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how to answer our customers question about the Preliminary NTO document

we are new to levelset and sent our first preliminary NTO. We were told it was a friendly notice that we were protecting our rights to be paid from the project. But having seen the actual document sent it is written with more legalese than we expected. We had this sent to our customer and between the time we requested it and the time they received it they paid their final invoice. They are now calling us, rather upset with the wording of this and want us to send something that says its rescinded. In my mind there is nothing to rescind since its the Preliminary NTO. We will send them a paid in full invoice. I am looking for guidance on how to explain this to our customers when they call. I called levelset and they said I should ask the question to the lawyers since they felt they couldn't answer it fully. I don't know if I have explained this well enough. If you want to call our phone is 727-944-3500. thank you

2 replies

Jan 30, 2020

There is no such thing as rescinding an NTO. In this specific instance, the most you can give them is a full and final lien waiver, which wouldn't be a bad idea anyway considering you've been paid in full. Your question is a common one about how to handle NTOs with upset clients, and I often tell customers to handle it this way: By statute an NTO is just a notice that you're doing work on a project. It's required under Florida law. It is not a lien on the property, it does not impact title to the property, and it does not mean you'll ever file a lien on the property. But you're required by law to send it in order to protect yourself if something goes wrong later. This something wrong doesn't have to be anything malicious, nor does it have to mean that you don't trust the property owner or the contractor. But if the property owner or contractor gets hit by a bus, that's probably going to have a bad impact on your ability to get paid timely, so having a lien right is going to be handy and important. That seems to reduce the tension around these things and put people at ease. I also usually tell clients to tell property owners and contractors that the NTO also protects them, because it tells them who they need to make sure is paid every time a draw is issued and who they need to seek lien releases from. I'm in your neck of the woods, so please feel free to reach out to me if you have any further questions.

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Jan 31, 2020

A preliminary notice or (in Florida, the Notice to Owner, NTO) is just a notice of possible rights, and therefore, there is nothing to "cancel" or "withdraw" or "rescind." Jason is exactly right on this point, and your intuition about it is on point. Nevertheless, people sometimes ask that you "rescind" or "retract" a NTO. What are they talking about? Should you do it? Is there any negative effects to doing it? And are NTOs "scary?" These are all elements to your question. Adding onto Jason's answer, I'll address a few of them here. If, after reading all of these answers, you decide you want to send a "retraction letter," you can do that simply from within Levelset. It's free, and it will resolve your customer's request.

What can I do if someone asks me to "retract" or cancel a NTO?

There's a bunch of information about this throughout Levelset's resources because it does come up from time to time. The main area for this information is in this blog post: How & Why To Send A Retraction Letter. And this has come up in the Legal Center before, too, when someone asked a similar question about a Florida NTO: How do you negate or nullify an incorrectly sent NTO?

What happens when you send a NTO retraction letter?

Funny enough....nothing happens. We addressed this a few months ago in a question about these retraction letters, "Will sending a retraction letter impact ability to file a lien later?" When asked to send one of these "retractions" or "cancellations" whether you're doing anything potentially negative to your rights or your position? And the answer is, not really. This depends on how much language you throw into the letter. After all, you don't want to turn a make-believe "retraction" letter into a contract with waivers, obligations, etc. But the run-of-the-mill letter that simply retracts a sent NTO? That does nothing! It doesn't need to be sent. It doesn't change anything for anyone.

Why does someone want one of these?

So if they are meaningless documents, why does someone want them? The simple answer is that the requesting person just doesn't understand. That is why they were "scared" by the NTO in the first place. While NTOs are extremely common and tens of thousands are sent in Florida every day...this still happens sometimes, and that's okay. This happens sometimes, and that's okay. This is a great moment to help educate your customer. You could point them to articles like 5 Reasons You Should Love Receiving Preliminary Notices or Why You Should Love Receiving Preliminary Notices. But, you can also send the "retraction letter" and let them rest their worries! It's simple, free, and doesn't change anything.

Are NTOs scary? Should you send them?

NTOs are not scary. They are very standard, and very common business documents. Especially in Florida. And, over the years, the NTOs sent by Levelset have been specifically designed to bring out the best of these documents and make people super comfortable with them (we even have a design patent pending for this design!). Be cautious not to let this one reaction change this important business practice. You can handle the reaction by sending a retraction letter, helping to educate your customer, and/or being ready to handle the reaction next time, etc. Good luck!

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