Home>Levelset Community>Legal Help>Prelim again?

Prelim again?

We provided an unconditional final release (and our subs did too) for a job that we thought was finished last year. The job has started again under the same contract and I would like to know if we should prelim this job again and ask our subs to prelim this work again.

1 reply

Oct 16, 2018

That's an interesting question. First, it might be worth exploring the possibility of executing a new contract for the work that will be added on. If a separate contract for work is executed, the preservation of lien rights would likely be a much cleaner process. A prelim could be sent out at the start of the "new" job, and a lot of guesswork would be put aside. However, if executing a new contract for extensive changes is not an option, the questions remain: (1) Would a second preliminary notice be required?; and (2) Would a previously submitted Final Unconditional Lien Waiver knock out any lien rights obtained for work performed after (and not contemplated) in that submittal? Let's start with preliminary notice. In California, if preliminary notice is valid when sent, sending revised notice later on if the scope of work changes is unnecessary. In fact, it could even be harmful considering preliminary notice only preserves the right to lien for the previous 20 days of work - sending a second notice could create confusion as to which notice should apply. zlien discusses that idea here: Is it OK to Send Revised Preliminary Notices? Does it Affect My Deadlines? Thus, if work continues on a job beyond the original scope of work, as long as that work is being performed under the same contract, sending additional or revised preliminary notice should be unnecessary. Regarding the prior submission of a Final Unconditional Lien Waiver, this could be a little more interesting. First, as you likely know, a Final Unconditional Lien Waiver is intended to signify that all payments on a job have been made. Typically, once this lien waiver is exchanged, a claimant will no longer have any lien rights for the project at hand. However, with the wording of California's Final Unconditional Lien Waiver, there's a strong argument that work not yet performed is not waived. There are two sections of the statutorily-required waiver that jump out. First, the waiver states: "NOTICE TO CLAIMANT: THIS DOCUMENT WAIVES AND RELEASES LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL WAIVER AND RELEASE FORM." This section of the waiver seems pretty unequivocal - the waiver waives lien rights even for amounts that have not been paid. Second, "This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for all labor and service provided, and equipment and material delivered, to the customer on this job. Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. The claimant has been paid in full." (Emphasis added) The bolded portions of this section are particularly interesting. The first bolded portion seems to indicate the past tense - it seems to waive amounts for work performed prior to the waiver. The second bolded portion contemplates change orders, but only change orders fully executed prior to the waiver. Finally, again, the waiver indicates that the claimant has been paid in full for the job. This part of the waiver, for the most part, seems to indicate the waiver waives lien rights specifically for work provided prior to the waiver. So, if push comes to shove, there is a fair argument that a claimant's final unconditional lien waiver is not effective to waive lien rights for change orders executed after providing the final unconditional waiver.

0 people found this helpful

Helpful