Tennessee Notice of Completion FAQs

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Notice of Completion: Tennessee

In general, the mechanics lien laws in the US empower the contractors, subcontractors, and suppliers on construction projects. These tools allow contractors to place lien claims against properties in order to get paid for their work. 

While these lien claims are incredibly powerful, they aren’t infallible. In fact, some states give property owners a tool to minimize a contractor’s ability to file a lien. 

In this Notice of Completion: Tennessee guide, we’ll take a look at such a tool provided to property owners in The Volunteer State. 

What is a notice of completion in Tennessee?

You wouldn’t be alone in thinking that completing a construction project is a good thing. In fact, as contractors, project completion is generally when the project owner releases retainage and the final checks. It’s often these final checks that contain all the profit. A notice of completion, on the other hand, isn’t quite as contractor-friendly.

In Tennessee, a notice of completion is a tool afforded to a project owner to help reduce the risk of lien claims on a property. Upon the completion of a project, the owner (or an agent of the owner authorized to do so) may file a notice of completion with the register of deeds. 

Once filed, a notice of completion reduces the amount of time a contractor, sub, or supplier has to file a lien for unpaid goods and services. In typical circumstances, the deadline is 90 days from last furnishing. Under the notice of completion statute, this deadline could be as short as 10 days, though the circumstances do affect the deadline.

First, note that Tennessee general contractors aren’t required to file a mechanics lien to preserve their lien rights (though they probably should). Instead, they must simply file a suit to enforce the liened amount within one year from last furnishing.

Parties other than the GC have within 90 days to file their liens. In some circumstances, this excludes subcontractors on residential projects — on owner-occupied residential property of between 1–4 units, only the prime contractor (and/or those contracting directly with the owner) has lien rights. If the owner is acting as his own prime contractor on a project on a single-family residential property, laborers and suppliers contracting with the prime contractor and “first-tier subs” have lien rights.

Also, understand that a project owner (or their agent) must simultaneously record and serve the notice of completion on the contractor on the project. This is not an “and/or” scenario. Should the project owner do one without the other, the notice of completion has no weight, and the deadline remains at 90 days.

However, should the project owner properly record and serve the notice of completion, general contractors on residential projects have just 10 days from the date the notice of completion was filed to file their liens or suits. General contractors on commercial projects will have 30 days to take action. Residential subcontractors generally do not have lien rights in Tennessee, but commercial subs have 30 days when the notice of completion is recorded and served. 

How to protect yourself from a notice of completion in Tennessee

Notices of completion are big, scary tools, and it makes sense that you’d want to insulate your business from their effects. The truth is, however, that Tennessee makes it pretty challenging to protect yourself. The good news is that the state does some of the work for you.

By requiring contractors to simultaneously record and serve their notice of completion on a contractor, you should at least be in the know. You can then take action, though you may have as few as 10 days to do so.

Overall, the best way to protect yourself from a notice of completion is to expect one at the end of every job. This means filing your mechanics liens or starting lawsuits sooner rather than later. Also, general contractors should prepare for their lawsuits early, as they may have as few as 10 days to do something about them

Tennessee Notice of Completion FAQs

Tennessee has some unique rules and regulations when it comes to mechanics lien laws and the tools provided to project owners to minimize their effectiveness. The following FAQs should help clear up the uncertainty and confusion that surround notices of completion in Tennessee.

Is a notice of completion required in Tennessee?

Tennessee isn’t the only state to provide project owners with such a powerful tool. But, notices of completion are entirely voluntary in every state that recognizes them. Should a construction project begin, exist, and end in Tennessee without a notice of completion, contractors on the project simply retain their 90-day window from last furnishing to file a mechanics lien (or suit, in the case of a general contractor). 

However, if a project owner successfully shrinks the window to file a lien, they could potentially escape their lien liability to contractors, subs, and suppliers. Shrinking a window from 90 days to merely 10 (30 on commercial projects) could cause the contractor to miss the deadline altogether, forcing them to pursue their money through much slower, more expensive processes. For that reason, always expect that a project owner will file a notice of completion, even though it’s voluntary.

How does a notice of completion affect a construction project in Tennessee?

The detailed answer to this question depends on the scenario, but the succinct response would be “tremendously.”

 

In Tennessee, project owners (or their appointed agents) must simultaneously record and serve a notice of completion for it to be effective. If done properly, it shortens the would-be deadline of 90 days by quite a bit.

  • For general contractors on residential projects, the deadline shrinks from 90 days from last furnishing to just 10 days from the filing of the notice of completion.
  • For general contractors on commercial projects, the deadline shortening is less severe, but still severe enough: It goes from 90 days to 30 days. 
  • Subcontractors on residential projects generally don’t have lien rights unless the owner is serving as their own GC. At which point, subcontractors are considered “first-tier contractors” and will have 10 days to pursue their lien.
  • For subcontractors on commercial projects, the deadline to file a lien under a successfully recorded and served notice of completion is 30 days.

Who needs to file a notice of completion in Tennessee?

With notices of completion being so powerful, the State of Tennessee regulates who can file them.

First, understand that no one has to file a notice of completion — it’s a voluntary document. In all the states that recognize a notice of completion, it’s not a requirement. However, should someone decide to file a notice of completion on a project, only the project owner or an agent appointed by the project owner (such as an owner’s agent) can file a notice of completion. 

No one else has the ability or jurisdiction to file this lien-busting document.

Where can notice of completion be filed in Tennessee?

Project owners that wish to file a notice of completion must do so with the office of the register of deeds of the county in which the project is located. This is the same office at which the contractor would file their mechanics lien. 

How do I find out if a notice of completion was filed?

For a notice of completion to be valid, the project owner must simultaneously record and serve the notice of completion on prime contractors. As for all other claimants, they aren’t required to be served a copy of the notice unless they served a Notice of Nonpayment.

Ultimately, it’s safe to just assume all of the project owners on your projects will file a notice of completion, allowing you to be at the ready instead of getting caught looking.

What happens if a notice of completion isn't filed in Tennessee?

In all of the states that recognize them, notices of completion are entirely voluntary documents. This means that contractors don’t have to send them if they’d prefer not to. The deadline simply remains at the typical 90-day mark. 

So, if a project owner decides not to file a notice of completion at the end of the project, a contractor has up to 90 days to file a mechanics lien or lawsuit. Nothing changes.

This applies if a project owner doesn’t simultaneously record and serve the notice of completion. Without both steps, the notice of completion isn’t valid, and contractors can enjoy their usual 90-day cushion.

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Tennessee Notice of Commencement Statutes

The provision of the Tennessee statutes that permit the filing of Notice of Completion can be found under Tenn. Code Ann. §66-11-143 and is reproduced below. Updated as of September 2021.

TN Notice of Completion

§66-11-143. Protection from unrecorded lien claims — Notice of completion — Expiration of lien rights — Form of notice of completion.

(a) In order to be protected from lien claims that have not previously been recorded, as provided in § 66-11-111 or § 66-11-112, the owner or purchaser of improved real property or their agent or attorney may, upon the completion of the improvement, record in the office of the register of deeds in the county where the real property or any affected part of the real property is located a notice of completion, or the owner or purchaser may require a person or organization with whom the owner or purchaser has contracted for the improvement to do so upon the completion of the improvement, and the owner or purchaser of improved real property or any other authorized party shall simultaneously serve a copy of any notice of completion recorded with the register of deeds on the prime contractor; provided, however, that no copy of the notice of completion is required to be served on any prime contractor when the owner, or an entity controlled by the owner, also acts as the general contractor, as defined in § 66-11-146(b)(1), in furtherance of the improvement to the property. If a prime contractor is entitled to be served with a copy of any notice of completion recorded with the register of deeds, then the lien rights of the prime contractor not so served a copy shall not be affected by the notice of completion.

(b) The notice of completion shall contain the following:

(1) The legal name of the owner or owners of the real property;

(2) The name of the prime contractor or prime contractors;

(3) The location and description of the real property;

(4) Date of the completion of the improvement;

(5) A statement that a transfer of ownership of all or a part of the real property or an interest in the real property and encumbrance on the real property, or a settlement of the claims of parties entitled to the benefits of this part, will take place not less than ten (10) days after the date of the recording of the notice of completion; provided, that the ten-day expiration for lien claimants shall only apply to contracts for improvement to or on real property, for one-family, two-family, three-family and four-family residential units. On all other contracts for improvement to or on real property, the expiration time for lien claimants shall be thirty (30) days after the date of the recording of the notice of completion in the register’s office;

(6) The name and address of the person, firm, or organization on which parties entitled to the benefits of this chapter may serve notice of claim;

(7) Acknowledgment by the person filing the notice, or by that person’s agent or attorney; and

(8) The name and address of the preparer of the instrument in compliance with § 66-24-115.

(c) The register of deeds shall make a permanent record of all notices of completion filed in the office of the register and the records shall be available for public examination. The register of deeds shall be entitled to the fees, provided in § 8-21-1001, for the register’s services in receiving and maintaining notices of completion required in this section.

(d) If a remote contractor has served a required notice of nonpayment pursuant to § 66-11-145, then any party recording a notice of completion shall simultaneously serve a copy of the notice of completion on the remote contractor. The remote contractor shall have thirty (30) days from the date of the recording of the notice of completion to serve a written notice in response to the notice of completion in accordance with subsection (e). The lien rights of a remote contractor that has not been served a copy, shall not be affected by the notice of completion.

(e)

(1) Any prime contractor or remote contractor claiming a lien under this chapter on the property described in the notice of completion, who has not previously registered the person’s contract as provided in § 66-11-111 or registered a sworn statement as provided in § 66-11-112 and served a copy of the registration to the owner, shall serve written notice, addressed to the person, firm or organization and at the address designated in the notice of completion for receiving notice of claim, stating the amount of the claim and certifying that the claim does not include any amount owed to the claimant on any other job or under any other contract.

(2)

(A) For improvements to or on real property for one-family, two-family, three-family and four-family residential units, the written notice shall be served not more than ten (10) days from the date of the recording of the notice of completion in the register’s office, and if notice is not served within that time, the lien rights of the claimant shall expire.

(B) For all other contracts for improvements to or on real property, the written notice shall be served not more than thirty (30) days from the date of the recording of the notice of completion in the register’s office, and if notice is not served within that time, the lien rights of the claimant shall expire.

(f) Any notice of completion recorded as provided in this section before the completion of the improvement or the demolition is void and of no effect whatsoever.

(g) The notice of completion may be in substantially the following form:

This Instrument prepared by:

Name _____________________

Address _____________________

    _____________________

NOTICE OF COMPLETION

Legal name of owner or owners of the real property:

_____________________

Names of all applicable prime contractors:

_____________________

The location and description of the real property:

_____________________

_____________________

_____________________

Date of completion of the entire improvement:

_____________________

A transfer of ownership of all or part of the real property or an interest therein and encumbrance thereon or a settlement of the claims of parties entitled to the benefits of Title 66, Chapter 11 of the Tennessee Code Annotated will take place not less than ten (10) days after the date of the recording of this Notice of Completion; provided, that the ten-day expiration for lien claimants shall only apply to contracts for improvements to or on real property for one-family, two-family, three-family, and four-family residential units. On all other contracts for improvement to or on real property, the expiration time for lien claimants shall be thirty (30) days after the date of the recording of this Notice of Completion. The name and address of the person, firm, or organization on which parties entitled to the benefits of Title 66, Chapter 11, may serve notice is as follows:

Name: _____________________

Street Address: _____________________

City: _____________________

State: ________________ Zip Code: _______________

Dated this the day of _____ , 20_____

Signature _____________________

(Check One)

_____________________, Owner

_____________________, Purchaser

_____________________, Prime Contractor

[Notary Acknowledgment]

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