We work in 31 states nationwide. Many of our contracts state that we are not to send notices or anything else regarding lien rights. What happens if we send a preliminary notice anyway? Do they have any legal recourse against us?
Jun 24, 2019
That's a good question, and it's not unheard of for a contract to prohibit the sending of a preliminary notice to an owner. However, at least in most states where a preliminary notice is required in order to preserve lien rights, a contractual provision prohibiting a sub or supplier from sending notice is likely unenforceable.
That is, most states prohibit the ability to waive lien rights before work is performed. And, where a lien can't be filed without first sending notice, an agreement that notice can't be sent would essentially be waiving lien rights right there in the contract. So, it follows that preventing a claimant from sending notice would equate to forcing them to waive their lien rights before work is even performed. For a deeper look at lien waiver rules, Levelset has this helpful lien waivers guide. Plus, there's a scroll bar on the right-hand side (under "Choose State") where you can look at every state's lien waiver rules - including whether a specific state allows waiving lien rights before performing work.
It is worth mentioning, however, that in a situation where no notice is required - a contract prohibitting the sending of a preliminary notice could be enforceable. Though, even where a contract prohibits sending notice, a small deviation from the contract typically won't rise to the level of incurring liability or establishing grounds for breach of contract.
For a little more discussion on this topic, this is a great article from Levelset's CEO, Scott Wolfe: General Contractor Asking You To Not Send Preliminary Notice? Is That Legal?