California Preliminary Notice Requirements

In most states, to secure the right to file a lien on constructions projects, contractors, suppliers, and subcontractors must send a preliminary notice. A preliminary notice is a legal document that provides information to whomever is responsible for paying for the job. It’s sometimes called a “20-day notice.”

California preliminary notices have specific requirements that depend on multiple factors such as:

• Whether the sender of the preliminary notice is a general contractor (prime contractor) or a subcontractor or materials supplier
• Whether the job is a private project or a public project
• Whether the job involves a lender

Here we discuss one California construction professional’s specific question about preliminary notices after a change of ownership. After that, we’ll go over some general facts about California preliminary notice requirements.

 

Question About California Preliminary Notices After Change in Property Ownership

Question:

We are working on a project and received a change order notifying us that the owner has changed. Should we send a revised preliminary notice? We are in California and already passed the 20 day deadline. Does the change in owner impact the validity of the notice? Could we still file a lien against the original owner if there are payment issues? Or do we need to actually revise the notice to include the new owner in order to maintain our rights?

Answer:

We’d need more specific information to answer these questions about California preliminary notice requirements after a change in property ownership.  At a consultation with one of our construction litigation attorneys, you’d be asked for more details.

Our first inquiry would be whether you were required to send a preliminary notice under California rules. Typically, parties contracting directly with the property owner (such as the prime or general contractor) do not have to send a preliminary notice. By your question, it appears that you are a subcontractor or material supplier. Perhaps you are a general contractor, but there is a lender involved. We’d need to know more details about your situation to advise you.

If you are a subcontractor or material supplier or if you did not contract directly with the property owner, you were probably required to send one. You indicated that you sent a preliminary notice to the former owner. So, if you were required to send a preliminary notice under California law in the first place, you should send a revised preliminary notice right away. Send one to both the prior and current owners to be safe.

A notice can be filed at any time during the project. The catch, though, is that it only protects work performed up to 20 days before it is served. If the project is long finished, it probably will not protect you.

Our next inquiry would be to ask if the project is ongoing? If the project is ongoing, it’s always a good idea to get the preliminary notice served. If it’s recently completed, you should also serve the preliminary notice as soon as possible. The new owner may have an argument that the prior owner should pay for the lien. Keep in mind though, a mechanic’s lien is a lien on the title and will attach to the property itself. So, you may proceed with your mechanic’s lien if required. The safest approach would be to name both prior and current owners, as you will not know what (if any) arrangement was made between the two related to assignment of any project debt.

Keep in mind, even if you missed your notice window and cannot file a mechanic’s lien to protect the debt owed to you, you can always consider a standard breach of contract claim against any party that owes you money. A skilled contract litigation attorney may be able to help you if you are not paid for your work or materials.

 

General Facts About California Preliminary Notice Requirements

As noted above, California treats preliminary notices differently depending on many factors. To secure lien rights, California law features the following requirements:

California Preliminary Notice Rules for a Prime Contractor of a Private Project

Prime contractors must send preliminary notices within 20 days from the start of the job if a lender is involved. Prime contractors also must send the notice to the lender.

California Preliminary Notice Rules for a Prime Contractor of a Public Project

Prime contractors don’t have to send preliminary notices at all for public projects.

California Preliminary Notice Rules for a Subcontractor of a Private Project

Subcontractors must send a preliminary notice within 20 days of first providing the work. They must send the preliminary notice to the owner and the prime contractor. If a lender is involved, they must also send a preliminary notice to the lender.

California Preliminary Notice Rules for a Subcontractor of a Public Project

Subcontractors must send a preliminary notice within 20 days of first providing the work. They must send the preliminary notice to the prime contractor and the public entity. If a surety is involved, they must also send a preliminary notice to the surety.

California Preliminary Notice Rules for a Material Supplier of a Private Project

Material suppliers must send a preliminary notice within 20 days of first providing the work. They must send the preliminary notice to the owner and the prime contractor. If a lender is involved, they must also send a preliminary notice to the lender.

California Preliminary Notice Rules for a Material Supplier of a Public Project

Material suppliers must send a preliminary notice within 20 days of first providing the work. They must send the preliminary notice to the prime contractor and the public entity. If a surety is involved, they must also send a preliminary notice to the surety.

 

Breach of Contract Litigation as a Back Up

If a construction professional fails to send a timely preliminary notice or if an unusual situation arises like the scenario above, all hope isn’t lost if payment isn’t made. Contracts are taken seriously in California. Often, even verbal contracts are considered legally binding if you can demonstrate evidence. An experienced contract litigation attorney may be able to sue the party that fails to pay for labor and materials for breach of contract. This type of lawsuit may result in recovering the payment even if the project was not secured by a lien.

If you need help with breach of contract litigation, please note that LloydWinter, P.C. features construction litigation lawyers who are not afraid to stand up for you in the courtroom. LloydWinter attorneys will not ask you to settle out of court when you could maximize your return through litigation.