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Prelim notice sent to incorrect address based on bad info from customer

North CarolinaPreliminary Notice Right to Lien

We're a staffing company, and are in a situation in NC where we're considering filing a lien on a project, and are now realizing that we originally sent our prelim notice to an address that is incorrect. Our customer gave us the address of a parking lot, which is where the employees met up for work, but the work was done at a different location down the street. Is our prelim invalid, and therefore we have no lien rights? What recourse do we have?

1 reply

Apr 13, 2020

If a preliminary notice is sent to the correct parties and otherwise meets the relevant requirements - then that notice will typically be effective even if it's flawed, to some degree. Obviously, the project address is a crucial piece of information. But, as long as it's clear which project notice is being sent for, then getting the project address wrong on the prelim might not be a huge deal - especially when you were misled by your customer. However, if the proper parties didn't receive notice - things would be less cut and dry. There'd still be an argument to be made that the lien should be allowed due to a customer providing flawed information. But, there isn't any guidance in North Carolina's lien statute for situations where notices are improperly sent due to flawed customer information. As a bottom line: Any time notices aren't sent, as required - there's a chance lien rights will be lost. Finally, it's worth looking at the relevant notice requirements to make sure that it's even a required notice that was sent. If not - then an error on the notice wouldn't have any effect on mechanics lien rights.

North Carolina's preliminary notice requirements

North Carolina his home to 2 types of required preliminary notices for sub-tier claimants: the Notice to Lien Agent and the Notice of Subcontract. You can learn about those notices here: (1) North Carolina Preliminary Notice Guide and FAQs; and (2) North Carolina Preliminary Notice: Everything You Need to Know.

Notice to Lien Agent requirements

A Notice to Lien Agent does require a description of the property in order to be valid - such as the physical address of the property. However, if there's an error with the project address included in the Notice to Lien Agent, lien rights will still exist if the project can be identified based on the other information on the notice. North Carolina's mechanics lien statute specifically states that "An inaccuracy in the description of the improved real property provided in the notice shall not bar a person from claiming a lien under this Article or otherwise perfecting or enforcing a claim of lien as provided in this Article, if the improved real property can otherwise reasonably be identified from the information contained in the notice." So, it's possible lien rights will still be on the table even if there's an issue.

Notice of Subcontract

A North Carolina Notice of Subcontract must also include a general description of the project property. This includes, potentially, the street address (but other means of identification are acceptable). But - keep in mind that a Notice of Subcontract will really only be required if the GC has filed a Notice of Contract on the job. So, if a Notice of Contract wasn't filed, any error in a Notice of Subcontract that gets sent shouldn't affect lien rights. Unlike with a Notice to Lien Agent - the North Carolina lien statute doesn't specifically state that flaws on a Notice of Subcontract can be overcome if the property can be otherwise identified. However, if it's obvious what project your Notice of Subcontract referred to, and if the notice made it's way to the proper parties, then it's fully possible the notice could be completely effective. Also - there isn't really a deadline for sending a Notice of Subcontract. So, even if the original Notice of Subcontract wasn't effective, that document could probably be re-sent and could still preserve rights.

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