Understanding how the Tennessee preliminary notice process works is crucial to secure mechanics lien rights. Most parties on a Tennessee construction project are required to send some form of notice. The rules and requirements for these notices can be complex. This article will tell you everything you need to know about Tennessee preliminary notices.
Editor’s note: Tennessee’s Notice to Owner rules changed on July 1, 2020. Those changes are reflected in the text below, but it’s possible some links may be outdated.
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What is a Tennessee preliminary notice?
In the state of Tennessee, there are two types of notice that may be required on almost every type of construction project. All project participants, regardless of the tier, must send a notice in some form or another.
The first type of notice is referred to as a Notice to Owner. Only those who contract directly with the property owner are required to send this notice. This notice is only required on owner-occupied, residential projects (up to 4 units). Failure to send this notice won’t affect the claimant’s mechanics lien rights, but they may be subject to criminal penalties.
As for all other parties (subs, suppliers, etc.) they are required to send a Notice of Nonpayment on nearly every construction project. The only exception is owner-occupied, 1-4 family residential projects; there are no notice requirements for remote contractors on these types of projects.
The rules governing Tennessee preliminary notices can get confusing. In fact, it comes up quite regularly in our Ask an Expert Center:
Why send a Tennessee preliminary notice?
The most obvious answer is that these monthly notices are required in order to secure the ability to file a mechanics lien. Mechanics liens are an invaluable tool to make sure you get paid on a construction project.
As for the Notice to Owner, Tenn. Code §66-11-206 specifically states that noncompliance shall “in no way affect the lien rights of a contractor.” However, failing to provide this notice could result in liability for a Class B misdemeanor for violating the Truth in Construction and Consumer Protection Act of 1975.
In addition to securing lien rights, they provide numerous other benefits on any given project; regardless of whether or not they are required. Depending on the size of the project, there can be any number of tiers between you and the money (i.e. the owner).
Sending a preliminary notice is a great way to inform the property owner that you are on the job and what you’re providing. This can go lengths in increasing visibility, opening the channels of communication and getting you paid faster.
Who needs to send a Tennessee preliminary notice? Who is it sent to?
Notice to Owner
A Notice to Owner is only required to be sent by those who have a direct contract with the property owner for owner-occupied residential projects. This includes those projects of 1-4 residential units, as long as the owner resides on-site. If the owner intends to live on-site at the conclusion of the work, then it may qualify as owner-occupied residential as well. As the name suggests, this notice must be provided to the property owner – it can be delivered “by registered mail or otherwise…”
Notice of Nonpayment
As for the Notice of Nonpayment, this must be sent by all “remote contractors.” In other words, this is anyone who was not hired directly by the property owner. This notice should be sent to the property owner and the general contractor. Additionally, this notice can also be sent to the mortgage lender to try to secure priority over the construction mortgage.
What needs to be included in a Tennessee preliminary notice?
Notice to Owner
Under Tennessee law, a Notice to Owner must be written in substantially the same form as provided by the statute. This includes the following statements:
The above-captioned contractor hereby gives notice to the owner of the property to be improved, that the contractor is about to begin improving the property according to the terms and conditions of the contract and that under the provisions of the state law (§§ 66-11-101 — 66-11-141) there shall be a lien upon the real property and building for the improvements made in favor of the above-mentioned contractor who does the work or furnishes the materials for such improvements for a duration of one (1) year after the work is finished or materials furnished.
Notice of Nonpayment
In order to be valid, the following information must be included in a Notice of Nonpayment. The requirements are found in Tenn. Code Ann. §66-11-145; which states that the notice shall contain:
- The name of the remote contractor and the address to which the owner and the prime contractor in contractual relation with the remote contractor may send communications to the remote contractor;
- A general description of the work, labor, materials, services, equipment, or machinery provided;
- Amount owed as of the date of the notice;
- Statement fo the last date the claimant performed work and/or provided labor or materials… in connection with the improvements;
- A description sufficient to identify the real property against which a lien may be claimed.
Having trouble gathering all of this information? Here’s an easy solution, find the building permit, it will have all the pertinent information you’ll need.
When does a Tennessee preliminary notice need to be sent?
Notice to Owner
A TN Notice to Owner must be sent prior to the commencement of the work or before entering into a contract for the improvement of real property. Also, including the notice directly in the contract may be an option as long as the contract is signed before work commences.
Notice of Nonpayment
Under certain circumstances, Tennessee law can require that multiple notices be sent in order to secure mechanics lien rights. The Notice of Nonpayment must be received within 90 days of the last day of each month labor and/or materials were furnished. That means that if the project spans over a few month period, and you go unpaid in more than one month, you will need to send more than one notice. Keep in mind, that this should be sent within 90 days of the last day labor or materials were furnished. Don’t confuse this with the day you invoiced the work. Missing this deadline doesn’t extinguish all of your mechanics lien rights, but you will lose the value of the labor or materials furnished in that month.
Need help keeping track of your notice deadlines?
How does a Tennessee preliminary notice need to be sent?
Tennessee Notices to Owner must be sent “by registered mail or otherwise…” That’s not a lot of direction, so sending it with a return receipt might be a good idea, too.
Notices of Nonpayment should be sent by certified mail, with return receipt requested. There was a recent case that expanded this to allow for personal delivery as well, as long as they provide a sworn, notarized statement of delivery. Service is deemed to be delivered when the notice is mailed by the proper means.
The rules and requirements for Tennessee preliminary notices can be confusing to those who are unfamiliar with how they work. Particularly, since there may be multiple notices required on a single project. Besides the obvious function of securing mechanics lien rights, there are numerous other benefits to sending preliminary notices. Be sure to follow this guide, to ensure you are paid what you’ve earned.