For those who have business interests in the construction industry, they will know how difficult it is to receive their dues for the work done. Countless people working as contractors, subcontractors, material men, equipment lessors, suppliers and other parties to a construction project go without pay for the work they have done. Many of these people either do not know how to protect their receivables or are under the impression the legal process is too cumbersome to pursue.
In order to address this injustice meted out to people in the construction industry, many states in America provide a remedy in the form a mechanic’s lien. Here, there are able to file a pre-lien notice to get their grievances addressed. Before a contractor can enforce a mechanic’s lien, he has to send a written “Pre-lien” notice or “Warning” notice to the property owner.
A Pre-lien Notice or a Preliminary Notice is a legal document sent to the property owner and the general contractor by registered mail that informs him that a debt is owned for both the materials and labor provided to the property. The contents of the letter must be written in a specific legal language in order for it to be valid. The letter requires the property owner to withhold construction funds to the general contractor in event a specific debt is not paid. The letter must be served (not filed) within a specific date when the materials and labor are provided to the property. Failure to serve this letter within the statutory deadline (even by one day) may result in a waiver of the right to file a lien against the property at a later stage.
Pre-lien or preliminary notices are of two types. One notice is for private works of improvement and the other is for public works of improvements. The statutory language required for each of them if different.
The information that is required to be included to file a pre-lien notice is as follows:
- The name and address of the owner (here the term “owner” is not the same as the “project owner”)
- The name and address of the direct contractor
- The name and address of the construction lender
- Your relationship to the persons to whom the pre-lien or preliminary notice is served
- A general description of the work you have furnished or will be furnishing
- Location of the project
- An estimate of the total amount of work furnished or to be furnished
- How the pre-lien or preliminary notice served (e.g. registered mail, personal delivery or overnight delivery)
A Pre-lien notice must be served not later than twenty days after the claimant (i.e., the contractor) has first furnished labor, services, materials, machinery, fixture to the construction project. It recommended that you sent out such notice as soon as you have your contract signed. You can always serve a Pre-lien notice late, if you have forgotten to send it earlier. In such a case, a mechanic’s lien will be enforceable only for materials and labor for twenty days immediately before sending out the pre-lien notice and for labour and material furnished thereafter.
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