Preliminary Notices – Why the Little Things Matter

Grenade pin

Sometimes the little things matter . . . a lot.

Such is the case with preliminary notices, formerly known as preliminary 20-day notices.

I know, I know. They’re routine. You can prepare them in your sleep. But at the risk of sounding like your mother, let me emphasize, they’re also important – Like good dental hygiene and eating your vegetables (And, yes, that’s a picture of a grenade pin. Like your mother, I can also be prone to over-exaggerated warnings).

So, here’s the ins and outs regarding preliminary notices.

What is a preliminary notice?

A preliminary notice is a legal document which must be served by most subcontractors and material suppliers and, in certain cases, by direct contractors, in order to record a mechanics lien, serve a stop notice, or make a payment bond claim. Failure to serve a preliminary notice may invalidate your right to pursue these statutory payment remedies.

Are there different types of preliminary notices?

Yes, there are two different types of preliminary notices, one for private works of improvement and one for public works of improvement. The statutory required language in each of them is different.

Who is required to serve a preliminary notice?

It depends on whether it is a private work of improvement or public work of improvement:

  • Private Work of Improvement: Subcontractors and material suppliers of all tiers. And, on lender financed projects, direct contractors.
  • Public Work of Improvement: Second-tier and lower subcontractors and material suppliers.

A preliminary notice is not required to be served if the work to be furnished has a value of $400 or less. Likewise, laborers are not required to serve a preliminary notice.

Is there a deadline to serve a preliminary notice?

No, but you can’t make a claim for work furnished more than 20 days before serving a preliminary notice.

So, for example, if you first began to furnish work January 1st and served your preliminary notice on January 20th, because a preliminary notice covers work furnished 20 days before, you would be able to make a claim for all work you furnished. If, however, you first began to furnish work on January 1st but did not serve your preliminary notice until January 31st, because a preliminary notice only covers work furnished 20 days before, you would only be able to make a claim for work you furnished since January 11th. Thus, you should always try to serve your preliminary notice as soon as possible after first furnishing work.

What information is required to be included in a preliminary notice?

You can find a preliminary notice (for private works) and a preliminary notice (for public works) under the “Toolbox” menu. But here’s what information is required:

  • The name and address of the owner (note: the owner may not be the same as the project owner, for example, in tenant improvement projects);
  • The name address of the direct contractor;
  • The name and address of the construction lender (if any);
  • Your relationship to the persons to whom the preliminary notice is being served (e.g., subcontractor to [name of direct contractor]”);
  • A general description of work you have furnished or will be furnishing;
  • The location of the project;
  • The name and address of the party to whom you are furnishing work;
  • An estimate of the total price of the work furnished or to be furnished;
  • How the preliminary notice was served (e.g., certified mail, overnight delivery, personal delivery).

NoteThe estimate of the total price of the work furnished or to be furnished is usually the amount of your contract.  You don’t need to add a “cushion,” and you really shouldn’t, as it may cause your preliminary notice to be invalid.  You also don’t need to serve a new or amended preliminary notice if the amount of your contract increases or decreases due to change orders or extra work, and while I know some who do, I am leery of the practice since it may create an argument that because the “new” preliminary notice replaces the “old” preliminary notice it only covers work furnished 20 days before.

How do you obtain the names and addresses of the owner and construction lender?

Direct contractors are required to provide the names and addresses of the owner and construction lender. In addition, where a construction loan is obtained after construction begins, the project owner is required to provide the name and address of the construction lender to each person who has served it with a preliminary notice.

Who do you send the preliminary notice to?

A preliminary notice should be served to the owner, direct contractor, and construction lender (if any).

Do you need to record a preliminary notice?

No, but if you record your preliminary notice at the county recorder’s office in the county where the project is located, the recorder is supposed to send you notice if the project owner records a notice of completion or notice of cessation. This is important, because a notice of completion or notice of cessation will reduce the time in which to record a mechanic’s lien or serve a stop notice.

Some, however, feel that this is not important, since the project owner is already required to serve all persons from whom it has received a preliminary notice, with a notice of completion or notice of cessation within 10 days of recording such notices with the county recorder’s office.

What if you are a material supplier and you supply equipment and/or materials under multiple contracts on the same project?

Material suppliers who supply equipment and/or materials under multiple contracts on the same project are required to serve a separate preliminary notice under each contract in which they provide equipment and/or materials.

211 Responses to “Preliminary Notices – Why the Little Things Matter”

    • Garret Murai

      Thanks for the pingback Scott. You, and the other folks at Zlien.com, maintain a great blog on mechanics liens (I read your blog regularly) with articles that are both helpful and readable (a rare combination among lawyers). Keep up the great work!

      Reply
    • LiveandLearn

      Hello Garrett~ you are a fantastic resource for so many! Cheers!
      I have a GC dispute on my CA commercial project. After several cost overruns (to the tune of $94k in a single category, among others), I requested an audit. I asked for sub-contracts, original change orders from subs, materials receipts, labor costs etc.) and the GC refused. FYI-no signed change orders were received for these overruns before the work was done. I hired an atty to assist my getting the info for the audit. The GC became angry and defensive and things are…strained. I have paid the GC over $800k to date. Today 9/23/14, I received a prelim notice for $1.3M dated 8/12, work began 6/2012. Over $400k had been spent by GC before our permit was issued 4/20/14. The major change orders approved by GC, without my approval, and major cost overruns were in July/Aug of this year, with about $65k in sub’s change orders delivered last week, at my request.
      Is it a viable notice, given the dates, and considering we have 80 days left on the project? Does an owner have rights regarding audits, receipts and information about the spending and specific materials used in their project?
      Any thoughts would be appreciated!

      Reply
      • Garret Murai

        Thanks. First, a general contractor is not required to serve a preliminary notice on private works project unless the project is financed by a construction lender. Second, assuming it is a lender financed project, a general contractor can serve a preliminary notice so long as it has performed work on the project within the last 20 days or will be performing work on the project in the future. But, a preliminary notice only goes back 20 days, so if a general contractor has performed work more than 20 days ago, the preliminary notice will not be effective to secure payment by way of a mechanics lien, stop payment notice or payment bond for that work.

        On the ability to audit the books and records of your contractor you would have two basis, as I see it. The first, is if your contract allows you to request backup documents from your contractor. The second, is if you are in litigation. In litigation you have discovery rights that would allow you to request backup documentation from your contractor.

    • LiveandLearn

      Thank you, Garrett,
      Our contract does not specify, nor mention, the backup documents. Aside from my audit, we will need documentation for our LEED Certification of materials. I’m hoping we can navigate this w/o litigating.
      Gratitude and good wishes to you!

      Reply
    • Charlene Benoy

      Can Prelim Notices be prepared by the contractor or does a lawyer need to prepare them?

      Reply
      • Garret Murai

        Hi Charlene. Preliminary notices do not need to be prepared by a lawyer but be sure you are using the correct forms and completing them correctly.

    • Anthony B

      Hello Garret,
      I received a Prelim notice date 10/7/14 for equipment that was rented out by my subcontractor for a demo job on 1 of my properties. The work was started on 9/4/14 and it was completed on 9/14/14 . When I called the equipment rental supplier to ask if my sub paid his invoice they said yes he paid the September invoice but there is a balance of $900 for some broken pcs on the equipment when he returned it in beginning of October. I advised them that the equipment that they rented out to him was removed from my property around Sep 15 and he took it to one of his other jobs and I shouldn’t be
      liable for any other charges. How can I protect my self from this kind of
      situation.

      Thanks,

      Anthony

      Reply
      • Garret Murai

        Hi Anthony. A preliminary notice only protects work (or, in your case, equipment rented) 20 days before the preliminary notice is served. So, if your dates are correct, they would not have a valid claim. It sounds like they’re trying to use a preliminary notice to put pressure on you to put pressure on your contractor to pay for a piece of equipment that was broken by your contractor, the cost of which, did not benefit your property.

    • Jenifer

      Hello Garrett!

      My company supplied material to a material supplier of a subcontractor for a project. I filed my preliminary notice to the Owner and GC on the project. We currently have both December and January invoices outstanding. I was notified today that the supplier has filed for bankruptcy. I promptly contacted the GC for the project to inquire on payment status, and was informed they did not have a contract with this particular supplier; their contract was with the subcontractor. They then referred me to the subcontractor for payment. I did call the sub, who let me know they would see if they had the funds available to pay us. I understand how the payment process works; the GC pays the sub, who pays their subs or suppliers, and then releases are collected, etc. It is my understanding that the GC would be responsible for payment as they were notified that we existed as a 2nd tier supplier to their own subcontractor by way of the preliminary notice. This is for a federal courthouse project, and a payment bond is in existence on the project. Just need a little direction to get this resolved.

      Thank you!!!

      Reply
      • Garret Murai

        Hi Jennifer. A California preliminary notice would be inapplicable to a federal project. This would be case even if the federal project was located in California. You’re best bet is a Miller Act claim. You can read more about Miller Act claims here.

      • Jenifer

        Thank you Garrett for your direction with my question. I do apologize I had wrong information regarding the project type and our position in the sub/supplier chain. The project is considered a county job, and not a federal job. We, as a third tier supplier, supplied material to a supplier of a subcontractor. The GC paid the sub, who paid their supplier, who filed for chapter 11. Would our payment remedies fall to the stop notice and / or bond claim? Thank you again!!

    • Kristi

      Hi Garret, I am a subcontractor working for a GC. I filed a preliminary notice when I received the contract (June of this year). The job was delayed, we just placed our first order for materials a couple of days ago and will be on-site either this month or next. Is my original preliminary notice still valid or do I need to send a new one?

      Reply
    • Holly

      Thank you for this great info!
      Question: I’m a landscape contractor and filed my preliminary notice – but my work is not completed (job is closed for the winter) and I haven’t been paid for the work I did complete. I just received a notice of completion today. Do I now contest the notice of completion or file a mechanic’s lien?

      Reply
      • Garret Murai

        Hi Holly. Thanks for reading. Your situation seems to be a bit unfair, particularly, since: (1) You aren’t allowed to record a mechanics lien unless you have a completed your work; and (2) by recording a notice of completion your deadline to record a mechanics lien has been artificially shortened (or even precluded if you don’t complete your work and record a mechanics lien within 30 days of the date the notice of completion is recorded). I would write the owner and ask if the notice of completion means that your work is no longer required, in which event, you intend to record a mechanics lien, otherwise, you would ask that the notice of completion be withdrawn.

    • Warren

      Garret –
      First off, let me thank you for offering such a useful and well done online resource! You have clearly generously helped many of your readers!
      Here’s my situation: I engaged a sub (I’m a City of Los Angeles “Owner/Builder”) to remodel some electrical work on a rental condo I own.
      There was no written contract, but he did quote an hourly labor price in a text message.
      When I received his bill, listing time spent and materials, the labor looked fine, but the prices billed for the materials seemed exorbitant.
      So, I researched the “List Prices” on the Internet, including both on Amazon.com and directly from manufacturers.
      Just as I suspected, many of the items billed were marked up as much as 150% over the list prices.
      I wrote and called the sub to complain about his pricing for parts on what I thought was a “Time and Materials” arrangement (again, no written contract).
      I repeatedly and respectfully requested that he send me his original invoices for the materials he billed, and made clear that I would immediately pay for those actual costs.
      I even cut him a check for just the labor an sent it to him right away, because it was totally correct.
      He became very hostile and claimed we had no prior agreement that he would neither show me the invoices from his suppliers, nor that there was any limit on how much he could fairly mark them up.
      Incidentally, the amount of materials in each line line item were excessive, such as charging me for an even 1,000 feet of commonly used wire when the amount used was far, far less. Additionally, he didn’t leave me with any of the excess materials he billed for.
      Now, (still within the 20 days since completion) I have just today received a Preliminary Lien Notice. He is totally unwilling to either negotiate the bill or send proof of his cost of materials.
      Now, I’m at a loss as to what to do. Hiring an attorney will cost me more than my estimate of the overcharges (about $850 on a $5,000 bill).
      Any help or clarity you can provide will be much appreciated. I never want to “stiff” any workers. But I don’t want to be ripped off myself. In over 30 years of doing this sort of business, I have never encountered such a difficult sub.

      Reply
      • Garret Murai

        Hi Warren. Thanks for the nice comment. You’re in a tough situation (as is the subcontractor) and short of a negotiated settlement or litigation you both don’t have many options. Since the subcontractor served a preliminary notice, likely, his next step will be to record a mechanics lien on your property. However, under the Civil Code, the subcontractor can only claim the lesser of: (1) the amount agreed to: or (2) the value of the work performed. Clearly, without an agreement, the amount agreed to is irrelevant, so the subcontractor would be left with the value of the work performed. Does that include a markup in the amount the subcontractor is demanding? Does it include a markup at all? Or does it include some reasonable markup which a court would determine based on the evidence? Since you don’t have an agreement, either written or oral, this is the dilemma you both face. You can of course litigate it, which seems like a waste under the circumstances, or you can try to settle the dispute knowing that the outcome should you litigate is far from clear and is in fact a pure gamble.

      • Kimberly Kempf

        Hi Warren, I was just reading your post and Garret’s reply. I hope you don’t mind, but I wanted to chime in. If the guy is a licensed contractor, I would contact the state license board. My dad had a situation with a roofing company and he contacted the CSLB and they were able to help. And I would also considering giving him a negative review on Yelp.

      • Warren

        Thanks again for your very rapid reply.
        I’ve just done more reading and it appears that I needed to check my dates regarding the “20 Day Notice”, as it seems to be often called.
        Here are the relevant dates:
        First date worked on job was: 3/28/2016
        First Disputed bill was rendered: 4/5/2016
        Last date worked on job was: 5/15/2016
        California Preliminary Notice “Date Prepared” is 6/17/2016
        California Preliminary Notice “Certified Mail” Postmarked date is: 6/24/2016
        Does this change my legal position significantly?
        Does the 20 days run from when the job starts, ends or when it is billed to customer?
        It appears to me that the sub missed his deadline to file by a very long time. If so, how does that change my situation with him? What should be my next steps, if any?
        My desire is to pay the remainder of the billed labor and continue to request his original receipts for the parts he used and offer to pay that amount.
        Much appreciated!

      • Garret Murai

        Hi Warren. I can’t provide you with legal advice since I’m not your attorney but a preliminary notice, previously called a 20-day preliminary notice, only preserves mechanics lien rights going back 20 days from the date a preliminary notice is served.

    • Shannon Fuller

      Hi Garret,

      I had questions regarding the 20 day preliminary. I noticed online there are many types of preliminary notices. They all pretty much ask for the same information besides a few minor details. One of the things I noticed are some of them say civil code sections 8200, et seq., 9300, et seq and others say sections 3097, 3098, 3259.5. What is the difference between these forms and which one should I be using? My other question is for the estimate of labor and services section should I be listing the original contract agreement amount or what’s due? Part of our contract price includes a deposit and permits which the customer pays for before we step foot on the property. So was wondering if I still list full contract price even though these two items are paid for? My last question is regarding the section that says list all laborers not paid compensation when due, and any person or entity whom a portion of a laborers compensation is paid. Don’t really understand this. Can you explain what goes here? Thanks Garret

      Reply
      • Garret Murai

        Hi Shannon. Thanks for reading. The preliminary notice laws were amended and recodified in 2012. Prior to 2012, the preliminary notice laws were located in the section 3000 series of the Civil Code. After 2012, the preliminary notice laws were recodified in the 8000 series of the Civil Code for private works of improvement (specifically, Sections 8200 et seq.) and 9000 series of the Civil Code for public works of improvement (specifically, Sections 9300 et seq.). As to the amount of the estimate, the Civil Code states that it is to be “[a]n estimate of the total price of the work provided and to be provided.” Thus, in your case, it should be for the full contract price. Finally, I’m not aware of a requirement (nor do I understand the purpose of such a requirement) that you identify laborers not paid compensation when due and any person or entity to whom a portion of a laborer’s compensation is paid. You may want to take a look at the preliminary notice forms in the “Toolbox” section of our blog.

    • ASL NHS

      I have signed a contract to do landscape mainenance services on an apartment complex for a developer. I will be charging monthly on the contract amount for twelve months…. The developer is the owner and I’m sure there is a bank involved. Do I need to send a 20 day notice once or every month????
      HELP PLEASE

      Reply
      • Garret Murai

        Hi ASL NHS. If you have a contract to perform landscape maintenance services for 12 months you do not need to serve a preliminary notice each month. You would only need to do so once, ideally, within 20 days of beginning work. The one gray area is whether your work performing “landscape maintenance services” entitles you to record a mechanics lien or serve a stop payment notice. Typically, in order to record a mechanics lien or serve a stop payment notice you must perform work which improves a property such as supplying materials, doing construction, etc., and while landscape maintenance services arguably improves the property, no court in California that I’m aware of has addressed the issue of whether a company who performs landscape maintenance services only is entitled to record a mechanics lien or serve a stop payment notice.

  1. Kristine

    Hi Garret – I have been using your blog as research the last month, but things just got hairy with our scenario. I am an attorney but do not practice construction law. Our scenario- we hired a MC who in turn hired a sub for painting. MC did not pay the sub in full. Sub never filed pre lien notice and time for that has expired. Now, he is suing us in small claims court based on breach of contract for work completed, for an amount that was more than the oral contract price the MC gave us. We never had a contract with the sub, and when the MC didn’t pay the sub in full, we fired both the MC and sub (had a feeling something was not kosher as they had been friends for 20 years) . Anyway, we then hired another painter to come and finish the job. Are we liable to the sub, and can he in fact sue us for breach of contract in small claims court? WAs his only remedy a mechanic’s lien?

    Reply
    • Garret Murai

      Hi Kristine. In California, if a subcontractor fails to serve a preliminary notice, the subcontractor waives its right to assert any of the statutory payment remedies available to it including a mechanics lien or stop payment notice. However, a subcontractor’s failure to serve a preliminary notice would not waive its right to bring contractual or equitable claims. But, from what you explained, you do not have a contract with the subcontractor, so I wouldn’t think that the subcontractor would have a valid contractual claim. Nor, do I think the subcontractor would have a valid equitable claim, say under a third-party beneficiary theory, because your contract with the construction manager was not “made expressly for the benefit of a third person . . . ” Cal. Civ. Code section 1559. This would be the case even if the subcontractor incidentally benefitted from your contract with the construction manager because part of the monies you paid to the construction manager were to be used to pay the subcontractor. See Martinez v. Socoma Companies, Inc., 11 Cal.3d 394, 407(1974); City and County of San Francisco v. Western Air Lines, Inc., 204 Cal.App.2d 105, 121.

      Also, regarding the statutory payment remedies available to the subcontractor. If it is a private project, the statutory remedies available to the subcontractor include recording a mechanic’s lien, serving a stop payment notice, or (if there is a payment bond) making a claim on the payment bond. If it is a public project, the statutory remedies available to the subcontractor include all of the foregoing with the exception of a mechanics lien which is not a statutory remedy available on public projects.

      Anyway, probably much more information than you need. Good luck to you.

      Reply
      • Alicia Galvan

        If materials were delivered and installed, applied or services rendered at a private property, this makes the home owner just as responsible. It is understood that the MC is hired to act as a representative of home owner because he is not the sole owner of the property he he was hired to work on, so both can be pursued legally. AG

      • Garret Murai

        Alicia you are correct. However, the remedy available to you depends on your contractual relationship and where you stand on the project. A subcontractor can sue a general contractor for breach of contract and the general contractor’s surety on a payment bond, for example, but does not have stop payment notice or mechanics liens rights against the general contractor. Conversely, a subcontractor can sue an owner to enforce a stop payment notice or to foreclose on a mechanic’s lien, provided that the subcontractor first served a preliminary notice, but cannot sue the owner for breach of contract.

  2. Lorraine

    What do I do when I get request for pre lien information, but do not get notices from material suppliers. Can I hold their payment, or will a conditional suffice to release payment. I usually don’t get conditionals from supply houses only uncondtionals. Are these acceptable protocols?

    Reply
    • Garret Murai

      Hi Lorraine:

      It’s always good practice to get conditional and unconditional waivers and releases even if a supplier didn’t serve a preliminary notice – you may have missed the preliminary notice, and with certain statutory payment remedies like payment bond claims, there is a procedure by which a supplier can make a claim without having first served a preliminary notice.

      A “conditional” waiver and release as its name suggests, conditionally waives a potential claimant’s statutory payment rights, on condition that payment is received for work performed during the period set forth in the conditional waiver and release. An “unconditional” waiver and release on the other hand, unconditonally waives a potential claimant’s statutory payment rights for work performed during the period set forth in the unconditional waiver and release.

      The way that “conditional” and “unconditional” waivers and releases are intended to be used, is that at the time a potential claimant (say a supplier) submits an invoice for payment, the supplier would also submit a “conditional” waiver and release along with the invoice, in which the supplier conditionally waives its statutory payment rights on condition that it is paid. During the next billing cycle, the supplier would submit a “conditional” waiver and release for the current invoice, and an “unconditional” waiver and release for the previous invoice since he has already been paid for the previous invoice.

      I have on occasion seen suppliers and subcontractors provide “unconditional” waivers and releases before they are paid. This is extremely risky for those suppliers and subcontractors, because if they are not paid, then they have just unconditionally waived their statutory payment rights. I have also seen contractors not require “conditional” waivers and releases, and instead only require that their suppliers and subcontractors provide “unconditional” waivers and releases after they are paid. While less risky, since there is no disincentive for the supplier or subcontractor not to provide an unconditional waiver and release after they have been paid, there is also no incentive for the supplier or subcontractor to provide an unconditional waiver and release after they have been paid either. And this can pose problems, particularly at the end of a project, when a contractor may be contractually required to deliver to an owner “unconditional final waivers and releases” or to deliver the property free and clear of mechanic’s liens or other encumbrances.

      Reply
  3. josie

    Hi Garret
    is it too late to file a Prelim Notice , work was done on 1-29-2013 and has not been paid yet I was not aware of a prelim form. Im a independent Contractor. thank you

    Reply
    • Garret Murai

      Hi Josie. In order to pursue certain statutory remedies, such as mechanic’s liens or stop payment notices, a valid preliminary notice must be served. Although there is no deadline to serve a preliminary notice, a monetary claim cannot be made for work furnished prior to 20 days from the date a preliminary is served. So, for example, if work was first furnished on January 1, 2013, but a preliminary notice was not served until January 20, 2013, a claimant could pursue its statutory remedies for all work performed from January 1, 2013 and onward. If, however, work was first furnished on January 1, 2013, but a preliminary notice was not served until February 20, 2013, a claimant could only pursue its statutory remedies for work performed 20 days prior to the date the preliminary notice was served and onward. Although failure to serve a timely preliminary notice will bar a claimant from pursuing certain statutory remedies, it does not bar a claimant from making a claim on a payment bond or suing for breach of contract.

      Reply
  4. sonia

    Hi Garret,
    I have a strange situation. My company is a subcontractor on a huge project, along with many other subcontractors. We had an employee working for us as a project manager who was fired due to not completing his work, turning in daily reports, not getting change orders approved, etc. He then turned around and filed a prelim on the job, and will not sign a conditional waiver until we pay him a ridiculous amount of money. We do not have a subcontract agreement with him at all. The company that we are working for will not release funds to us- per our contract, they have the right to withhold funds until either we have a signed lien release from the sub (which he will never sign) or the lien rights have expired. I have checked on California laws regarding lien rights, and they all say that he has 90 days from the completion of the project to file a lien. But the project will not be completed for years as its a huge development. My question is: is there any way to combat his preliminary notice, or invalidate it? He was not a subcontractor, he was an employee.

    Reply
    • Garret Murai

      Hi Sonia. Your situation is a strange one. Civil Code section 3089 defines “laborer” as including “any person who, acting as an employee, performs labor upon or bestows skill or other necessary services on any work of improvement.” The statutory definition of “laborer” is broad, and the courts have similarly construed the term “laborer” broadly when applying the state’s statutory payment remedies as including laborers “skilled as well as unskilled, those who toil with their brains as well as those who work with their hands – in short, persons performing work of any kind.” Myers v. Alta Construction Company, 37 Cal.2d 739, 742 (1951). Thus, it appears that your ex-project manager, while he is not required to serve a preliminary notice, may do so under the law. You might be able to get the owner to agree to release funds without a conditional waiver and release from the ex-project manager, however, if your company agrees to defend and indemnify the owner from any statutory payment claims that might be made by the ex-project manager.

      Reply
  5. Manuel

    Hi Garrett,

    First off, great blog. As has been well stated you do a superb job of providing info in an easy to understand/streamlined format. So, here’s my question what is your thought on Prelim reqs. between a direct contractor and tenant for major improvements. I’m a P.M., with an engineering, design and construction firm where many of our commercial clients hold title to the property/bldg. (project site) in the name of a separate entity (smart arrangement). I’ve read C.C. 8200 a hundred times and am clear on reputed owner definition, and as a matter of practice my thought would be to err to the side of caution and send a prelim in the name of legal owner (even if it’s to same address). Some members of my management team disagrees and feel it could unnecessarily alarm the customer. Apart from that it’s my opinion we should have the customer provide some form of signed Property Owner’s Authorization even if it’s redundantly signed by the customer. I’ve did a ton of poking around and it appears there are no clear rules in CA on this. Your thoughts would be greatly appreciated-Prelim or not to Prelim is the Question? In advance, thank you for your time.

    Reply
    • Garret Murai

      Hi Manuel. Thanks for your comment. I agree with you, although the preliminary lien and other statutory payment remedy statutes were revised just this past year, there are still ambiguities.

      You mentioned tenant improvement work, and that, as I mentioned, can create some confusion of which “owner” needs to be served with a preliminary notice – the “project” owner (i.e., the tenant) or the “property” owner (i.e., the landlord). The code, as you point out, does not distinguish between the two, and simply says that a preliminary notice needs to be served on the owner or reputed owner.

      Nevertheless, I believe that the best practice is to serve a preliminary notice on both the “project” owner as well as the “property” owner and to do so even if you are a direct contractor. My rationale is this: On private works projects, one of the payment remedies available to contractors is the recording of a mechanics lien which creates a security interest in the property, and if unpaid allows the contractor to file suit to foreclose on the mechanics lien and have the property sold to satisfy the mechanics lien.

      Because a mechanics lien creates a security interest in the property, I think the property owner (i.e., the landlord) should be served with a preliminary notice because his interest in the property may be effected. I also believe that it is prudent for direct contractors in tenant build-out projects to serve a preliminary notice (although they are technically not required to under the law) because while the “project” owner (i.e., the tenant) may know that the direct contractor is performing work on the property, the “property” owner may not, and the purpose of preliminary notices to provide notice to those persons who may be effected by a contractor’s statutory payment remedies.

      Reply
  6. Michelle

    I’ve been in the construction industry since 1985, yet I had a customer ask me a question, and I actually questioned myself. She is doing a job in a mall for a coffee lounge. Obviously the owner of the project/store is not the owner of the mall. Who does she list as the owner on the prelim?

    Reply
    • Garret Murai

      Hi Michelle. On tenant improvement projects where the project owner (the tenant), is not the same as the property owner (the landlord), I suggest that both the tenant and the landlord be sent a preliminary notice. I agree with you that the code is not clear as it only states that, among other persons, a preliminary notice must be sent to the “owner or reputed owner.” The reason I think it is good practice to send a preliminary notice to both the tenant and the landlord is that on private works projects, which tenant improvement projects tend to be, claimants can record a mechanics lien which creates a security interest in the underlying property. As such, notice should be given to the landlord to preclude an argument later, that notice was required, but not given. Cheers!

      Reply
  7. Johna

    Hi Garret,
    What a great site you have put together, very helpful. Thank you
    We are a subcontractor and did a job at a marine base. Which would be a public works job. We were a third tier sub on the job. I requested prelim information many times and could not get it. I went to the General on the job and was told that 2nd and lower ties can not prelim a job. Is this correct? If not, how can I obtain prelim information. There were changes to the original contract and the sub that we worked for approved them. When time came for payment we were denied payment for changes because it was not approved by the owner. I want to know for future jobs where I stand on my lien rights and stop notices. Not knowing what else to do, I filed a claim against him with the State Lic Board and with his bonding company. Lucky he cared about his reputation and paid us as soon as he got a call from the State Lic Board.

    Reply
    • Garret Murai

      Hi Johna. Thanks for your comment. If I correctly understood your comment, your company did work at a U.S. Marine base. If so, it is a public works project as you point out, but more specifically, it is a federal public works project. On federal public works projects, even those located in California, you would not have the same statutory payment claims as you would on a California state or local public works project. On federal public works projects subcontractors can make a claim under the Miller Act, which requires that general contractors furnish a federal payment bond to guarantee payment to first and second-tier subcontractors. I’ve been meaning to write a post on the Miller Act, but until then, here’s a good overview of the Miller Act.

      Reply
      • Johna

        If I’m understanding the Miller Act correctly 3rd tier and lower are not protected. I’m confused though on the Little Miller Act, is that only in the State of N.C? If not protected by either bond, what action should be taken.

      • Garret Murai

        Hi Johna. Yes, only first and second-tier subcontractors (and suppliers) may make a claim on a payment bond under the Miller Act. The “Little” Miller Act simply refers to state laws which, like the federal Miller Act, requires general contractors to furnish payment bonds (and, in some cases, performance bonds) on state and local public works projects. California has such a statute but, as discussed, it only applies to California state and local public works contracts.

        In your case, you were lucky to get paid by the general contractor since you were a third-tier subcontractor on a federal public works project and, as such, would not be able to make a claim against the general contractor’s payment bond and would likely be limited to pursuing a breach of contract claim against the party with whom you contracted.

  8. Laurie

    If my company is sending multiple preliminary notices to one contractor for multiple jobs, can we mail them in the same envelope, or do we have to mail each one separately? Thanks for your help.

    Reply
    • Garret Murai

      Thanks Laurie. This is the first time I’ve heard this question, but it’s a good one. The law does not specify, but because the intent of the law is to provide notice to those who are entitled to notice, I don’t see any reason why mailing multiple preliminary notices to the same person wouldn’t be permissible.

      Reply
  9. Jody Adams

    Thank you for all the great information provided. Our company (general contractor) had a verbal contract with a sub-contractor that provided a service for us. After the work was completed they sent us an invoice for almost double of what was agreed to. Never was any additional cost ever discussed. We paid the agreed to amount for the service. 32 days after work had begun and 30 days after work was completed we received a certified letter with a Preliminary notice inside. From what I understand they can’t enforce the lean but can go after out bond. Is this correct?

    Reply
    • Garret Murai

      Hi Jody. Service of a valid preliminary notice is a prerequisite for a claimant to record a mechanics lien and serve a stop payment notice. The timing of service of a preliminary notice effects the amount that can be recovered because it only preserves claims related to work performed 20 days before the preliminary notice was served.

      So, for example, if a preliminary notice was served 30 days after a project was completed, because a preliminary notice only preserves claims going back 20 days, then the claimant would not have a valid basis for recording a mechanics lien or serving a stop payment.

      The same is not true of payment bonds and license bonds. Even though a preliminary notice was not served (or was served late) a claim can still be made against a payment bond if notice is timely given to the surety. Also, a preliminary notice does not need to be served to make a claim against a contractor’s license bond, but the claim is limited to the dollar amount of the license bond and the claimant must show that the contractor fraudulently failed to pay the subcontractor.

      Reply
  10. Nicole

    You have a great article. I’m sending a preliminary notice to the direct contractor and the address listed on BBB and Ca St License Board Website are both incorrect. Am I required to personally serve the parties to ensure receipt?
    Thanks!

    Reply
    • Garret Murai

      Thanks Nicole. You may want to check the California Secretary of State’s website if they are a California corporation, LLC, or limited partnership. Preliminary notices can be certified mail return receipt requested.

      Reply
  11. Ivana Maslerova

    Do I need to file a preliminary notice for commercial project?
    Thanks

    Reply
    • Garret Murai

      Hi Ivana. Yes, in general, you need to serve a preliminary notice in order to enforce your statutory payment remedies, such as recording a mechanics lien, serving a stop payment notice or making a payment bond claim, whether you are working on a public or private project including commercial projects. However, whether you need to serve a preliminary notice depends on whether you are a direct contractor (i.e., someone who is in contract directly with the owner) or a subcontractor or material supplier. If you are a direct contractor then you do not need to serve a preliminary notice unless there is a construction lender financing the project. If you are a subcontractor or material supplier then you will need to serve a preliminary notice in order to enforce your statutory payment remedies.

      Reply
      • Tessa Perrin

        Hi Garret!

        Here is our scenario:

        Owner of a sales company hired a general contractor for construction of new stores. That general contractor hired a flooring company to do the floors. That flooring company (whom we worked for for years and also has a contractors license) then sub contracted us out to install the material they sold (job in Petaluma)

        We had previously completed and got paid for a job (in Davis, Ca) for the same exact general contractor and flooring company. The floor for this job started to lift and it was determined the floor company purchased the wrong glue for the product. The general contractor tore up the floor.

        The floor company has not yet paid me for recent Petaluma job (it’s past 30 days since completion) and they said they have not yet got paid for this job because company is holding payment until Davis job scenario is resolved.

        I think the floor company who hired me has been paid, and is just holding my check until other problem is resolved. Do they have a right to do that? How can I find out if the floor company has been paid. And if they have in fact not been paid, can I file lien on the property?

      • Garret Murai

        Hi Tessa. Under California law, general contractors are required to pay subcontractors and subcontractors are required to pay second-tier subcontractors within 7 days of their receiving a progress payment and within 10 days of their receiving retention. If they don’t they are subject to prompt payment penalties of 2% per month, which is higher than the interest on many credit cards. However, up to 150% of any progress payment or retention may be withheld if there is a good faith dispute.

        Unfortunately, California law does not have mechanism by which a subcontractor (of any tier) may determine whether the party who they are in contract with has been paid either a progress payment or retention. However, you may want to just call the owner and see if they will tell you.

        In terms of recording a mechanics lien, you have to have first served a valid preliminary notice. If you’ve done this, then you have 90 days from project completion to record a mechanics lien if no notice of completion was recorded, or if a notice of completion was recorded, 30 days from the date the notice of completion was recorded.

  12. AJ

    Hi Garret, very helpful blog; thank you! Do you think you can help me with some solid advice?

    My small, independent flooring company was hired by a “reputable” builder even though they knew we were not licensed. (I am in the process of getting one, but it takes about a month). As I usually do with smaller customers (home owners who have small floor jobs), I drew up a contract with the agreed upon price and when I brought it to the job site, the PM told me, “we can’t sign that; you don’t have a license.” However, they knowingly hired us without one. It’s anyone’s guess why except maybe because I gave them an amazing deal. I was skeptical that we would be paid without contract, so after we finished installing hardwood in half the house (the bottom floor), I demanded 50% payment if they “wanted the rest of the home finished next week.” They promptly deposited 50% in my account so I had no reason to believe we would get screwed at time of project completion. (I did not know about the Prelim notice but I did know about Mechanics’ Liens).

    We finished the project May 30, 2014. I heard nothing from the firm or home owner for a week so I contacted the construction firm that hired us, telling them the project was complete and it was time to pay the final balance. The construction company owner wrote back saying he needed “an invoice from which to pay from.” I sent an invoice via email after I saw his message. Then, radio silence for a few days. He finally called me and left a VM saying that the owner of the home was “complaining about the quality of the floor and installation” and that they were going to have to hang onto all the remaining 50% balance until they could get a floor rep out to see the floor and determine if it was installed properly. This was the first I had ever heard of the home owner complaining about the floor. They had moved in partially through our install, and so they saw the bottom half of the house prior to our starting the top floor — and the construction company conveniently never told us there were any “issues” until we finished installing all the flooring.

    The floor we put in was real hardwood, and as such, has variations in pattern and width, so ensuring there is a zero gap installation is not easy as it is with factory milled planks such as laminate or engineered. In any case, the construction company owner claims he has been trying to get the floor rep to come out and look at the floor for the last 2 weeks and hasn’t made any progress on that front. In the meantime, they are holding our money hostage and my workers are calling me daily to collect and I do not have anything for them until we get paid. If I wait and wait, I will have missed the 90 day window to file a Lien. Perhaps, I cannot file one anyway due to the Prelim notice not being filed. The amount is right under $3,000.

    What are my options here to collect? Small claims court? Go after the payment bond? Go after the company’s license bond? To my understanding, they are one of only 4 construction companies in California that can arrange up to 95% financing of the home’s new construction so I am guessing maybe they are the lender, too. How do I find out? Help please!

    Reply
  13. AJ

    Hi Garret, thanks for your reply; much appreciated. How do I know if my company was required to be licensed? Is it a blanket assumption that due to the nature of the work (flooring), a license was indeed needed? Thank you.

    Reply
    • Garret Murai

      Hi AJ. There is a general presumption that if you construct or alter any building, highway, road, parking facility, railroad, excavation or other structure where the cost is $500 or more that you are required to be licensed by the Contractors State License Board. As to flooring, there is a flooring and floor covering specialty license (C15) which applies to individuals and companies who “prepare[] any surface for the installation of flooring and floor coverings, and installs carpet, resilient sheet goods, resilient tile, wood floors and flooring (including the finishing and repairing thereof), and any other materials established as flooring and floor covering material, except ceramic tile.”

      Reply
      • Jody

        Hello Garret

        Thanks for all the great information. I currently have an issue with a contractor. We finally got through all the issues with the project, but when the project was completed I started receiving calls from the sub contractors that they haven’t been paid and the general was not returning calls. I come to find out that our progress payments we not used to pay anything or anyone including the material supply house. I never received a 20 day preliminary notice from the material supply house, can they still file a lien at this point? The roofing portion of the project was completed 6/13 and today is 7/11 so were way passed the 20 days?

      • Garret Murai

        Hi Jody. If the material supplier did not serve a preliminary notice and the materials were incorporated into the project more than 20 days ago then the material supplier will have no basis for recording a mechanics lien.

      • AJ

        Thanks, Garret. Can anything positive come out of me filing in small claims court for breach of contract? Various emails and voice mails back and forth will show that work was indeed performed and expected of us.

      • Garret Murai

        AJ, sorry, I couldn’t tell you. It would depend on the evidence presented and the judge reviewing it. I can say though that because attorneys are not allowed to represent parties in small claims court the rules of evidence are usually much looser. You’re also capped in the total amount you can recover: $10,000 for individuals and sole proprietorships and $5,000 for business entities.

  14. Jody

    Am I correct in thinking if the notice was served it would’ve had to of been addressed / mailed directly to my home, not to the contractor?

    Reply
    • Garret Murai

      Hi Jody. A preliminary notice should be served on the owner, direct contractor and, if there is one, the construction lender.

      Reply
      • Jody

        Thanks so much for sharing your knowledge and the quick response. I have been pretty stressed about this matter and feel more at easy with the issue now.

  15. Jen

    Hi Garret, we had a vebral agreement with the general contractor. We did not send the 20 days preliminary notice. The job was completed on Feb 2014. On July 2014, the general contractor asked us to sign the contract in order to pay us with 90% and holding 10% retention. The verbral agreement with the general contractor was to pay in full upon completion of project. Please advise if we still can file stop payment notice.

    Reply
    • Garret Murai

      Hi Elaine. The requirements and timing of serving a stop payment notice depends on the type of project. If it is a private works project, subcontractors and material suppliers of all tiers are required to serve a preliminary notice in order to serve a stop payment notice. If it is a public works project, only second-tier and lower subcontractors and material suppliers are required to serve a preliminary notice in order to serve a stop payment notice. Once you’ve determined whether or not you were required to serve a preliminary notice you then need to determine whether you’re outside the deadline for serving a stop payment notice. The deadline for subcontractors and material suppliers to serve a stop payment is no later than the earlier of (1) 90 days after completion of the project; or (2) 30 days after the owner records a notice of completion or cessation.

      Reply
  16. Susan Allen

    HI Garret, Thanks for the helpful blog. I have a question. I work for a General Contractor in CA. We issue subcontractor agreements that clearly state on the first page all the information required for the Preliminary Notice. Then, the subcontractor’s supplier contacts me directly looking for prelim information. My boss feels this is not my responsibility and has told me to tell these companies to contact their customer directly for this information. Where does the law stand on this? Am I considered the “direct” contractor and therefore have to provide this or is the subcontractor the “direct contractor”? Thanks for your help.

    Reply
    • Garret Murai

      Hi Susan. If your company has a contract with the owner then it is a “direct contractor” and has an obligation to provide tis information. Civil Code section 8208 (which is new as of July 1, 2012) provides that “[a] direct contractor shall make available to any person seeking to give preliminary notice the following information: (10 The name address of the owner. (b) the name and address of the construction lender, if any.” A “direct contractor” is in turn defined under Civil Code section 8018 as “a contractor that has a direct contractual relationship with an owner.”

      Reply
  17. Jenifer

    This is a really helpful article, thank you. My company is a material supplier, and routinely files Preliminary Notices for the items supplied to mechanical (aka sub) contractors. However, we do not file on material suppliers. Per California law, are we able to file on a supplier, when said material is being supplied for a work of improvement, and not for the suppliers stock?

    Thank you for your help!

    Reply
    • Garret Murai

      Hi Jennifer. Sorry for the late reply. Yes, material suppliers of all tiers can serve a preliminary notice, even material suppliers to material suppliers, so long as the materials being supplied are for a particular project.

      Reply
  18. Amy

    This has been the most helpful article I’ve found on Preliminary Notices. Our company is both a material supplier and a general contractor. If we are both a sub and a supplier to company do I file separate prelims for as a sub and a supplier or one for all of it?

    Reply
    • Garret Murai

      Hi Amy. When you say that your “company is both a material supplier and general contractor” and that it works as “both a sub and supplier to [a] company” do you mean that your company holds a B license and is both supplying materials and performing work for another contractor on the same project?

      Reply
      • Amy

        The contractor is purchasing asphalt from us for a Caltrans project which we are also doing subcontract work for. The asphalt is not part of the subcontract agreement, which to me makes us both a supplier and a sub, but I could be totally wrong.

      • Garret Murai

        If you are acting as both a material supplier and subcontractor under two separate contacts you should serve one preliminary notice for the materials supplied or to be supplied and another preliminary notice for the work performed or to be performed.

  19. Julie

    I just discovered your blog, and find the information very helpful! Thank you for sharing! I am curious what the consequences are for a subcontractor that files a Lien Notice on a homeowners property that has not filed a preliminary notice. We have a contractor and project that the work was completed in January, and we are still getting the run around on final payment. It was a large residential project, and the owner is claiming that he has problems with the GC (not with our portion), therefore he feels he has paid the GC in full. The GC says he has not been paid our portion, therefore can not pay us. We have many billings, phone conversations and phone messages to verify our right to be paid. Unfortunately, we have been very accommodating, while they continue to be “out of town” “look at it when I get back” Haven’t had a chance to look at it” “I’ve been very busy” ….
    However, they have moved in and are living in the house! Is there anything we can do to get the remaining monies owed. The GC was/is a friend, so we have tried to be very cordial, but very tired of the run around! The amount owed is more than the small claims cap.

    Reply
    • Garret Murai

      Hi Julie. If you were a subcontractor then serving a preliminary notice is a precondition of recording a mechanics lien. However, you would still have the ability to bring a breach of contract claim against the general contractor for nonpayment.

      Reply
  20. Julie

    Thank you for your immediate response. I know that a prelim is required, but I am still curious if there are any ramifications to filing a mechanic’s lien anyway? I believe we did so unknowingly in the past, and did end up getting paid by the owner because of the lien. So I want to know if there are any ramifications for doing so. And what is achievable with the breach of contract claim?

    Reply
    • Garret Murai

      If you record a mechanics lien without having first served a preliminary notice the owner may be able to have the mechanics lien expunged and recover his attorney’s fees in doing so

      Reply
  21. Sandy Rath

    Garrett – Great Blog! I have bookmarked your site for future use.

    We have had a couple of strange things occur. We are a subcontractor and regularly prelien projects.

    One project had an ownership change in the middle of the project. The general didn’t let us know about the ownership change but wanted waivers addressed to the new owner. I did it but should we send a new prelien?

    Same type of question – different project -there was a lender change. Do we do a new prelien?

    What ramifications does this have for the original preliens?

    Reply
    • Garret Murai

      Thanks Sandy. Civil Code sections 8200 et seq. which governs preliminary notices on private works projects does not address the two situations you raised. However, the point of a preliminary notice is to give notice to owners and, if there is one, construction lenders, that you are performing work on the job and have statutory construction payment remedies. Under the circumstances, I would serve an “amended” preliminary notice to the new owner and new construction lender. I would clearly indicate that the prelien is an “amended” prelien since a prelien only covers work performed within 20 days of the prelien being served and you want to foreclose any argument that the new prelien only covers work performed within the last 20 days.

      Reply
  22. Alicia

    Hi Garret, I work in an accounting office and the accountants are out on vacation. I need your help understanding because I am not familiar with this form…One of our clients sent us a California Preliminary Notice via Fax that he received today. He did have a job done at his restaurant, but hasn’t finish paying. He is asking what is this for?

    Reply
    • Garret Murai

      Hi Alicia. A preliminary notice is simply a notice advising an owner that a subcontractor or material supplier is performing work on the owner’s property. It is a precondition of serving a stop payment notice, recording a mechanics lien, or, in some cases, making a claim against a payment bond. In short, it is simply a notice advising the owner that a subcontractor material supplier “can” make such claims, not that they will.

      Reply
      • Alicia

        I will go ahead let our client know!

        Appreciate your help, Thank you

  23. Carla

    The lender on a new Prelim I am doing is in Hong Kong. Do I still send it?

    Reply
  24. Laura Boyles

    We are questioning when to send a prelim notice. I know it’s when you start work on the project. Does the fact that you have design work being done count as a starting point or is it just when you have your first payroll on the job?

    Reply
    • Garret Murai

      Hi Laura. I would need more information in order to answer your question. When you say “design work” are you an architectural or engineering firm?

      Reply
  25. SANDRA ESTRADA

    HELLO WE SUB GC IM JUST A LITTLE CONFUSE WHEN TO RECORD A MECHANIC’S LIEN IS IT WHEN THE SUBCONTRACTOR FINISH HIS TRADE WORK OR WHEN THE WHOLE PROJECT IS FINISH AND GC RECORDS A NOTICE OF COMPLETION.:)

    Reply
    • Garret Murai

      It depends on whether you are a general contractor or subcontractor. If you are direct contractor, you cannot record a mechanics lien until after you have completed your direct contract. If you are a subcontractor you cannot record a mechanics lien until after you have ceased providing work.

      Reply
  26. Laura Boyles

    First, your blog is a great resource. Thank you for doing it. I have a question about who to put in this blank…The name of the person or firm who contracted for the purchase of such
    labor, services, equipment or material is:
    I’m the subcontractor so that is my customer or in other words, the general contractor. Is that correct?

    Reply
      • Laura Boyles

        I saw the response you left for another person on who should fill out the prelim, an attorney or self. You said to that person could do it themselves but to make sure and have the right form and fill in the blanks properly. Is it possible for you to post a sample with the blanks filled in and layman’s terms for who goes in which blank. It’s mostly self explanatory. But if you could emphasize the importance of what goes in the blanks. I know that it has to be pretty much perfect of it can be considered invalid. For example, the address. In some rare cases, the address hasn’t been completely determined and all you have in the beginning of the job is 4 lots on Carroll Rd. Maybe later on down the road in project the job the address may be more well defined. What do you do in that case?

      • Garret Murai

        Hi Laura. If you look under the “Toolbox” tab there are preliminary notice forms for both public works and private works projects. Regarding property addresses, you’re right, sometimes can be difficult particularly if it’s a new housing development without addresses let alone street names. In those cases, and just to make sure you have the correct property owner and property address information in general, the best way to do it is to subscribe to a real property search service such as Docedge.com.

  27. Ed

    Garrett – I’m a property manager and one of the partner of the property I manage is asking how we can confirm whether or not a GC is paying his subcontractors. Assuming we receive a 20 day Preliminary Notice, he wants a lien release prior to paying the GC. However, if the GC is waiting for a progress payment from us to pay the subcontractor how can that occur? Is there another method we’re missing?

    Reply
    • Garret Murai

      Hi Ed. You would have the GC provide you with “unconditional” waivers and releases upon progress payment for those subcontractors who were paid through the GC’s previous pay application and “conditional” waivers and releases upon progress payment for those subcontractors who are to be paid though the GC’s current pay application. In short, unconditionals from subcontractors for the previous pay application and conditionals from subcontractors for the current pay application. So, have them send you a conditional waiver and release upon progress payment. You can find a copy of a conditional waiver and release under the “toolbox” menu.

      Reply
  28. Tim M

    Garrett – If I have two different contracts for the same job, do I need to get (2) unconditional final release forms for each contract or just one UF release?

    Reply
    • Garret Murai

      Hi Tim. I would get a release for each contract to preclude any potential claims that the release only applies to work performed under one of the contracts. Probably a good idea as well to include the contract numbers in each release as well so that it’s clear.

      Reply
  29. Rebecca

    Garret – Should we be paying attention to the Estimate amount of the prelim notice that comes from the Supplier of one of our Subcontractors? Specifically when the estimate amount is close to 80% of the contracted amount for that sub? Do we need to question/notify anyone?

    Reply
    • Garret Murai

      You may want to contact the supplier as it could mean one of two things: (1) the supplier inflated the amount of materials it is supplying or (2) the subcontractor underbid its work, which may be an indicator of problems in rhe future.

      Reply
  30. acnownzu02

    Hi Garrett,

    If a 20-day notice is mailed via certified mail on the 1st and delivered to the property owner on the 3rd, is the 20-days of proceeding work based on the 1st or the 3rd?

    Thanks!

    Reply
  31. Travis

    Garret- On a public works project, if a subcontractor has not been paid by the general contractor, are the unpaid sub’s only remedies to go after the payment bond or file and perfect a stop notice? Or can the sub simply sue the general contractor for breach of contract? It is unclear to me whether the 2 statutory remedies are the only ones available to the sub…if the project has been complete for many months, is the sub out of luck? Any guidance would be appreciated. Thanks.

    Reply
    • Garret Murai

      Hi Travis. You can do all three. You can make a claim against the payment bond, serve a stop payment notice as well as sue the general contractor for breach of contract. These remedies are cumulative, meaning that you can pursue each or all of them, at the same time.

      Reply
  32. stephanie

    on a private works Preliminary Notice that does not have a direct contractor. Would that mean my company is the direct contractor?

    Reply
    • Garret Murai

      Hi Stephanie. If you have a contract with the project owner then, yes, you would be a direct contractor. And, furthermore, if you are a direct contractor you do not need to serve a preliminary notice unless there it is a lender financed project.

      Reply
  33. Jose Hernandez

    Do you need to file a preliminary notice if you are doing work directly for a city? I called the city asking for prelim info and they seemed confused on my request.

    Reply
  34. Armanda Nunez

    Can a manager of the company serving the preliminary notice sign or does it have to be an owner of the company?

    Reply
  35. Sandy Rath

    Good Morning Garret! We always do electronic return receipt with the post office. I have recently had two notices come back saying “There is no delivery signature on file for this item”.

    Do I need to do anything? Resend?

    Thanks

    Reply
    • Garret Murai

      Hi Sandy. Proof that you sent a preliminary notice by certified mail should be sufficient to rebut an argument that a preliminary notice was not sent, but I would contact the post office because documents sent by certified mail should not be delivered without a signature, and it’s unclear from the notice you received whether the preliminary notices were returned undeliverable, were delivered but not signed for, or were delivered and signed for but the post office (for some reason) can’t get you an electronic copy of the signature.

      Reply
  36. Jose Hernandez

    Hi Garret. When we receive the preliminary information sheet from the contractor, sometimes it states a Bonding Company. Should we send a preliminary notice to them as well?

    Reply
    • Garret Murai

      Hi Jose. A preliminary notice only needs to be sent to the owner, direct contractor and construction lender, not the bonding company.

      Reply
  37. Tina

    I sent Preliminary Notice certified mail/return receipt and homeowner refused to sign/pick up from post office so it was returned undelivered. How does this effect my lien rights?

    Reply
    • Garret Murai

      Hello Tina. Civil Code section 8110 provides that “notice by mail under this part shall be given by registered or certified mail, express mail, or overnight delivery by an express service carrier,” it does not say that it has to be signed for. Just make sure you keep your certified mail receipt showing that it was sent by certified mail.

      Reply
  38. Alex Jordan

    Good Info! I work for a rental equipment company. Each piece of equipment rented for a job has a separate rental agreement. We prelim when we rent the first piece of equipment on a job location. If a customer (customer is a sub to a direct contractor) comes back and rents more equipment a month later for the same job location, we don’t send another notice. Should we sent a separate preliminary notice for each piece of equipment/rental agreement? There isn’t one overarching contract to rent multiple pieces of equipment.

    Reply
    • Garret Murai

      Hi Alex. Thanks for reading. I assume if a subcontractor comes back to rent additional equipment, even if it’s for the same project, that your company is entering into a new rental agreement for that additional equipment. If so, you should be serving a separate preliminary notice for each contract it enters.

      Reply
      • Alex Jordan

        Thanks for the prompt response. Would your opinion be the same if there were 3 different rental agreements, for 3 different pieces of equipment, all rented on the same day? We’d send an single invoice for all 3 pieces.

      • Garret Murai

        Hi Alex. Civil Code section 8206(b)provides that “[i]f a claimant provides work pursuant to contracts with more than one subcontractor, the claimant shall give a separate preliminary notice with respect to work provided pursuant to each contract.” Thus,if you rent equipment to a customer for a particular project, and the customer later comes back to rent additional equipment for the same project, you only need to serve a single preliminary notice under Section 8206. However, there’s a rub. Civil Code section 8202 states that a preliminary notice must include “[a]n estimate of the total price of the work provided and to be provided.” If the customer comes back and rents additional equipment, the risk to you is that the original preliminary notice no longer represents a reasonable “estimate of the total price of the work provided and to be provided.” To me, I would rather be safe than sorry, and would serve a new preliminary notice or an amended preliminary notice for each piece of equipment that is rented.

  39. Nat

    Easy to read article, thanks for the info. I work for an electrical contractor and one month ago sent a prelim to the owner, developer and contractor for one of our projects. Today I received revised prelim information showing a modified project address (they added a 2nd temporary location where we are also doing work and is in the contract) in addition to a new 2nd owner. Do I have to resend to all parties or can I just send to the new owner and leave the project address as is? I don’t want to appear to void the 1st prelim but I also want to make sure I’m covered all around as it’s a + million dollar project.

    Reply
    • Garret Murai

      Hi Nat. Thanks for reading. California’s Civil Code does not address what to do if you serve a preliminary notice and later find out that some of the information contained in the preliminary notice, through no fault of your own, is inaccurate. My suggestion is that you serve an “Amended” preliminary notice, with the word “Amended” clearly indicated on the preliminary notice, and re-serve the “Amended” preliminary notice on all parties. It probably wouldn’t hurt to also indicate in the preliminary notice that the “Amended” preliminary notice amends “that certain preliminary notice dated XXX.” By serving an “Amended” preliminary notice, rather than a completely new preliminary notice, you potentially stave off an argument that you served your new preliminary notice more than 20 days after you first performed work on the project.

      Reply
  40. Vanessa

    I have a supplier of a Subcontractor that filed a Preliminary Notice with the dollar amount specified “$10,00.00 MONTHLY”. I understand it that they are to give an estimate of the entire project as whole and if they exceed the amount originally specified they must re file the notice if they choose to do so?
    Thank you for any help!!

    Reply
    • Garret Murai

      Hi Vanessa. I would agree. Civil Code section 8202 requires that a preliminary notice include “[a]n estimate of the total price of the work provided and to be provided.”

      Reply
      • Alex Jordan

        Could you clarify the 2nd part of Vanessa’s comment? Is there ever a time to “refile” or send an “amended” notice in California, based solely on a change in the estimated balance?

      • Garret Murai

        Hi Alex. Vanessa’s question was if a material supplier serves a preliminary notice with a dollar amount stating “$10,00[0].00 monthly” is that a proper preliminary notice? My response was that I didn’t think so because Civil Code section 8202 requires that a preliminary notice include “[a]n estimate of the total price of the work provided and to be provided,” and “$10,000.00 monthly” provides no indication of the “total price” of the work provided or to be provided. Thus, I think the material supplier would need to re-serve a preliminary notice or risk going forward and having its original preliminary notice found to be invalid. Of course, re-serving a preliminary notice presents its own risks since a preliminary notice should be served within 20 days of furnishing labor, materials or equipment. This then brings up the question of whether to serve an “amended” preliminary notice in an effort to keep the service date of the original preliminary notice. Unfortunately, I don’t have a straight answer for you. The Civil Code does not address whether an “amended” preliminary notice can be served. Arguably, if an amended preliminary notice is served soon after service of the original preliminary notice one can argue no harm, no foul since the purpose of a preliminary notice is to give notice that you’re on the job, the work you’re performing, and the estimated value of that work. If an amended preliminary notice is served some appreciable time after the original preliminary notice was served, however, I can see a party arguing that they relied on the content of the original preliminary notice to their detriment and that you can’t now amend or change the preliminary notice at such a late date, in addition, of course, to the argument that the Civil Code doesn’t allow for “amended” preliminary notices.

  41. Lisa

    Hi Garret. We are suppliers of matteirals and due to a typographical error, the Preliminary Notice was sent to the owner to an incorrect address. The owners are now disputing our Notice of Intent to Lien, claiming that they did not receive a Preliminary Notice. Can I do an Amended Preliminary Notice since it has been more than 20 days since our last deliver of materials for the project?

    Reply
    • Garret Murai

      Hi Lisa. This is a mistake that, unfortunately, is not uncommon, but which leads to all sort of thorny legal issues to which there is no “right” answer. The purpose of a preliminary notice is to give notice to an owner that you are furnishing labor, materials, or equipment on a project, and if an owner didn’t receive notice when it was supposed to, then the argument goes that you shouldn’t be able to record or enforce a mechanics lien against the owner. On the other hand, if you can show that despite the wrong address, the owner knew you were on the project then you might be able to argue that you should be allowed to record and enforce a mechanics lien since the whole purpose of a preliminary notice is to put the owner on notice. The difficulty as I see it though is that the error was on your part not the owner, and while the result may be harsh, the party who made the error should bear the consequences. Then again, a court or jury might see it differently. I don’t think though that an amended preliminary notice is helpful since the whole point of a preliminary notice is to give notice to the owner, and the owner clearly knows who you are, now.

      Reply
  42. Cindy

    Hi Garret, We are a 1st tier subcontractor, our material suppliers have all filed preliminary notices for a public works project located in CA. Our GC issues joint checks to each supplier based on their submitted Conditional Progress Releases. If the owner and in then turn the GC are ‘late’ in paying the material supplier within their terms are the material suppliers entitled to charge interest or late fees? If so, who would ultimately be responsible for paying those fees?

    Reply
    • Garret Murai

      Hi Cindy. Good question. It would depend on what was agreed to by the parties, and it’s likely to fall into one of three scenarios: (1) If you issued a purchase order and it has a provision which provides that you will pay the material supplier within “x” number of days or “after” receiving payment by the general contractor you have a strong argument that you are not subject to any interest or late fees; (2) If you do not have such a provision in your purchase order, or you didn’t issue a purchase order, and the material supplier has an interest or late fee provision in an invoice to you, then you are likely on the hook. Of course, I would try to negotiate out of any interest or late fees. The material supplier ostensibly has an interest in securing your future business; or (3) You issued a purchase order and it includes such language, but the material supplier also sent you an invoice which includes an interest or late fee provision. Here, you have what is called a “battle of forms,” two documents that say contradictory things. There is some legal analysis that would need to go into such a situation, and it is very fact specific, but, in short, it’s what you would call a mess, and hopefully you and the material supplier would be able to negotiate a reasonable settlement. The bottom line though is that “you” have the contract with the material supplier, and the material supplier will be looking to you, not the general contractor or owner, for payment of interest or late fees.

      Reply
  43. Hyun

    Hi, We’re GC and have question about preliminary notice.
    As far as I know material suppliers can come after GC without filing 20day preliminary notice. Please clarify if this is correct.

    Reply
    • Garret Murai

      Hi Hyun. A material supplier is required to serve a preliminary notice to record a mechanics lien, file a stop notice or (generally) to bring a payment bond claim. However, a material supplier does not have to serve a preliminary notice to bring a breach of contract claim against you if their contract was with you.

      Reply
  44. Hyun

    Hi Garret,
    Maybe I wasn’t straight to the point.
    Does general contractor liable to the material suppliers when they claim for the payment without filing preliminary notice when the material supplier had contract with subcontractor not with us(GC)

    Reply
    • Garret Murai

      Hyun, there are variety of different types of claims. So, when you say “claim” I’m not sure what kind of claim you are referring to. If you are referring to a breach of contract claim, then no, generally, a material supplier to a subcontractor cannot pursue a breach of contract claim against a general contractor. If, however, you are referring to a mechanics lien claim, stop payment notice claim, or payment bond claim, then yes, generally, a material supplier would need to have first served a preliminary notice in order to pursue those types of claims.

      Reply
  45. Maisoon

    Hello Garret,
    We are a sub-contractor and prelim all projects. What should I do when I have the property owner different from the project owner? There is only one space available for one “owner” on the form.

    Thank you,

    Reply
    • Garret Murai

      Hi Maisoon. You’ve hit on one of the most frustrating ambiguities under the law, and that is, there is no definition of “owner” and whether the term “owner” means the project owner, real property owner, or both. I would err on the side of caution and include both the project owner and real property owner when serving preliminary notices. It doesn’t take a lot of extra work and, as they say, it’s better to be safe than sorry.

      Reply
  46. Chelsea

    Hello Garret,

    Thank you for providing this information. I do have a question: when the direct contractor is filing the CA Preliminary Notice, do we need to certify and send the lien information to ourselves?

    I took over office management position and during training the previous manager said she would certify the letter to the job site, owner, and either ourselves if we were the direct contractor or to the general. I just want to make sure we are sending them properly and if sending it to ourselves is a waste of time and money.

    Reply
    • Garret Murai

      Hi Chelsea. I am assuming that your company is the direct contractor. If so, you should of course identify your company as the direct contractor in the preliminary notice, and while Civil Code does not specify address your question, I have a hard time believing a court would require you to mail a copy of the preliminary notice to yourself for the preliminary notice to be valid.

      Reply
      • Chelsea

        Hi Garret, I have a follow up question. We have an odd contract going on. It is a ‘Time & Materials’ based contract, we offered to perform repairs and only charging our cost +15%, payment is due weekly. The tenants are now refusing to pay (the payment itself is going on 15 days overdue and there is a 2 week balance owed on the account), would I be able to file a mechanics lien on this job if a preliminary lien was already supplied within the last 30 days? Or do we have to complete all known repairs needed prior to serving the mechanics lien?

      • Garret Murai

        Hi Chelsea. For mechanics liens you need to complete your work before recording a mechanics lien.

  47. Susan Thomas

    Hey Garrett, if materials are supplied for a project, do they need to be delivered directly to the job site in order for a pre-lien to be filed, or can you pre-lien if they are delivered to the contractor’s place of business first?

    Reply
    • Garret Murai

      Hi Susan. There is no “delivery to the job site” requirement. In general, so long as work performed or materials provided are used to improve the project then you can serve a preliminary notice. And, for materials, it doesn’t matter how it got there.

      Reply
  48. ken

    HI Garret. Which laborers have lien rights without filing Preliminary Notices? Direct labor to the Owner only? Or even laborers on subcontractor’s payroll which would mean all labor?

    Reply
  49. Jess Phillips

    Hi Garret, I’m a general contractor doing small jobs. I recently (May 20) completed a residential job through my lic’d electrician, he was the direct contractor and I had no contact with homeowners. It was a handshake arrangement, probably my mistake. My question is, do I send prelim to homeowner on this?
    Thanks, Jess

    Reply
  50. Sandy Rath

    Garret –

    Some owners are now requiring us to pay all subcontractor retention and provide unconditional final waivers prior to paying us our retention.

    This seem wrong to me and leaves us holding the ball all alone if we do not get paid our retention.

    Any thoughts?

    Reply
    • Garret Murai

      Hi Sandy. I would not recommend submitting an unconditional waiver and release on final payment until you have received final payment. In fact, Civil Code section 8122 states that “[a]n owner, direct contractor, or subcontractor may not, by contract or otherwise, waive, affect or impair any other claimant’s rights under this part, whether with or without notice, and any terms of a contract that purports to do so is void and unenforceable unless and until the claimant executes and delivers a waiver and release under this article.”

      Reply
      • Sandy Rath

        I’m sorry I mispoke. They are asking for unconditional finals from our subcontractors and suppliers prior to paying us the retention. On this current job supplier retentions are about $90,000.00!

      • Garret Murai

        Sandy, I can’t give you legal advice, but I don’t think they can do that. The owner can’t contractually require your subcontractors/material suppliers to provide unconditional finals since they don’t have a contract with them, and under Section 8122 they can’t contractually make you require that your subcontractors/material suppliers provide unconditional finals as a condition of your being paid your retention.

  51. Paul Bell

    Hello
    Asked to step in on a remodel job by a GC I have done a lot of work with. Provided quote to GC but was paid deposit by owner. Did not file prelim. Did the work, owner not satisfied but will not allow me to rework/replace/repair whatever it is she doesn’t like. During all the talk back in forth more than 20 days and she hasn’t paid balance of contract. Am I completely out of luck on this or do I have some other recourse?

    Reply
    • Garret Murai

      Hi Paul. Sorry for the delay responding. It’s unclear to me who you have a contract with, the GC or the project owner, and depending on which your remedies would be different. If your contact is with the GC you would need to serve a preliminary notice in order to assert a mechanics lien against the project owner, and it’s unclear whether you would still have the ability to do so, but it sounds like you might not. Nevertheless, you would still have the ability to bring a breach of contract claim against the GC. If, on the other hand, your contract is with the project owner, you would not need to serve a preliminary notice in order to asset a mechanics lien against the project owner. In addition, you would have the ability to bring a breach of contract claim against the project owner.

      Reply
  52. freddy

    Hello Garrett,
    Thank you in advance for the advice.
    I am an owner builder on a residential construction project. I recently hired a paving contractor to do a small asphalt patch in the street in front of my house. I was out of town at the time, but he called and said he had some free time. This was on June 30. I told him to go ahead and get it done. Around July 10 I got a call from the contractor and he asked to come over to give me a bill. When he gave me the bill I was surprised to see that he had charged me more than the original bid. This was a very basic patch and I was with him when he measured and actually held the tape measure for him. He said fine pay the original amount but find someone else to do the driveway, another project I was going to hire him for. Very rude and unprofessional. I basically told him to go away. I received several threatening calls and text messages shortly thereafter. On July 20th he texted me and said tomorrow they were going to lien the property. I told him that I never said I wasn’t going to pay. I expected to hear more from them, but didn’t Then July 27th I texted him back and asked him if he wanted a check, he responded by saying that would be great and when the check clears he will release the lien on my property. So my question is, did he follow the correct procedures to lien my house? Can he actually lien the property since the work was done in the public right of way? What do I have to do to get the lien released? Also there was no written contract, just a written bid for work.
    Thank You,
    Freddy

    Reply
    • Garret Murai

      Hi Freddy. Sorry for the delayed response. When you say that the work was done on a “public right of way,” was the work done on your property, or on a street owned by the municipality? If the the former, it appears that the contractor can record a lien on your property. If the latter, I don’t believe he would be able to, although I would question your potential liability for making repairs to a public street.

      Reply
  53. Sally

    I just found this blog which is really great!
    Here is the scenario: I hired a management manager to help taking care my rental house. When tenants moved out by the end of the tenancy, we found damages in the house. The manager said he would let handyman to repair and all the cost would be deducted from tenant’s security deposit. So he never gave me estimate. While one week later, he told me I should pay half since there were too much burden to the tenant. After 2 days he emailed me to be responsible for all cost since he finally noticed that the some damages had been there before the tenant moved in according to MIMO. Regarding our property management agreement the manager is supposed to get pre-approval for any expenses over $400 exluding emergency. I refused to pay the bill and yesterday I got a preliminary notice in my mailbox (not certified) from the handyman. The repair finished more than 2 months. I just wonder if the preliminary notice is valid and what should I do under my circumstances?

    Reply
    • Garret Murai

      Hi Sally. Sorry for the delay responding. Your situation reminds me of a law school examination with a number of legal issues. First, I don’t think the handyman needed to serve a preliminary notice because he contracted with your property manager who was arguably acting as your agent. Thus, it was as if he had a contract directly with you. Second, I assume that what the handyman is saying he is owed is in excess of $400, and if so, I think you have a legitimate argument with the property management company that they didn’t get pre-approval from you and should pay any amount owed to the handyman (although, to be fair, you may want to ask that they just pay any amount in excess of $400). And, third, while the handyman could, in theory, record a mechanics lien on your property (since work was completed within the last sixty days), I think the handyman would have difficulty doing so on a residential project such as yours unless he had entered into a statutory home improvement contract with you or your property management company.

      Reply
  54. Sean Kenny

    Does the 20 day rule for preliens apply to materials? What if no-one signed for the material? If there is no SOV can the entireunpaid balance be applied to the last task?

    Reply
    • Garret Murai

      Hi Sean. Thanks for reading. Yes, the 20-day rule applies to materials as well labor, and pursuant to Civil Code section 8204 should be served “not later than 20 days after the claimant had first furnished work on the work of improvement.” Section 8204, however, is not very helpful where the “work” being furnished is materials. Is it 20 days from the date materials are ordered, from the date materials are delivered, or from the date the materials are incorporated into a work of improvement? Section 8204 provides no guidance. To me, the most reasonable application, is when the materials are delivered to the project site, since materials can be ordered weeks if not months in advance of delivery, and a material supplier will likely not know when its materials are incorporated into a work of improvement. Thus, whether or not someone signed for the materials seems irrelevant to me. Likewise, I think you are taking a risk if you wait to serve a preliminary notice – in situations where multiple material orders are placed – until the last of materials are ordered (or delivered) – since it’s likely that you will never know “if” or when that “last” order will be placed.

      Reply
  55. Kim Kempf

    Hi, We are a supplier and our customer has 2 projects at the same location, with 2 different GC’s. Should we issue 2 separate prelims? Or are we covered with one? The problem that we have right now, is that one of the projects is finished and that GC is requesting a UF, but the other is still on-going. Have we erred by issuing only one prelim.?

    Reply
    • Garret Murai

      Hi Kim. Civil Code section 8206(b) provides that “[I]f a claimant provides work pursuant to contracts with more than one subcontractor, the claimant shall give a separate preliminary notice with respect to work provided pursuant to each contract.” Since you supplied material to one customer – although that material was incorporated into two different projects for two different general contractors at the same location – you would only need to serve one preliminary notice. Moreover, the unconditional waiver and release upon final payment requested by one of the general contractors should not affect your ability to pursue any statutory remedies for materials incorporated into the other project for the other general contractor.

      Reply
  56. Carol

    Hello!
    We are a GC based in Virginia. I received a CA Preliminary Notice from a vendor in CA. The project is in Virginia, as well. Are we subject to this since we are out of state? I had never seen one before. We do have lien releases, of course, but the Preliminary Notice is not a common practice in VA.

    Thanks!

    Reply
  57. Kory

    What incorrect information provided on a prelim notice would be considered unacceptable? Should you notify the claimant of any errors? You also mentioned above an argument can be made that the Civil Code does not acknowledge amended prelim notices. If I read that correctly, which code is it?

    Reply
    • Garret Murai

      Hi Kory. This is going to be an extremely unhelpful response: I don’t know. And I don’t know because it would depend on the judge or jury deciding the case. One guiding principal though is that a preliminary notice is intended to provide notice to those who may hold a legal interest in property that work is being performed on the property and that, as result, a mechanic’s lien affecting their interest can be recorded against the property. Thus, if notice is provided, arguably, the preliminary notice is good. And, finally, I don’t have a code section for you regarding the Civil Code not acknowledging amended preliminary notices because the Civil Code doesn’t address amended preliminary notice (which is why I mentioned that the Civil Code doesn’t acknowledge preliminary notices). Depending on whether it is a private or public works project, you can find the Civil Code sections addressing preliminary notices beginning at Civil Code section 8200 and 9300, respectively.

      Reply
  58. Vicki

    Hello Garrett – I have found your site to be very informative. Thank you. My name is Vicki – We have project owners that do not notify us upon completion of project. Is there anything I can do to acquire the information? We have worked as Contractor and Sub-Contractor. Also, I have read if we record our preliminary notice at the county recorder’s office in the county were the project is located, the recorder is supposed to send us a notice if the project owner records a notice of completion or notice of cessation. I am attempting to receive notice of completion within the time boundaries allowed us.

    Reply
    • Garret Murai

      Hi Vicki. They are supposed to. Civil Code section 8190 provides that “[a]n owner that records a notice fo completion or cessation shall, within 10 days of the date the notice of completion or cessation is filed for record give a copy of the notice to all of the following persons: . . . . a claimant that has given the owner preliminary notice.” And, yes, you are correct, the recorder’s office is “supposed” to send notice to claimants who have recorded a preliminary notice, but there’s no penalty if they don’t.

      Reply
  59. Trish

    Hi Garrett- I have a customer who kept promising to pay week after week. Now we’re on day 28 since the work was completed. I never sent a preliminary lien notice. Do I have any legal recourse ? They owe $10,500. Please help.

    Thank you,
    Trish

    Reply
    • Garret Murai

      Hi Trish. You are likely too late to serve a preliminary notice but you could still file a lawsuit against your client for breach of contract.

      Reply
  60. Shannon

    Hi Garett,
    My husband and I own a swimming pool construction company and about 11 months ago signed a very big contract. We are not contracted with the owner directly but with another contracting company the owner hired. While on this job we encountered problem after problem. We made a mistake on this job by not sending a preliminary notice right when this job started. Because of this we have been taken advantage of. We are still owed a bunch of money and the contractor uses this to his advantage to get us to come back and fix things in return for payment. After many days spent going back and still no payment there was a period (over 20 days) we stopped showing up. Finally after some emails expressing our frustrations and concerns we came to another agreement. My husband went back to the job site about a week ago and we are trying to be very cautious and protect ourselves from any further problems. He wants to file a preliminary now that we are back working on the job. Are we still allowed to file a preliminary even though we are at the tail end of the job? If so, on the preliminary where it says “in the amount of,” do we put the original amount of the contract or what’s owed to us? If you could respond it would be a big help. Thanks.

    Reply
    • Garret Murai

      Hi Shannon. If you are still doing work you can serve a preliminary notice but it will only allow you to record a mechanics lien for the value of work performed within the last 20 days of the date in which the preliminary notice was served which, from what you have described, would not include the entire value of the work your company has performed. To recover for that additional work you would be limited to filing a breach of contract claim against the general contractor. On the preliminary notice in the “in the amount of section” you would include the entire value of the work your company has and reasonably anticipates to be done.

      Reply
      • Shannon

        Thanks for the quick response. This really helps.

  61. Chris G

    Hi Garett, I had question. We are a subcontractor and worked on a project (a preliminary notice was filed) and once our work was complete we were told they were waiting for payment from the owner. But have recently been told the project has a 2nd phase (not being worked on by our company) and payment would not be issued until that work is complete, mind you, the executed contract states “final payment will be issued x amount of days following work completion” which now is not the case.
    Work was completed late November 2015 and by the time we found this out we were past 90 days completion. Have we surpassed our lien rights on this project?

    Reply
    • Garret Murai

      Hi Chris. Thanks for reading. I assume this is a private worlds project. If so, the deadline to record a mechanics lien is 90 days from completion of the project, not your portion of the project, so it does not appear that you are time barred.

      Reply
  62. Carrie

    Question: We are subcontractors in California and we issued a prelim on a job. It is a very large development project with several contracts. We are owed $92,+++ on one of the contracts which includes retention and March invoices. This contract has been going on since Oct. 2015. I have been submitting Conditional Releases each month using the form the Owner/Direct Contractor requires us to use. I submitted my signed February releases for myself and my suppliers on the original forms I have been using since October. This morning I was asked to get new releases using a new Conditional Release form. The email said they hope our original releases will be accepted; however, they want the releases on the new forms just in case. The issue is the new forms do not match what we have on the prelim we issued. The Direct Contractor and the Owner have changed.
    Can you advise on:
    1. It looks like I need to issue a new prelim and send my suppliers new prelim information.
    2. How do I issue a new prelim and not loose my rights under the original prelim? Or, If I issue a prelim with the new information does my original prelim stay in force?
    Just a note: There are several contract to this project. It seems they are all family members/related somehow. One contract will show a name as the owner while another contract will show the same name as the direct contractor etc.

    I have asked our customer to let me know what was going on. I just heard this morning that they think this section of the contract was bought out. What does that mean and shouldn’t we have been given notice of any major change like this?
    Thank you,

    Reply
    • Garret Murai

      Hi Carrie. Thanks for reading. I don’t know what the “old” and “new” forms you were signing (and have now been asked to sign) look like. However, Civil Code sections 8120 through 8138 – California’s statutory waiver and release forms – state that they must be in “substantially” the same form as provided under statute – and, in terms of identifying entities, only require that you identify the name of your “customer” (i.e., the party you are in contract with).

      Assuming the project you are working on is a private works project, Civil Code section 8208 further provides that “[a] direct contractor shall make available to any person seeking to give preliminary notice the following information: (a) the name and address of the owner; and (b) the name and address of the construction lender, if any. I would request updated information pursuant to this section.

      If it turns out that there has been a change in the owner (perhaps the project was sold) or the direct contractor (maybe the original direct contractor was replaced), I would suggest that you send an “amended” preliminary notice. The Code does not address an “amended” preliminary notice – either that you can or can’t serve one – but I would include the word “amended” so that it is at least clear that you had already served an earlier preliminary notice in case someone tries to argue that you are time barred from making a claim.

      Best of luck to you.

      Reply
  63. SJP

    What is the requirement for serving a 20 day notice? Does it need to be personally served, mail via certified mail, etc. or can it be mailed first class postage?
    We paid our contractor, they apparently didn’t pay the materials supplier and though the supplier states they sent us a 20 day notice within the given time frame, we never received a 20 day notice. They now have a lien on our property and no copy of the lien was ever sent to us either. The supplier said that the 20 day notice is really just a courtesy and proof they sent it isn’t required.

    Does the supplier have a right to the lien? Can we ask them to remove it?

    Reply
    • Garret Murai

      Hi. Thanks for reading. According to Civil Code section 8106 a preliminary notice must be served in one of the following ways: (1) personal delivery; (2) registered mail; (3) certified mail; (4) express mail; (5) overnight mail; or (6) substitute service identical to serving a summons. Simply putting a preliminary notice in the mail is not sufficient. I would ask the material supplier for proof of service of the preliminary notice such as certified mail receipt, overnight mail receipt, or proof of service by a process server. If they material supplier can’t provide adequate proof of proper service I would ask that they release the mechanics lien.

      Reply
  64. Julie

    Hi Garret,
    I was wondering how detailed the “has furnished or will furnish the following labor, service, equipment or material” needs to be. We are a metal fabrication subcontractor who does decorative metalwork for residential & commercial properties. We are doing several pieces in this contract. Our last client gave us some trouble so we are sending our first preliminary notice to a new client and I just want to make sure I complete it correctly.
    Thank you~
    Julie

    Reply
    • Garret Murai

      Hi Julie. Neither the Civil Code where the preliminary notice statute is located, nor, am I aware, have any cases, defined the degree of detail needed in a preliminary notice when identifying the labor, service, equipment and/or material being furnished. A guiding principal though is that a preliminary notice is intended to put an owner (and lender, if any) on notice of who is furnishing work on a project and what work they are performing. In my experience descriptions tend to be short and to the point (e.g., scaffolding and drywall). Hope that helps. Thanks for reading.

      Reply
  65. Shanon Johnson

    Hi Garret,
    We, a GC, issued a subcontractor a “Master Contract” that states the same amount awarded for “EACH SITE”. From there, we issue a PO/WO for the individual project they are to work, with that same dollar amount. The subcontractor sent in a California Preliminary Notice-Private Works form that has the first project name & address listed on the form along with the project’s general name and “VARIOUS LOCATIONS”, then a list of all the 32 projects attached. The amount they have on the form is an all-inclusive total + more, which I would assume is to cover change orders. My question is, is it a valid notice with it saying various locations and a list attached or would they have to file a notice for each project? Also, the “Date Claimant first provided said labor, services, equipment or materials” is listed as 2/23/16 and the date signed is 4/28/16. Is this acceptable notice?
    Thank you in advance for your reply.

    ~Shanon

    Reply
    • Garret Murai

      Hi Shannon. Civil Code section 8202 provides that a preliminary notice is to include “[a]n estimate of the total price of the work provided and to be provided.” If the subcontractor is including an estimate which is, as you say, an “all inclusive total” for 32 projects under a master subcontract, the subcontractor should revise the preliminary notice to only include an estimate for the specific project, since the project owner will have no idea of the estimated value of work the subcontractor is performing on the project owner’s project. As to the date of furnishing work of “2/23/16” and preliminary notice execution date of 4/28/16, the subcontractor is running the risk that he/she/it may only be entitled to pursue statutory remedies for work performed 20 days before the preliminary notice was served. On a side note, while master subcontracts are becoming increasingly common, I would give second thought to including a specific dollar amount in the master subcontract and issuing a purchase order or work order in the same dollar amount, unless the work to be performed by the subcontractor is in fact that specified dollar amount.

      Reply
  66. Frank Cheung

    Hi Garret,
    Thanks so much for all the great info from you.
    1. How soon can I file the mechanic’s lien after sending out the 20 day preliminary notice as a sub-contractor or project manager.
    2. Does the mechanic’s lien need to be recorded. If so, when.
    3. What are the next steps and time lines.
    Thank you,
    Frank C.

    Reply
  67. Tim Markel

    Garrett – for a public works project, could you tell me why having Bond Information (bond number, surety co name and address) on a preliminary notice would be important? We are representing a owner that will be building an improvement (street) and then be reimbursed via public funds once the improvement is complete and accepted. I have a preliminary sheet that has a “bond information” section to be filled out with the information noted above. Only thing I can think of is if a claim is made on the payment bond (failure to pay), notice is given to the surety company. Is the prelim notice (with the Surety companies info and bond no.) given to the Surety that contains all of the info of the project? Just trying to rationale the importance (if any) of any bond / surety co info on a prelim notice. Thanks

    Reply
    • Garret Murai

      Hi Tim. Thanks for reading. It doesn’t sound like the document you are completing is a preliminary notice – since the statutes governing preliminary notices don’t require you to include surety bond information – but that it may be a document you are completing to provide surety bond information to lower tiered contractors so that they know who to make a payment bond claim to.

      Reply
  68. Alex

    What steps, if any, need to be taken after the notice is given?
    How can you follow up to make sure to collect the fees for material and work provided?

    Reply
    • Garret Murai

      Hi Alex. It would depend on what statutory remedies you would like to pursue (e.g., mechanics lien, stop payment notice, claim on a payment bond). You can get further information on each of these remedies under the “Blueprints” menu on our blog.

      Reply
  69. Sheryll Van Gelder

    Hi Garret,
    I stumbled upon your very information blog. We are a subcontractor. When we first got the project we asked the GC for the preliminary info for about a month. We were missing the owner name and address. I should let you this is a tenant improvement job. Our material suppliers were hounding us so we contacted the Tax Accessors office and they provided us with the name of the owner and address. So we sent off our notice. About a week later we got a call from our GC that we had the wrong owner info listed and that the people we sent it to were upset. So we revised the prelimnary notice and resent it. Now the “owners” we originally sent it to want some kind of proof that we removed them as the owners. So we e-mailed them our notice along with our material supplier notices reflecting the corrected ownership. Now they are saying that isn’t enough and they want to file a claim at the CLSB against us. The GC is asking us to send them an unconditional upon final with the wrong owners name. I am hesitant to do that. What can we do to help satisfy that the wrong owners are no longer on the notices?

    Reply
    • Garret Murai

      Hi Sheryll. As you know, a preliminary notice is not a lien. As such, there is nothing the apparently “wrong” owner needs to be concerned about and nothing further you are required to do. You simply sent out a preliminary notice with apparently incorrect information.

      Reply
  70. TF

    We are a material supplier to a sub contractor for a public works job (Govt to General to Sub (our Customer) to us). The general has paid the sub for materials on hand and we haven’t been paid yet, and it has been beyond a reasonable time period. The job is about 75% done, do we file a stop notice and to whom?

    Reply
  71. kari

    hi there,- i filed a preliminary notice on a job for flooring and they finally paid after 4 months. Do I send a release? and which one if I do??

    Reply
    • Garret Murai

      Hi Kari. I’m not sure what kind of “release” you are referring to. Presumably, you are referring to statutory waivers and releases. If you have been paid in full, you can send a unconditional waiver and release in exchange for final payment. You can find the form at Civil Code section 8138.

      Reply
  72. MK

    Hi, Garrett. Thanks for the great blog. I have a question about preliminary notices for a tenant improvement project where the underlying property owner has changed. We are a GC working on a tenant improvement project for a “project owner” who is not the owner of the underlying property. The project also has a lender. At the outset of the project, we and our subcontractors sent preliminary notices to the property owner of record, to our client the “project owner”, and to the construction lender. We have just learned from our client that at some point since the work began the underlying property was transferred from the original property owner to a new property owner, although the Tenant’s lease has not been affected. Should we and our subs file new preliminary notices on the new property owner? And what if that new owner acquired the property more than 20 days ago? If the original preliminary notices were not recorded with the county clerk, can the new owner claim that he/she had no notice and therefore we cannot lien the property for any amounts incurred before the past 20 days? Thank you.

    Reply
    • Garret Murai

      Thanks MK. The Civil Code doesn’t address your situation and only states that “a claimant need give only one preliminary notice to each person to which notice must be given under this chapter . . .” Having said that, I suggest serving an “amended” preliminary notice to the new owner, project owner, and construction lender avoid potential notice defenses being raised later, and that you include the word “amended” so that it is clear that you served an earlier preliminary notice.

      Reply
  73. Moses

    Hello I have a question on what I can do. I have supplied an electrical contractor with lighting supplies for a job. This invoice is now 77 days past due. I had been told that the check was in the mail 3 weeks ago. I gave it time and it never showed they said they would issue a new one immediately. Now there are no responses to my calls and or emails. And not out of the blue this company did an installation for me in October 2016 and are now stating there were additional cost incurred on that job of $1,350. Unfortunately the owner stating he was waiving the fees was over the phone just two weeks ago along with apologies over past due payment for my materials. What can I do to get payment?

    Reply
    • Garret Murai

      Hi Moses. You kind of lost me after “[a]nd not out of the blue …” if this is a private works job and you served a timely and proper preliminary notice you can record a mechanics lien. But if you didn’t, you would be left with a breach of contract claim against your customer which you would need to bring in court by filing a lawsuit.

      Reply
  74. Harmony King

    Hi Garret,
    Does filing a preliminary notice affect Net 30 Terms? I have had a couple of our GC’s state that since we filed a notice, payment is conditioned to Owner payment. Please help 🙂 Thank you in advance!

    Reply
    • Garret Murai

      Hi Harmony. There’s no correlation between a preliminary notice and payment terms, other than of course, the ability to record a mechanics lien, serve a stop payment notice, or make a bond claim, all of which of course, can help to ensure that those payment terms are met. ; ) Whether your customer can withhold payment until your customer is paid by a higher-tiered party who it is in contract with depends on the terms of your subcontract. Some contracts have provisions which state that payment is not due until a certain number of days after a GC is paid by the owner. Others do not.

      Reply

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