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Re-Rent Pre-lim

Hi there. We are a rental company that rents out heavy equipment and we have a customer re renting it to another company and is stating that since it is a re-rent that he shouldn't have to send prelim. This doesn't seem right. I feel like it's even more reason to pre-lim. Help?

1 reply

Oct 31, 2019

I'm not sure I fully understand the situation, but some basics on California preliminary notices and mechanics lien rights should help cut through uncertainty here.

It's a good idea to send preliminary notice on every job, regardless of whether it's required

California preliminary notices do more than just preserve lien rights - they reduce payment risk. They help create a transparent project and open lines of communication right from the jump. And, collaborative projects tend to have fewer payment problems. By informing higher-tiered parties of who all is providing work the project, it's easier to be sure that all payments are getting where they need to go, and that will often speed up payments down the line. So, even in a situation where a preliminary notice wouldn't be required, it's still a good idea to send notice. More on that here: Why You Should Send Preliminary Notice Even If It’s Not Required.

An equipment re-renter would likely be entitled to lien rights

Regarding lien rights - nothing in the California mechanics lien statute appears to limit the mechanics lien rights of an equipment lessor who has rented that same equipment from someone else. So, on that front, electing not to send a preliminary notice could result in the loss of rights in addition to the loss of other benefits on the job. And, when a mechanics lien is off the table, it will typically be harder to recover payment down the line.

Additional resources

I hope this information has been helpful! For more background on California's lien and notice rules, these resources should be valuable: - California Preliminary Notice Guide and FAQs - The Ultimate Guide to California’s 20-Day Preliminary Notice - California Mechanics Lien Guide and FAQs

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