Preliminary Notice | Most Common Mistakes
It is a prerequisite to filing a Mechanic’s Lien and/or Stop Notice that any potential lien claimant who does not contract directly with the owner must complete and serve a California Preliminary 20 Day Notice. This notice must be served on the construction lender, if any, the owner and the general contractor or reputed general contractor. While personal service and registered mail are proper methods of service, it is recommended that certified mail, return receipt requested, be used.
The California Code requires that the Preliminary Notice be served within 20 days of the lien claimant first placing labor or material on the job. Nonetheless, California does recognize a relation back theory. In essence, any Preliminary Notices filed later than 20 days after first placing labor or materials on the job, will relate back twenty days prior and capture for mechanic’s lien purposes the cost of labor and/or material provided from that date forward.
20 Day Notice Chart
| Who | All persons claiming a lien, stop notice or action on the payment bond, except the original contract and person performing actual labor for wages in direct contact with the owner. |
| When | 20 Days after claimant furnished labor, services, equipment, or material on the jobsite Civil Code Section 3097(c). |
| To Whom | • Owner or reputed owner (actual owner irrelevant • Lender • Original Contractor |
| Where | • Residence • Place of Business • Job Site (Contractor) • Address shown on building permit • Address shown on construction deed (for lender) |
| How | • Personal Service • Registered Mail/Certified Mail |
| Contents | • A general description of the labor • Estimate of the total price of labor, service, • Equipment materials • The name and address of the person giving notice • The name and address of the person who contracted for the purchase of the labor, services, equipment, or materials • A description of the jobsite sufficient for identification Statutory Language • If subcontractor is required to pay fringe benefits into a trust fund pursuant to a collective bargaining agreement, the notice must contain the identity and address of the trust funds • Identity and address of any laborer who did not receive all compensation when due. |
Common Mistakes
Due to the importance of a preliminary notice, it is imperative that you do not make following mistakes:
Failing To Mail A Preliminary Notice
Any subcontractor who enters into a contract for construction for work $400 or more must file a Preliminary Notice. Failure to do so is in violation of California State Contractor’s License. (Civ. Code §8216)
Mailing The Preliminary Notice Late
In order for a contractor to preserve their Mechanic’s Lien or Stop Notice rights, a Preliminary Notice must be sent by registered certified mail within 20 calendar days of the first date services were performed or materials were provided on a jobsite. If the Preliminary Notice is sent after the 20 days after when work started or materials delivered on a job, the contractor is entitled to Lien or Stop Notice rights only for work performed within the 20 days prior to serving the Notice.
Mailing the Notice by Regular First Class Mail
The Preliminary Notice may only be served by personal delivery, or by first class certified or registered mail. “The statute clearly states that proper notice is a prerequisite to perfecting a mechanic’s lien, and that if service of the notice is accomplished by mail, the notice must be sent by registered or certified mail.” (IGA Aluminum Products, Inc. v. Manufacturers Bank, 130 Cal. App. 3d 699.) Proof that the Notice was served by mail in accordance with the statute must be accompanied by either the return receipt of certified or registered mail, or by a copy of the record of delivery; or in the event of nondelivery, by the returned envelope itself. (Civ. Code § 8110.)
Giving an Arbitrary Estimate of the Total Price for the Job
The law requires a Preliminary Notice to contain an estimate of the total price of a job, any such estimate must be a good faith estimate. The estimate must be “a derived figure, arrived at by rational analysis.” (Rental Equipment, Inc. v. McDaniel Builders, Inc., 91 Cal. App. 4th 445.) Estimates that are “made up out of whole cloth” are insufficient.
A good faith estimate would be the price for the work contracted.
Failing To Use The Proper Language For The “Notice to Property Owner”
California law is very specific about the language required in a Preliminary Notice for private works of improvement. California Civil Code section 3097, subsection (c), sets forth required language in the “Notice to Property Owner” contained on the face of the Preliminary Notice. California courts have long held that deviation from this language will render your Notice invalid. In Harold L. James, Inc. v. Five Points Ranch, Inc. (158 Cal. App. 3d 204), the court held that: “Where the Legislature has provided a detailed and specific mandate as to the manner or form of serving notice upon an affected party that its property interests are at stake, any deviation from the statutory mandate will be viewed with extreme disfavor”.
To avoid not having the proper language, request a form from a reliable construction attorney or mechanics lien service.
Failing To Mail Notice To The Surety Company When There Is A Payment Bond
To enforce a claim on a payment bond, notice must be given to the bond surety and bond principal within 15 days of the recording of a Notice of Completion or Notice of Cessation (or within 75 days after completion of the work if neither Notice is recorded). (Civ. Code § 8612 for private works and § 9560 for public works.) This payment bond notice can be accomplished by simply serving the bond surety with the Preliminary Notice, and further ensures that a very short 15-day deadline is not missed.
Serving Only One Notice If Multiple Notices Are Required
Generally a contractor must serve only one Preliminary Notice per job, regardless of the length of time or amount of materials and services provided. However, if you are providing services or materials to a jobsite under multiple contracts with multiple subcontractors, a separate Notice must be prepared and served pursuant to the contract with you have with each subcontractor. (Civ. Code § 8110.)
This most often occurs with suppliers who provide materials to many contractors for the same job.
