I receieved prelim information with 3 different lenders for one project. Do I need to file each prelim separately with each of the lenders listed?
1 reply
Mar 9, 2021
On a private project, you do need to serve the construction lender or reputed construction lender in order to secure your lien rights. Civil Code section 8200.
Civil Code section 8006 defines the term as follows: “Construction lender” means either of the following:
(a) A mortgagee or beneficiary under a deed of trust lending funds with which the cost of all or part of a work of improvement is to be paid, or the assignee or successor in interest of the mortgagee or beneficiary.
(b) An escrow holder or other person holding funds provided by an owner, lender, or another person as a fund for with which the cost of all or part of a work of improvement is to be paid.
An older case defines the term "reputed construction lender" is a person or entity reasonably and in good faith believed by the claimant to be the actual construction lender. Kodiak Industries v. Ellis (1986) 185 Cal.App.3d 75.
Because you are aware that there are three construction lenders on this project, it is likely that you will be held to the requirement of giving notice to all three construction lenders.
The Preliminary Notice is your gateway to being able to assert a stop notice or a mechanic's lien. The minor inconvenience of serving three lenders and retaining your lien rights is a better approach than trying to save a few dollars by only serving one lender and facing the potential downstream of not having perfected your lien rights.