Related Article: What Do I Do If I Miss a Mechanics Lien Deadline?
Mechanics liens are one of the construction industry’s most powerful tools to get paid. But in order to remain in a position to file a valid mechanics lien, there can be many specific and intricate requirements and deadlines that must be met – and any errors or omissions could potentially kill your lien rights.
In many states, one of the most important prerequisite requirements is to send a preliminary notice at some point (soon) after you begin work on the project, and prior to filing a mechanics lien. Preliminary notices are important for many reasons, but perhaps the most important thing about preliminary notices is that they make it possible to file a valid mechanics lien.
Since the deadlines are so crucial to protecting lien rights, what happens if you miss one? The answer depends on many factors, one of which is the “flexibility” of the deadline itself. Please read on for a more thorough explanation.
Video Summary of What to Do If You Miss a Preliminary Notice Deadline
States With No “Real” Deadline
Some states, including Alabama, do not have specific, hard-and-fast deadlines for preliminary notices. Generally speaking, in these states the only deadline stipulation is that the notice must be sent prior to the mechanics lien itself, or must state that they are only effective as to money unpaid up to the point that the notice is sent.
Since the deadlines for these notices are not strict deadlines, it’s difficult for these notices to be technically late. Practically speaking, however, notices with this type of deadline should still be sent early in the project.
The earlier these notices are sent, the better – for a couple of reasons:
1): the notice will provide the visibility that is a benefit of all preliminary notices, and take the worry out of needing to remember to send the notice later (before a potential lien is filed, and when payment issues have already arisen)
2): the earlier the notice is sent the more likely there are still funds remaining in the hands of the owner unpaid to the GC, which provides greater protection to you as a potential lien claimant.
In these states, you should actually go ahead and send the notice whenever you realize that you have not yet sent a notice on the project, whether it seems later than a preliminary notice is usually sent, or not. States with this type of deadline are in the minority, however. It is more likely that in your state you will encounter one of the following situations, with more technical preliminary notice deadlines.
States With Real Deadlines But Sliding Protection
In some states, notably California and Arizona (among others), there is a specific preliminary notice deadline – but, if the deadline is missed, there is still potentially some protection provided to the potential lien claimant.
For example, in California, lien claimants are required to provide a preliminary notice within 20 days of first furnishing labor or materials to the project for full protection. However, if you miss the required date, all is not necessarily lost. A lien claimant who failed to provide a 20-day notice within 20 days of first providing labor or materials may provide the notice at a later date, but will only retain lien rights for materials and/or labor furnished within the 20 days preceding the late notice, and the labor and/or materials provided thereafter.
A preliminary notice in these states is effective on a sliding scale: if the deadline is met, everything is protected; but, if the deadline is missed, the claimant may still be protected for a period of time relating back a number of days from when the notice was sent.
While it is clearly in your best interest to meet the deadlines and be fully protected, notice should still be sent even if it is late. Failure to send the notice at all is generally fatal to lien claims in states with a preliminary notice requirement, and even though you may not be fully protected, you’ll retain some protection, and ‘some’ is better than ‘none.’
Additionally, if notice is sent late, the period for which you are not protected is generally the period for which you are most likely to be paid. This is because payment problems typically arise later on projects – not on the first progress payments. All the more reason to send your notices in these states, even if you’re late.
States With Hard-and-Fast Deadlines & No Wiggle Room
The final category of state preliminary notice deadlines are the states where the preliminary notice deadline serves to completely cut off mechanics lien rights if missed. This category includes Florida, Minnesota, and a few others. Clearly, it makes sense that in these states, the most care should be taken to make sure these preliminary notice deadlines are not missed. Setting a notice policy (and following it) can help you avoid missing these deadlines and being put in the position of needing to figure out what to do if the deadline passes before you get your preliminary notice sent. If you find yourself in that situation, though, there are some steps that you can take to position yourself as best as possible.
First, check to see if you have actually missed the deadline. Some states consider the deadline met when the notice is mailed rather than when it is received, so there may still be time for you to beat the deadline. Additionally, if the notice deadline is dependent on your first furnishing of labor or material – there may be a gap between when you agreed to do to the work and signed the contract and when you actually did the “first furnishing,” so the deadline could potentially be later than originally thought.
If you really have missed the deadline, you may indeed end up being out of luck for filing a valid mechanics lien, but that’s no reason not to send the notice anyway. As mentioned above, preliminary notices serve many functions other than just protecting the right to file a lien, like providing needed and helpful visibility to the project stakeholders. Additionally, a late notice could still work to prioritize your invoices – just because the notice may be a bit late, your invoices could still be viewed as from a party providing notice and prioritized accordingly.
The general take-away here is to always send your preliminary notice. Sending it early (and prior to the expiration of any deadline) is always the best practice, but sending it late is usually better than never.