Preliminary Notice Estimate

#3 of the Top 10 Misconceptions about Mechanic's Liens

A claimant’s Preliminary Notice estimate must reasonably resemble the value that the claimant ultimately provides to the project

Actually, the similarity between a claimant's preliminary notice estimate and the value actually bestowed to a project is irrelevant in determining whether the Preliminary Notice is valid.

Similar to a claimant's obligation to reasonably investigate the ownership of the property before stating the owner's name within his Preliminary Notice, the claimant must only make a reasonable effort to estimate the value of labor and/or materials and/or equipment etc. that he expects to provide to the project.

For a subcontractor, this amount will usually be the subcontract price. For a supplier, the supplier should ask his customer what quantity of materials the contractor expects to purchase from the supplier for the project and use that information to determine the appropriate amount of the estimate.

Even if the claimant ultimately is owed an amount much larger than the Preliminary Notice Estimate

Even if the claimant ultimately is owed an amount much larger than the amount stated on his Preliminary Notice, the claimant may still recover on a mechanic's lien for this much-increased amount if the claimant's estimate on his Preliminary Notice was made reasonably using some form of information available to the claimant.

The claimant will lose his mechanic's lien rights if the estimate in his Preliminary Notice is completely random.

The claimant would be smart to make a record of any conversations it has that form the basis of his understanding as to his estimate within his Preliminary Notice.

Revising the Preliminary Notice Estimate

Once the Preliminary Notice has been served, the claimant need not revise his estimate on the document even if change orders come into play that increase or decrease the value of the job. Similar to the situation involving the claimant learning new owner information, it may be smart to send an update letter to the owner, but again it is important to consult with a construction attorney before taking any specific steps.

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Above article written by:
David J. Barnier,
Partner at Barker Olmsted and Barnier, APLC

Disclaimer -
This article presents a discussion of general laws, rules, and strategies related to mechanic's liens and other construction issues and is intended to provide background information that will assist the reader in understanding the general laws and rules that apply. Examples and hypotheticals are described in this article for the purpose of illustrating these general rules, however no information within this article should be relied upon when analyzing a specific real-life situation.

For each real-life situation that the reader experiences, it is necessary that the reader consult with an experienced construction law attorney to ensure that the reader's specific situation is evaluated. The laws and rules affecting mechanic's liens and construction are extremely complex and no attorney can provide in a writing an explanation that will empower the reader to use only the information in an article to evaluate how the law will apply to a specific real-life situation. In other words, the reader should not rely on the information in this article when addressing a particular real-life situation.