Sending a Montana preliminary notice is an effective way to speed up payment on a construction project. A preliminary notice is an informational document typically sent to the property owner near the beginning of a construction project. Here's what you need to know about the rules and requirements for sending preliminary notice in Montana.
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Notice of intent to lien
Montana preliminary notice requirements for:
General contractors and all other parties who are contracted directly with the property owner are not required to send preliminary notice on private projects.
General contractors are not required to send notice on public projects.
Since GCs will not make a claim against their own bond for non-payment, they do not have bond claim rights, and have no preliminary notice requirement.
Subcontractors and suppliers must send a notice of lien rights on private projects.
Notice must be sent within 20 days
Notice can be sent late
Notice is filed with county clerk and delivered to owner
Notice of Lien Rights must served on owner within 20 days of first delivering materials or labor and filed with recorder within 5 days of delivery to owner (unless one of the exceptions apply). If the project is not owner-occupied residential and is funded by a lender, the deadline is increased to 45 days.
2nd-tier subcontractors and suppliers must send preliminary notice on public projects.
Notice must be sent within 30 days
Notice cannot be sent late
Notice is sent to the GC
Notice is not specifically required from 1st-tier subs, but it might be best practice to provide anyway.
If you're sending preliminary notices in Montana, it's important to get all the details right. The rules, requirements, exceptions, and procedures are complex in Montana, so it pays to pay attention. If you're receiving prelims, it's important to know what you're looking at and know what to do in followup. Since prelims in Montana are subject to a lot of complex rules and requirements, this can all be difficult. These are some frequently asked questions (and their answers) about the Montana preliminary notice process.
It depends. A preliminary notice is required in Montana, but certain potential lien claimants are excepted from the notice requirement. Despite the fact that some lien claimants are not required to give preliminary notice, it may be advisable to send notice anyway, as Montana courts have not provided sufficient guidance as to the meaning, scope, and application of the exceptions.
Notwithstanding the foregoing, the following parties are not required to send and file preliminary notice in Montana: 1) a party who furnished labor or material directly to the property owner at the owner’s request; 2) wage laborers; 3) a party who furnishes labor or material to a residential project for five or more families; 4) a party who furnishes labor or material to a project that is partially or wholly commercial in character.
When do I Need to Send a Montana Preliminary Notice?
Preliminary notice must be served on the property owner not later than 20 or 45 days after first furnishing of labor or materials to the project. The 20-day period applies to all projects other than a non-owner-occupied residence where payment is made by a lender with a security interest in the property.
Further, the preliminary notice must be filed with the clerk and recorder of the county in which the property is located. The notice must be filed within 5 days after notice was given to the owner.
What if I Send the Montana Preliminary Notice Late?
If the preliminary notice is sent late, all is not lost. If given after the 20- or 45-day period, the notice only covers work or materials furnished within the 20 or 45 days preceding the notice.
However, if the preliminary notice is required, it is a prerequisite to filing a valid mechanics lien. In that case, the preliminary notice must be filed with the clerk and recorder of the county in which the property is located prior to filing the mechanics lien.
How Should the Montana Preliminary Notice be Sent?
The preliminary notice should be served on the property owner either by personal service, or by certified mail, return receipt requested. If served on the property owner personally, a written acknowledgement of receipt from the property owner is required.
The notice must also be filed with the clerk and recorder of the county in which the property is located.
Do I Have to Send the Montana Preliminary Notice to Someone Other than the Owner?
Yes. The preliminary notice must also be filed with the clerk and recorder of the county in which the property is located. The lien claimant should also be careful to send the notice to all property owners of record.
Is the Montana Preliminary Notice Requirement met when sent or delivered?
In Montana, the notice is considered delivered when sent – if sent by certified mail, return receipt requested. If the notice is given by personal delivery, it is considered delivered when the property owner signs the written acknowledgment of receipt.
It depends. All parties supplying materials or supplies to any subcontractor (or anybody other than the pubic entity or GC) must deliver preliminary notice to the general contractor to preserve rights to make a bond claim upon no-payment.
A Montana preliminary notice is an absolute requirement for anyone who didn't contract directly with the property owner to secure the right to file a mechanics lien. Exactly when this notice needs to be sent, depends on the type of project. The general rule is that notice needs to be sent within 45 days of first furnishing labor or materials to the project. If, however, the project is an owner-occupied residential property, the time to serve notice is reduced to just 20 days after first furnishing. A Montana preliminary notice can be sent late, but it will limit the amount of lien rights available. A late notice will only cover the value of labor or materials provided in the 45/20 days (whichever is applicable) preceding the notice, and everything thereafter. So even if you've missed your notice deadline, it's worth sending a late notice anyways. That way you've secured some lien rights, as opposed to none. Here are some other resource you may find helpful:
When filling out a prelim do I enter the estimated contract amount since we do not know what the final amount will be yet?
Montana preliminary notices don't seem to require an estimated contract amount in order to be valid and preserve the right to lien, according to sections § 71-3-531 and § 71-3-532 of the state's mechanics lien statute. So, because that's not a part of the form that's statutorily required, then that amount shouldn't be binding on a prospective lien claimant. Rather than the amount featured on a Montana preliminary notice, a Montana mechanics lien claimant would generally be entitled to file a mechanics lien on all amounts they're owed but unpaid for the improvement of the property. Generally, though, any time an estimate is required to appear on a preliminary notice, it's understood that the estimate is just that - an estimation. And, relatively small variations in the estimate and price actually being charged shouldn't be particularly consequential. Though, in a state like Arizona, a revised notice could be required when work substantially exceeds the original estimate.
Montana’s preliminary notice rules and requirements are complex, and not well or clearly defined by statute or the courts. While requiring preliminary notice is the default in Montana, the exceptions to the requirement nearly consume the requirement that preliminary notice be sent. The parties that appear to be specifically exempted from the preliminary notice requirement by statute are:
an original contractor who furnishes services or materials directly to the owner at the owner’s request;
a wage laborer performing labor for a contractor or subcontractor (employee of construction participant);
any party furnishing labor or materials to a residential property for 5 or more families, when the work is done pursuant to a real estate improvement contract; and
any party furnishing labor or materials to a construction project the is at least in part commercial in character, when the work is done pursuant to a real estate improvement contract. Some projects that may otherwise be residential can be considered commercial if separate work was done prior to the residential part of the project. JTL Group, Inc. v. New Outlook, LLP, 223 P.3d 912 (Mont., 2010)
When these exceptions are peeled away, it appears that the only parties technically required to send preliminary notice in Montana are: parties, other than direct contractors or laborers, working on completely residential projects on dwellings of less than 5 families.
Notwithstanding the foregoing, however, it is likely advisable to send preliminary notice anyway on most projects, just to be safe. There is little jurisprudence providing guidance on these issues, and other sections of Montana law seem to contemplate notices being required in other circumstances.
One of the circumstances that clouds the water with respect to preliminary notice requirements is the statutory section setting forth the calculation of the deadlines related to Montana preliminary notices. Montana law provides a preliminary notice deadline of either 20 or 45 days after first furnishing labor or materials to the project. The base deadline is 20 days, which applies in all circumstances other than those that give rise to the specific 45-day deadline. The 45-day deadline applies
“when payment for services or materials furnished pursuant to a real estate improvement contract, excluding a contract on an owner-occupied residence, is made by or on behalf of the contracting owner from funds provided by a regulated lender and secured by an interest, lien, mortgage, or encumbrance for the purpose of paying the particular real estate improvement being liened.”
So, breaking that down a little, the 45 day deadline applies to projects: 1) other than an owner-occupied residence; where 2) payment is made by a lender with a security interest in the property. Since, it appears from the exceptions above that notice is only required from some participants on residential projects of less than 5 “units” it appears the 45-day deadline would only apply to residential projects which are not the owner’s residence and are funded by a lender. And, accordingly, the 20-day deadline would apply to owner-occupied residential projects, and other residential projects that are not being funded by a lender.
Montana has another interesting rule regarding preliminary notices, as well. After the notice is sent (either by certified mail or personally delivered), it must also be filed with the county’s clerk and recorder within 5 days. Few states require the recordation of preliminary notices, but Montana is one of them. Even more rare, Montana specifically requires that, if a participant is paid after filing the preliminary notice, a release of notice must be recorded. Generally, since notices are usually not recorded, and do not encumber the property (since they are not liens themselves), there is no need to “release” them. However, Montana specifically requires that notices be released within 5 days of request from the owner if payment for the labor or materials subject of the notice has been made.
Finally, Montana allows a subcontractor who has not been paid to make a written request on the property owner to be notified when the property owner makes any subsequent payments. If this request is made, the owner must inform the sub of any progress or final payment made to the GC. There is, however, very little information related to this notice in the statute, however, as there is no specific time period, content, or delivery requirements outlined by Montana law.
Take extra care to make sure the information you include on your preliminary notice is correct. That’s because making a mistake when preparing your notice could eliminate your right to file a Missouri mechanics lien if you’re left unpaid down the line. Double check everything and make sure it’s accurate.
Deliver your notice
You should serve your notice on the property owner either by personal service, or by certified mail, return receipt requested. If served on the property owner personally, a written acknowledgement of receipt from the property owner is required.
Additionally, Montana notices need to be filed in with the clerk in the county where the property is located.
How to send a Preliminary Notice with Levelset
Select Preliminary Notice document.
Provide basic job information.
Levelset sends the document for you. Postage included!