What is a notice of completion?

Were you looking for information on the Notice of Commencement document?

As anyone reading this surely knows, the construction industry loves its documents! There’s a document for just about everything under the sun in the construction business. When it comes to securing payments in the construction industry, not only is there a specific document required for each step in the process, the name of that document also varies from state to state.

However, there are some documents that are only used in one or a few states, and one of those documents is called the “Notice of Completion” or “Notice of Cessation.”

What is a Notice of Completion?

Notice of Completion:

A document recorded by a property owner to notify potential mechanics lien claimants that a specific construction project has been completed.  The effect of a properly recorded Notice of Completion is to reduce the time in which a subcontractor, material supplier or general contractor can record a Mechanics Lien against a private works construction project. ~ Beard Hobbs, Attorney at Law

There are some important things to note from Mr. Hobbs’ definition. The Notice of Completion typically comes from the property owner on a private project to notify the participants on a project – specifically, the parties that have Mechanics Lien Rights – that the project has been completed. The bottom line is that in just about every case when an owner files a Notice of Completion, the window of time available to file a mechanics lien is shortened. Read on for more info on the Notice of Completion document and its impact on your lien rights.

Where Does a Notice of Completion Matter for Private Construction Projects?

In the vast majority of states, the deadline to file a mechanics lien is based on the last furnishing methodology,” or the date that a participant – subcontractor, sub-sub, material supplier, or equipment lessor – last supplied labor or materials to a construction project. However, there are 5 or 6 states where lien rights deadlines are tied to the date when a project is substantially or finally complete. Four of those states – California, Nevada, Arizona, and Utah – are neighbors of one another out west. And in those 4 states, the owner on a construction project/job may file a Notice of Completion which can drastically shorten the deadline available to file a mechanics lien.

The table (below) outlines the basics regarding the date of completion trigger and what happens if an owner decides to file a Notice of Completion in one of these 4 states.

Notice of Completion

Note: Tennessee, Massachusetts, and Alaska are also states where an owner may file a Notice of Completion.

What’s the Safest Course of Action?

The safest way to calculate a lien claim deadline in one of the 4 states listed above is to follow your last furnishing date, for several reasons:

  • The completion date on a project is often difficult to find out, but your last furnishing date will be obvious to you, since you’re the one who did the furnishing.
  • Chances are the project continued for some time after your last day on the project (your last furnishing date)
  • Therefore, since the date that you last furnished work or materials will almost always be earlier than the date that the project is substantially or finally complete, basing your deadline to file off of your last furnishing date should give you the “completely safe lien period.”