We were advise to submit revised prelims for any of our projects that increase by 10% from out change orders. I know CA does not require to submit a revision with price. But i was notified by chatting with levelset that the amended prelim date supersedes the original date of the prelimanary notice. Is the date replaced only when i make a change in amount or does it also apply if i make a change in owner, property address, or lender info?
That’s a good question. I’ll break down the rules regarding the amount listed on California’s preliminary notice, then discuss why sending revised notice, in some situations, might even pose a liability. But, to set a bottom line: Revised notices are not required in California, but sending a revised notice updating the amount won’t automatically reset the date of the original notice, either.
Before getting into amended notices (for amounts), it’s worth noting that notice is only effective when it’s sent as required. So, if notice was sent – but sent to the incorrect owner and contractor, or listing incorrect project information – that notice generally won’t be effective to the extent that it was incorrect. Put another way – if there are errors on a preliminary notice, and those errors are corrected with another notice sent afterward, the original notice date might not be effective. This is especially true for errors like putting the improper owner on a notice, since that owner’s receipt is the reason why preliminary notice is sent in the first place. Essentially, if the original notice was flawed enough, that notice might not be effective at all, and “revised” notice might be helpful to preserve some lien rights. For more information on late preliminary notices, this article will be valuable: What Do I Do If I Miss a Preliminary Notice Deadline?
Regarding notices amended to update the amount…
Many construction businesses (and even construction attorneys!) in California mistakenly believe that preliminary notices must be revised if the estimated value of work featured on that notice is exceeded due to change orders, acceleration, or some other reason. However, this isn’t supported by statute – nothing in the California Civil Code requires that revised or amended notice be sent simply due to construction work exceeding the amount given on a preliminary notice.
Some attorneys and businesses may point to a lawsuit (Rental Equipment, Inc. v. McDaniel Builders, Inc. (2001)) where preliminary notice was considered invalid due to an inaccurate estimate on a preliminary notice. However, as long as an original estimate on a preliminary notice is made in good faith and is based on actual calculations of the work to be provided, the estimate given on an original preliminary notice does not need to be updated. For a little more discussion on this topic, this article has great information: Should I Send Multiple Preliminary Notices in California If the Amount of Work Changes?
Now, on the other end of the spectrum – sending revised notices could potentially affect the dates of preliminary notices, and in a worst-case scenario, could potentially even “reset” the date notice was given. As a baseline, this is a potential risk. However, as long as notice was actually given and received, as required, that might not be a particularly large risk. At the same time – because preliminary notices don’t have to be revised or updated simply because work exceeds the anticipated cost or value, there’s generally no need for taking on any extra risk when it comes to sending preliminary notices – even relatively small ones.
I hope this was helpful! Here are some additional resources that I think will be helpful to better understand California’s notice requirements:
(1) About California Preliminary 20-Day Notices
(2) The Ultimate Guide to California’s 20-Day Preliminary Notice
(3) California Lien and Notice Overview, FAQs, and Statutes.