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Is it better to file a prelim now without lender information, or wait to file until the lender is confirmed?

CaliforniaPreliminary Notice

We received a letter of intent to award the project in August and have begun the drafting and engineering part of our job. The GC says the job itself won’t begin until next year, though, and we are still waiting for lender information from the GC. Should we file our prelim now and add the lender information later, or wait to file the prelim until we have the lender’s information?

2 replies

Nov 2, 2019

Generally speaking, the preliminary notice must be served no later than 20 days after first furnishing the labor, services, equipment or materials for which the lien is claimed. The notice can be served after the initial 20 day period, but the amount of the lien is limited to the labor, services, equipment or materials furnished 20 days before the service of the notice and those furnished thereafter. Out of an abundance of caution, it might be a good idea to serve one now, and check the property title record yourself to see if there is a construction lender before doing so.

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Nov 2, 2019

Your California preliminary notice deadline is what it is, and that's not going away, and it's not going to wait for you to get your full job information. You should send it sooner than later. I agree 1000% with Chris here. And, actually, have some pretty strong feelings about this issue.

Who is the lender?!

You're in a pretty fortunate spot because you're expecting to receive information from the GC about who the lender is on the project. In many cases, however, the GC does a poor job of communicating this information to subs. Or to sub-subs. Or to suppliers. There isn't a database out there of construction lenders to search. Yet everyone needs to know who the lender to send a proper notice. What gives? I explored this in The Ultimate Guide to California 20-Day Preliminary Notice, under the sub-heading "How to find the owner, the lender, the GC, or the Surety." As explored there: When preparing a California prelim, one of the most difficult tasks is figuring out the identity of parties on your job. This because especially difficult and overwhelming when dealing with a large volume of projects and notices (i.e. such as the case for suppliers/vendors), and when working as a sub-tiered contractor. The unfortunate reality here is that there are no easy solutions to this. The California statutes (and most states) do a terrible job with this dilemma, in my opinion. When the California lien laws changed a few years ago they added some help. The statues indicate that the general contractor must provide information to those who request it (see §8208: "A direct contractor shall make available to any person seeking to give preliminary notice the following information: (a) The name and address of the owner. (b) The name and address of the construction lender, if any"). BUT, there aren't any clear consequences if you don't get a response...or, in your case, don't get a response in time. And this happens a lot. Check out these other questions and answers about this problem here: • We have submitted several requests for Pre-Lien information and the contractor is not responding to our request. What suggestions do you have for submitting the 20 day notice when we are unable to attain the information? • If the notice sent to the owner, who is also my contracted client, was returned to sender but the lender is unknown, can my obligation to request/find lender still be fulfilled?

The Best Practice: Send Your Notice, Make Info Requests, Followup

This is a murky and aggravating area of the California preliminary notice laws. The best thing for you to do here is to follow best practices - which is what Chris suggested in his answer. #1) The deadline is not waiting for you. So, don't wait for anything. Send your preliminary notice out. #2) If you don't know the lender, make sure your preliminary notice makes the information request for the lender, citing §8208. This will provide you some cover. #3) As soon as you learn the Lender, then you'll want to send out a notice to the lender. For what it's worth, Levelset does have some data partnerships and data intelligence, and research services, that can sometimes know the lender even before the GC sends that information to you. That's one of the values of Levelset. You can send your California Preliminary Notice absolutely free through Levelset in just a few minutes...and the notice does include the information request! Send a free California Preliminary Notice now.

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