Understanding Ownership in a Preliminary Notice

A Preliminary Notice is designed to alert the property owner and general contractor that a subcontractor (or supplier) is getting ready to perform work or furnish materials at a specific real property location. The preliminary notice is generally the first step that a subcontractor must take in order to establish his or her right to file a mechanics lien. While some states do not require preliminary notices, most require some type of notice to be served before you can file a lien. In California, the preliminary notice (previously known as the 20 Day Preliminary Notice,  is required for everyone, except the direct (General) contractor who wants to establish their lien rights.  However,as of July 1, 2012, if there is a construction lender., the direct (General) contractor must also serve a preliminary notice

The preliminary notice requires that you identify ownership of the real property upon which you are performing the work or furnishing the supplies. Naming the correct property owner is crucial as the notice is designed to notify the owner of the property that you will be doing work on the construction project. If it is not served to the correct owner, the owner may claim that you did not comply with the statute and your prelim will have no legal standing.

So how do you go about finding the correct owner of the property?

First of all, it is important to understand that quite often the person having the work done is the tenant, not the real property owner. For example, say a mobile phone company is renting a space in a local strip mall. While the construction contract is issued by the mobile phone company, the mobile phone store does not own the property; the strip mall owner does. This is an important distinction that many who file preliminary notices fail to consider. If a materials supplier serves a prelim and lists the mobile phone store as the property owner, the prelim will most likely be declared invalid and the materials supplier will have no legal ground to file a mechanics lien. However, if the materials supplier lists the mall owner as the owner and the mobile phone company as the tenant, and both are properly served, they can move forward and, if necessary, file a lien.

The property owner is usually identified through legal public records. Don’t just assume that you know the correct property owner; look it up and verify your information. There are multiple ways to research and identify the true owner of a property. For example, you can pull the title, building permit, or the Notice of Commencement (Florida) to find the correct property owner. Make sure you have identified the true owner of the property before you serve the preliminary notice. If you have not identified the correct owner, it doesn’t make a difference what else you have included in the prelim. It will all be invalid and unable to support a claim of lien.

When you go to file a lien on a property, you must include the actual owner in the lien. This is why identifying the correct property owner and tenant in your prelim is so important. Without the correct owner and tenants, your mechanics lien will be invalid and should you file an invalid mechanics lien you may become liable for damages.  By having both the Owner and Tenant properly identified and served through a preliminary notice, you can bring a lien against both the owner and the tenant. By filing  mechanics liens on both parties, you should be able to secure and collect the money owed to you and your company.

The research process for completing a preliminary notice  can be somewhat daunting; however, using an experienced Preliminary Notice Service Provider like CRM Lien Services will shift the research and preparation to those who have years of experience with this process and alleviate your need to condust all of the research and remove your concerns about serving a compromised prelim. Partnering with a qualified service provider will take the guess work out of the prelim process, help you save valuable time, and protect your lien rights with accurate and compliant notices. CRM Lien Services will thoroughly research the correct information and professionally prepare your preliminary notices and mechanics lien so your job related accounts receivable are fully protected.

If you’d like to learn more about CRM Lien Services or obtain a quote for your preliminary notice or mechanics lien services, click here. We look forward to serving you with all of your prelim and mechanics lien needs!

Aaron Blum

Director of Business Services at CRM Lien Services Inc.

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