 months from Substantial Completion to file a mechanics lien. However, if the owner files a Notice of Termination, this deadline is shortened to 30 days after notice filing.
When a Notice of Commencement is filed on a construction project, subcontractors must send preliminary notice within 20 days in order to protect their lien rights. In Michigan, preliminary notice is called Notice of Furnishing. The NoC provides the information that subcontractors need to prepare their Notice of Furnishing.
If a Notice of Commencement is not filed and posted as required, subs and suppliers do not need to send a Notice of Furnishing. They retain the ability to file a mechanics lien automatically.
Filing a Notice of Commencement is voluntary in Nebraska. It can be filed by any party associated with a project, and affects lien priority on the project. All liens submitted while the NoC is in effect have the same attachment date as the day the NoC was filed. This effectively creates a retroactive attachment date, giving contractors and subcontractors lien priority while the NoC is effective.
If a NoC is not filed, liens are assigned priority in the order in which they were attached to the property.
When a NoC is filed on a construction project in Ohio, subcontractors must file preliminary notice within 21 days of the start of the job to retain lien rights. In Ohio, preliminary notice is called a Notice of Furnishing.
If a NoC is not filed, a Notice of Furnishing is not required and any party can file a valid and enforceable lien.
In South Carolina, a Notice of Commencement is optional. In this state, a NoC does not affect a subcontractor’s right to file a lien, but it may affect the amount they are allowed to claim on a mechanics lien.
If a Notice of Commencement is filed, subcontractors should send preliminary notice, also known as Notice of Furnishing in order to protect their full lien rights. If the subcontractor fails to send preliminary notice, the amount they can claim in a mechanics lien is limited.
If the GC fails to file a NoC, subcontractors are not required to send a preliminary notice before filing a lien.
Filing a Notice of Commencement in South Dakota is strictly voluntary.
If a NoC is filed, parties below first-tier subcontractors must send a preliminary notice called a Notice of Furnishing. If they fail to do so, they lose their lien rights. The NoC does not affect the lien rights of the General Contractor or first-tier subcontractors though.
If a Notice of Commencement is not filed, sub-tier parties are not required to send a Notice of Furnishing in order to protect their right to file a lien.
Notice of Commencement is voluntary in Texas, where it is called an Affidavit of Commencement. Filing a NoC in Texas affects lien priority of subcontractors.
If an Affidavit of Commencement is filed, any subsequent mechanics liens would relate back to the date listed in the Affidavit.
If it is not filed, liens have priority based on the order in which they were attached to the property.
Utah requires a Notice of Commencement on public projects only.
If a NoC is filed, subcontractors in Utah must file a preliminary notice within 20 days in order to retain the ability to make a claim against the bond.
If a NoC is not filed, subcontractors aren’t required to send preliminary notice in order to file a claim on the bond.
Know your state’s NoC rules
A Notice of Commencement has wide-ranging effects on lien rights and preliminary notice requirements for subcontractors depending on state specific laws and the filing status of the NoC. As subcontractor, it is good practice to always send a preliminary notice on every construction project, regardless of whether you believe it’s required or not. Preliminary notice can serve other purposes, including promoting communication, building good relationships with customers, speeding up the payment process. In fact, sending preliminary notice may even eliminate the need to file a lien altogether.