Mechanics lien claims can create havoc on a construction job. They can cause major financial risks for property owners, construction lenders, and general contractors. And, quite frankly, keeping up with all of the mechanics lien laws, preliminary notice requirements, and chasing lien waivers down can be a total mess. To help all stakeholders on a construction project better manage the lien rights process and lien risks, many states have structured “Notice of Commencement” filing requirements and processes.
The Notice of Commencement helps all parties establish when a project begins, identify who is involved, and get everyone on the same page to make the exchange of notices and waivers easy. This article provides you with a comprehensive guide to understand what these documents are, why they matter, how they impact lien rights and lien risks for stakeholders, and more.
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What is a Notice of Commencement?
A Notice of Commencement is a construction document that publicly announces the beginning of a construction project and identifies the project stakeholders. Because this notice can add extra hurdles to filing a mechanics lien, it also reduces risk for the property owner.
Only a few states have a notice of commencement process. When starting a project in one of these states, whether or not you file a NOC may significantly impact the lien rights process on the job.
Also, a notice of commencement is not a preliminary notice, a notice of intent to lien, or other types of construction notices. There are many, many different “construction notices” that get exchanged during the course of a job. This is a good post to help you understand the differences between all the construction notices: Notices Sent In Construction: FAQs, Forms, And Guide.
What a Notice of Commencement does
Typically, the filing of a notice of commencement by the property owner or other top-of-chain party affects preliminary notice and construction lien requirements and deadlines for subcontractors, material suppliers, and other parties down the contracting chain. This serves as protection for the owner or general contractor because it creates additional hurdles and limits the lien process timeline for potential lien claimants: if a required preliminary notice is sent late, lien rights may be reduced or even extinguished.
Some states require notices of commencement while others offer the document as an optional precaution for property owners and/or general contractors. (A majority of states’ lien statutes don’t mention notice of commencement at all.) For states in which filing notice of commencement is a requirement or an option, here is what you need to know.
Why this notice exists
The mechanics lien remedy has a long storied history in the construction industry. First established over 200 years ago by the Maryland legislature and involving the handiwork of founding fathers like Thomas Jefferson & James Madison, the mechanics lien remedy is actually one of the world’s first labor laws. It creates protection against improper payments for people who perform work and provide materials to others.
Mechanics lien claims are so effective and powerful that state legislatures have spent the past 200 years working out ways to make them more predictable and fair to all parties involved, including property owners and construction lenders. The problem for owners, lenders, and general contractors is that they can’t keep track of all the money flowing through a project. Construction jobs have just become too complex, too fragmented, and too layered for anyone to stay on top of things.
Over the years, states have turned to different legal devices to balance the rights of all construction stakeholders. Preliminary notices were created to help property owners keep track of which subs & suppliers were contributing to their jobs. Then, lien waivers were created to help those property owners determine whether these parties were or were not paid. And generally speaking, these schemas have two major headaches.
First, property owners don’t know who is on their job. Predictably, they get side-swiped by lien claims from parties they didn’t even know existed. Plus, tracking lien waivers can be real pain in the neck.
Second, subcontractors and suppliers don’t have the information they need about jobs. This makes it difficult to let owners know they are contributing to a job, and their payment status.
Some states have created notice of commencement procedures to addresses these two concerns.
The notice of commencement announces the start of a construction job. It also gives subcontractors and suppliers the information they need about the job and who is participating on it. And because real property owners have made such information public and announced, they have taken the first step to protect themselves against double-payment risk, such that subcontractors and suppliers must send materials to the identified owner before gaining mechanics lien rights.
Download free Notice of Commencement forms
States That Have Notices of Commencement
Only 11 states in the US have a Notice of Commencement process. And within these states, the processes are very different.
Sometimes the notice of commencement is a firm requirement that creates major negative consequences if un-filed. According to Florida statutes (Chapter 713.13), for example, not filing a notice of commencement will make it extremely difficult to get a property inspected. This will make it difficult start the project…much less finish it. On top of that, NOCs in the State of Florida have a built-in expiration date (1 year) that lenders and property owners need to pay attention to. In other states, though, the requirement is much less impactful. In Louisiana, for example, the Notice of Contract will not really impact the logistics of the project at all. The only consequence of note when the Louisiana Notice of Contract is not filed is that the general contractor loses their lien rights.
Here are the states that have legal notice of commencement procedures and filing requirements. You can click on any of these states to view our resources, frequently asked questions, forms, and guides for the NOC requirements in that state:
For Owners & GCs: How to File A Notice Of Commencement
If you’re a property owner, an owner’s agent, a construction lender, a fee simple titleholder, or a general contractor in one of the states that require notices of commencement, you may have the duty to get the notice filed on your job. This section provides you with a step-by-step guide to filing your Notice of Commencement.
1. Start Right Away
As soon as the details about your construction project are set, get started right away on preparing and filing your notice of commencement. Though the rules are different from state-to-state, one thing that is the same in all of the states with NOC requirements is that these things need to get filed early. Typically, before any work starts on the project! So get moving.
2. Collect Key Information About Your Job
You’ll some key information about your job and the relevant parties to fill out the notice of commencement. In this step, you need to collect all of this information and have it on-hand, and accurate. The detailed requirements of your state will control. However, most notices of commencement will need you to identify the following information:
- The Legal Description of the Property. If you need help getting this, download our Legal Property Description Cheat Sheet.
- Construction Lender: If the job has a construction lender, you’ll need the formal name, mailing address, and maybe telephone number.
- General Contractor: The formal name, mailing address, and telephone number for the project’s general contractor;
- Property Owner: The formal name, street address, mailing address, and telephone number of the property owner(s);
- Party Commissioning The Work: The formal name, mailing address, and telephone number for whoever is “commissioning” the project. This may be the property owner(s), but it may also be a tenant.
- Payment Bond Sureties: If any payment bonds are being issued for the job, you’ll need the formal name, address, and telephone number of the bonding company/surety;
- Scope of Work: You need to provide a description of the work itself;
- Time of Work: You should be able to provide an estimate of when the work will begin, and end.
3. Be Specific In Identifying Yourself To Be Sure That You Get Notices
In your collection of the above information, consider being very specific when identifying the stakeholders — especially yourself. If you just put generic information about yourself, the subcontractors and suppliers will send their preliminary notices to you with the generic label. This runs the risk of the notices not actually getting into your hands. Be very specific about where the notices should be sent, and to who.
4. Find The Exact Right Form & Fill It Out Carefully
The notice of commencement form is extremely important. These documents are highly regulated. You need to make sure that you get the notice of commencement form right.
You can find free Notice of Commencement forms here on Levelset, which meet state and county requirements.
5. Record Your Notice of Commencement
The next step is to record your Notice of Commencement. Generally speaking, the notice of commencement must be recorded with the county where the project is located. However, this will really depend on the county. The name of the recording unit will vary from county to county. It may be the clerk’s office, the recorder’s office, the tax records office, etc., etc. Pay careful attention to this because recording your document at the wrong office can be fatal to following the process. After you find the right location, mail your notice to them, bring it in by hand, or file it electronically. Your best bet is electronic filing. When it’s time to record and if you want to record electronically, e-filing your Notice of Commencement with Levelset makes it super easy.
6. Display Your Notice of Commencement Clearly on the Job Site
You’re almost there…but not done yet. Most also require you to display the NOC publicly on the job site! Do not skip this important step. And do not try to be clever by posting it somewhere hard to locate. Many states specifically require that the NOC be posted somewhere “conspicuous”. The last thing you need is a legal argument about whether you were conspicuous enough, or not. Post your notice prominently at the job site, and keep some type of evidence that you did this on time.
For Subs & Suppliers: How To Protect Lien Rights If A Notice of Commencement Is Filed
Subcontractors and Suppliers may not have to do anything to get a notice of commencement filed (and if one is not filed, it likely is just fine and dandy for you and your rights), but they are substantially impacted by these documents. Here are just a few ways that subs & suppliers are impacted by NOC filings:
- When NOCs are filed, subs & suppliers must frequently send preliminary notices to protect their lien rights;
- When NOCs are filed, subs & suppliers must use the information in the NOC when preparing their lien and notice documents, and if they miss something that is identified in the NOC, it can be fatal to lien rights;
- NOCs can impact the lien priority of a sub or supplier’s lien claims.
While the notice of commencement’s impact on a subcontractor or suppliers lien rights will vary from state to state, it’s universally the case that subs & suppliers should get their hands on the notice of commencement. These notices contain highly valuable information to them. This is a guide to help subcontractors and suppliers protect their lien rights when they are working in a NOC state.
1. Get A Copy of the Notice of Commencement
If you’re a sub or supplier in a NOC state, you want to get your hands on the NOC that is filed on the project. There are a few options for you here:
- You can look for it on the job site. Most states require the owner or general contractor to post the NOCs on the job site. So you can look for it and take a picture of it there;
- You can look for it in county records. These docs are public record. If you go to the county recorder or clerks’ office in the county where the project is located, you should be able to get your hands on the NOC;
- You can make a request for it. Most states have a formal procedure for this. It’s a good idea to always use this procedure because it creates more protections for you. Send the request to the owner or general contractor (depending on where you are). It may be that the owner or contractor doesn’t reply to your request (i.e. see the Expert Answer to this question in our Expert Center – “How many times do you have to request a Notice of Commencement from a contractor?“), but that’s not a bad thing sometimes. Sometimes, that actually puts you in a good legal position, because there are penalties for not replying that protect you.
Here are some guides to help you find the notice of commencement on your project:
- How to find the Notice of Commencement for your job in Florida
- Find the Notice of Commencement for your job in Georgia
- How to find the Notice of Commencement for your job in Michigan
2. Send A Preliminary Notice No Matter What
The next step for subs and suppliers is to send a preliminary notice. And you should do this one no matter what. Regardless of whether a NOC is or is not filed, and regardless of whether you have a copy or not — SEND your preliminary notice! You can even use your notice to make a request for the NOC.