The sheer volume of documents that the construction industry requires can make your head spin. There is a document for almost everything that happens on a construction site. But, for the most part, these required documents are pretty standard across the country, though they might go by different names. One document that’s not so standard? Arizona’s Notice of Completion.
Arizona, along with just a handful of other states, provides project owners with a mechanism to shorten the amount of time contractors and sub have to file a mechanics lien. This mechanism is a “notice of completion,” and Arizona contractors need to understand what it is and how it works.
What is a notice of completion in Arizona?
A notice of completion is a document that an Arizona project owner or higher-tier contractor can file to mark the end of a construction project. The filing party needs to wait until the project is absolutely complete and then file the notice of completion with the county clerk governing the project’s address.
When the project owner files a notice of completion, it has significant implications for the parties working on the project. In fact, the deadline that contractors have to file a mechanics lien shortens — by a lot. By half, in fact.
When a project owner doesn’t file a notice of completion, the Arizona mechanics lien deadline is 120 days from completing the project. If that’s confusing, understand that project owners do not have to file a notice of completion. Should the owner choose not to file, the standard mechanics lien deadline stands. But, if they do file a notice of completion, the deadline is only 60 days from the date such notice was filed, not even from the date the contractor became aware.
This means that if a contractor, sub, or supplier is still waiting for payment, they’re going to need to get on their horse and file a mechanics lien sooner rather than later. Luckily, the notice of completion doesn’t affect the amount of time a contractor has to enforce a mechanics lien.
Be sure to read the following section to understand all of the implications, as well as what you can do to prevent being blindsided by a notice of completion.
Protecting yourself from a notice of completion
The implications of a notice of completion might sound scary, and indeed they are if you aren’t protecting your payments. But, if you’re playing by Arizona’s rules for protecting your payments, a notice of completion will be much less scary. Yes, the window to file a lien shortens significantly, but the owner must notify the contractors who sent preliminary notices. Plus, Arizona requires contractors to send those notices within 20 days to maintain lien rights.
You can also protect yourself by being more proactive with your lien rights. If you’re waiting for payment, you’re asking for trouble. You don’t have to wait until the job is complete to make a move. Filing a mechanics lien is the fastest way to get paid, which could help avoid the scramble a notice of completion causes altogether.