A mechanical engineer under contract to me, an architect, informed my client that they had filed a preliminary lien notice. This occurred without my knowledge during the CD phase of services. No permit has been been pulled. No construction has begun. Does their notice have any legal standing? I scanned your FAQ and see that a design professional must have a written contract with a property owner in order to file a mechanics lien. Does this also apply to a prelim notice and design professionals lien?
There are two potential liens a design professional may have a right to.
The first is a design professional lien which would apply before construction begins. A registered professional engineer, licensed land surveyor, or certified architect who furnishes services under a written contract with the owner for planning, engineering, or design of a work of improvement has a right to a design professional lien (with the exception of single-family, owner-occupied homes with construction costs of less than $100,000 in value.) A design professional lien can be converted to a mechanics lien once work begins. If work never begins, the eligible design professional may proceed to enforce the design professional lien.
The second is mechanics lien which would apply after construction begins. With respect to a mechanics lien, while preliminary notice must be timely served, there is no requirement that the design professional have a written contract with the owner. So provided that the project actually moves forward, the preliminary notice served should provide the consultant with lien rights should the consultant not be paid.
I appreciate your timely response, Ryan. If I understand you correctly, the engineer CANNOT file a prelim notice or design professionals lien because they have no written contract with the owner but they CAN file a prelim notice and mechanic's lien but only AFTER construction begins. Given that we are still in design, it seems whatever was filed has no legal merit and amounts to harmlessd saber rattling.
I am an architect in California. A multifamily developer
contracted with my firm to provide design services related to obtaining
Planning approval for a project. After entitlements were received, the project
was put on hold for over a year due to economic uncertainty and, eventually,
sold to another developer before a building permit was obtained. Fees for
design services rendered are still owed. What recourse do design professionals
have to recover monies owed if work stops before a building permit is issued?
That is fair with the caveat that the preliminary notice they have served will permit them lien rights once construction begins. So it does serve a purpose even if it is early.
Thank you, Ryan. In researching this issue further, I learned that a 20-day preliminary notice is NOT required before design services begin in order to reserve one's rights to file a Design Professional's Lien (DPL). Only a notice of intent 10-days before filing the DPL.