X number of layers = X number of potential construction liensConstruction projects often have many "layers" of contractors, suppliers and service providers. The "first layer" would be the main or Prime Contractor who has a direct contract with the Property Owner; the "second layer" would be the Subcontractors and/or Suppliers and/or Service Providers who are contracted with the "first layer", the Prime Contractor; and the "third layer" would be the Sub-Subcontractors and/or Suppliers and/or Service Providers who are contracted with the "second layer" Sub-Contractors and/or Suppliers and/or Service Providers. Notice to owner form; preliminary notice form; pre-lien notice form; etc.Many states require that Construction Contractors, Suppliers and Service Providers provide Owners, Lenders and Contractors with a specifically worded (state mandated verbiage) notice that the Contractor, Supplier or Service Provider is present on a particular construction project and may have lien rights.These notices are known by many different names depending on the state. For example, in California and Arizona they're known as the 20-Day Preliminary Notice (or Preliminary 20-Day Notice) whereas in some other states they're known as "Pre-Liens" and in still other states they're known as "Notice To Owner" forms. Protection of lien rights comes from the notice to owner form; preliminary notice form; pre-lien notice form, etc.No matter the title of the form, the main purposes of the form are to A) provide notice to the Owner, Lender and Prime Contractor that the Subcontractor, Supplier and/or Service Provider is present on the construction project and B) provide protection of lien rights of those various entities. The notice provides everyone on the project (the Owner, the Lender, the Prime Contractor, the Subcontractor and Sub-subcontractor, the Supplier and Sub-supplier, etc.) with protection: the Owner with protection from liens on his property; and the Contractors and Suppliers with protection against not being paid, or more accurately, protection of their lien rights should they not get paid.Because the "second layer" and "third layer" etc. Subcontractors and Suppliers are not contracted with the Owner, the Owner (and/or Lender and/or Prime Contractor) may not know that these "layers" are present. The notice allows those in charge of the project funds the opportunity to make sure that the "second layer" (and "third layer", etc.) gets paid and it protects the lien rights of these "layers" should they not get paid. Most states have deadlines for processing these noticesUsually there's a deadline on when the form needs to be delivered and missing the deadline can cause a partial or full loss of lien rights. Also, usually state law governs the language of the notice and if that exact language is not used then often times the notice is not valid and protection of lien rights does not exist.It's a sad fact that many contractors, suppliers and service providers do their jobs and then struggle to get the customer to make payment. While the preliminary notice doesn't guarantee that payment will be forthcoming, it does usually guarantee that the serving party will have lien rights should he not get paid. Your source for the preliminary notice forms; notice to owner forms; pre-lien notice forms, and for more infoPlease follow this link to purchase the form for your state or click the link below for the corresponding state for more info. If the state below is not a link it's because I don't have the "more information" page for that particular state created yet.Back to the top of this page: Protection of Lien Rights To purchase the form: Purchase the California 20-Day Preliminary Notice Form Back to our home page: Download Construction Forms |
