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Can we order 20-day notice on LOI’s before we get a contract?

ArizonaPreliminary Notice

We are proceeding under a letter of intent (LOI) so that we can get a head start on our construction project before we have a signed contract. Can we send a 20 day preliminary notice on an Arizona project before we have a signed contract?

1 reply

Apr 25, 2019
That's a good question. First, let's look at whether sending early notice is technically allowable under the Arizona lien statute. Then, we can look at how early notice might affect relationships. In Arizona, in order to preserve the right to lien, preliminary notice must be given "not later than twenty days after the claimant has first furnished labor, professional services, materials, machinery, fixtures or tools to the jobsite..." under ARS § 33-992.01(C). However, there does not appear to be any restriction as to how early an AZ preliminary notice may be sent, at least not under statute. Of course, even where preliminary notice can be sent early, it's worth considering the effects of sending notice before a contract has even been signed. For one, AZ preliminary notice must be sent to the sender's customer, the project's GC, the lender, and the owner. So, particularly in a situation where the party sending notice isn't directly contracted with the property owner, sending notice before a contract has even been signed might feel like a warning flag to recipients. There's language on the face of the Arizona 20-day notice that acts to quell anxiety about receiving the notice (i.e. statements like "This is not a lien"), but still - receiving an extremely early notice could negatively affect relationships and might cause alarm to a property owner if the project has not yet begun. Of course, every situation is different, and some relationships might remain completely unaffected by early notice. However, how early notice might impact others is likely worth considering before making any decisions. For more information on Arizona preliminary notices, these resources should be helpful: Guide to AZ 20-Day Preliminary Notices; and Arizona Lien & Notice Overview.
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