Utah Owners Cannot Simply Rely on Construction Lien Registry Search Results to Find Valid Preliminary Notices

Mark Morris and Tyson Prisbrey | Snell & Wilmer

In December 2020, the Utah Court of Appeals found that, because a contractor’s preliminary notice contained the statutorily required information, although in unconventional order, the notice was valid.

In Zion Village Resort, Pro Landscape U.S.A. performed work on a condominium development and filed preliminary notices with the Utah State Construction Registry pursuant to the state construction lien laws. Pursuant to Utah Code Ann. § 38-1a-501(1)(h)(i), a preliminary notice must include certain information, including the “name, address, telephone number, and email address of the person providing the construction work.” In Pro Landscape’s preliminary notices under the line “Person Furnishing Labor, Service, Equipment, or Material,” the Pro Landscape listed “Chad Hansen,” and provided an address, email address and telephone number. Under the line provided for “comments,” the notices stated that the “services [were] provided by Pro Curb USA LLC DBA Pro Landscape USA.” Pro Landscape later filed construction liens on various parts of the development.

Zion Village filed a petition to nullify the construction liens, arguing that the they were invalid because Pro Landscape failed to file valid preliminary notices as required by statute. The trial court concluded that the notices were filed by Chad Hansen, not Pro Landscape, and therefore the notices “neglected to include such basic information as the identity of the actual lien claimant.”

On appeal, Pro Landscape argued that the preliminary notices contained all the statutorily required information, including the name, address, telephone number and email address of the person providing the construction work. Zion Village argued that because Chad Hansen rather than Pro Landscape is listed on the line asking for identification of the “Person Furnishing Labor, Service, Equipment or Material,” the notices were deficient.

The court found that Pro Landscape, by identifying itself in the comments section of the preliminary notice, had substantially complied with the statute. “While Pro Landscape may have set forth the required information in an unconventional sequence, the preliminary notices it filed contained all statutorily required information.”

Zion Village argued that the court’s holding frustrated the practical functioning and purpose of the registry, which serves as a database that allows interested persons to search for preliminary notices on a property. When Zion Village searched the registry’s database for preliminary notices filed by Pro Landscape, none turned up in the result because “Chad Hansen” and not Pro Landscape was listed on its notices as the “Person Furnishing Labor, Service, Equipment or Material.” Zion Village asserted that interested persons should be able to rely on the search results without having to searching through all preliminary notices individually. The court was not persuaded, noting that the construction lien statute mandates the application of a “substantial compliance” standard, rather than a strict compliance standard.

The court’s holding in Zion Village stands as a warning to property owners that one cannot rely on the search results to determine whether a party has a preliminary notice on file. Given the “substantial compliance” standard, as long as a preliminary notice has the statutorily required information in the notices somewhere, it is valid.

Preliminary Notice Is More Important Than Ever During COVID-19

Justin Giteman | Levelset

For this week’s Guest Post Friday here at Construction Law Musings, we welcome Justin Gitelman.  Justin is the Content Coordinator at Levelset, where over 500,000 contractors and suppliers connect on a cloud-based platform to make payment processes stress-free. Levelset helps contractors and suppliers get payment under control, and sees a world where no one loses a night’s sleep over payment.

As the construction industry continues to adjust to the coronavirus and an uncertain future, contractors are struggling to get paid. During the COVID-19 pandemic, construction businesses across Virginia need to do everything they can to protect their payments, and get paid faster. One simple action that can help fight payment delays: sending preliminary notice on every job.

Subcontractors and suppliers should send preliminary notices out to the GC, project owner, and/or lender at the start of every single project. These tools allow contractors to make themselves visible on crowded job sites, helping contractors get paid more quickly, and, in some cases, securing their right to file a mechanics lien or bond claim.

Preliminary Notices in Construction

The purpose of a preliminary notice is to allow each member of a construction project to know who you are and what work you’ll be performing. With coronavirus in mind, contractors can use preliminary notices to remind the hiring party of their payment expectations. When you submit a preliminary notice on every project, you’ll have legal protection in your corner while also giving yourself a greater opportunity to get paid.

When sending a preliminary notice, be sure to send them at the beginning of a project. This allows the recipients to review your information early, and helps you stand out compared to the many possible subcontractors on large projects. We’ve heard from subcontractors that the GC’s accounts payable department often prioritizes payments to sub-tier parties that have submitted preliminary notices.

How Preliminary Notices Support Contractors During COVID-19

In regard to the COVID-19 outbreak, preliminary notices are more prevalent than ever for construction businesses. Across the U.S., some cities have completely shut down their construction operations in order to combat the virus. This means contractors have to start protecting their money while the entire industry has less cash flow to go around.

Payment can certainly be tough to come by in construction these days, which makes sending preliminary notices all the more beneficial to your business. You may have been on a job site that was completely shut down due to coronavirus. Don’t be left in the dark if this happens to your business. Submit preliminary notices on every job – not just the problem jobs – to help protect your business during the COVID-19 pandemic.

Preliminary notices can primarily support contractors in two ways during the COVID-19 outbreak: by improving communication on jobsites and potentially protecting your payment by securing your right to file a lien.

Virginia preliminary notice requirements

In Virginia, sending preliminary notice isn’t required to protect your right to file a mechanics lien in most cases. Preliminary notices in Virginia are only required on specific private projects on certain residential homes.

However, Virginia has some unique statutes that give extra power to your preliminary notice. The Code of Virginia’s Section 43-11 states that sending preliminary notice, along with other follow-up statements of account, can make the owner or GC personally liable for your payment.

Every state has their own mechanics lien laws that set notice requirements. In some, sending preliminary notice protects your right to file a lien if you’re not paid. In others, you can file a lien without having first sent notice. If you do construction work in neighboring states, it’s important to understand their notice requirements and lien deadlines – and how they differ.

In West Virginia, for example, preliminary notice isn’t required (but sending one is still highly recommended). North Carolina requires preliminary notice in most cases, while Maryland and Tennessee only require notice on public and private jobs, respectively.

In states that use preliminary notice, take care to follow the statutory requirements and submit it according to the deadline. If notice isn’t required on your particular project, send one anyway. You should be doing everything you can to strengthen communication between you and the person who controls your payment right now.

Send preliminary notice – and watch your lien deadlines

During these uncertain times, it’s more important than ever to protect your rights. Your payment bond and mechanics lien claims can project your payment interests – a source of reassurance during this pandemic.

Stay mindful of your Virginia construction deadlines: Lien early, and lien as often as you need to. While you generally have 90 days from the last day of the month in which you furnished labor or materials, your lien amount can only include the last 150 days you were on the job. On projects over 150 days, you may need to file multiple liens – and each one will have a different deadline.

Preliminary Notices: Common Avoidable But Fatal Mistakes

William L. Porter | Porter Law Group

In the California building and construction industry, service of a “Preliminary Notice” is a prerequisite for Subcontractor and Supplier claims for payment through the Mechanics Lien, Stop Payment Notice and Payment Bond Claim process.  Without proper drafting and service of a Preliminary Notice, these extremely valuable claims cannot be protected. Unfortunately, despite the vital importance of the Preliminary Notice, Subcontractors and Suppliers often make common self-defeating mistakes that make their Preliminary Notice efforts completely ineffective, resulting in loss of their claims rights.  The purpose of this article is to list some of these common mistakes in the hope that the reader will avoid such mistakes, preserve the integrity of the Preliminary Notice, and protect the claims rights it makes available:

Not Sending out the Preliminary Notice Within 20 Days After Supplying Labor or Materials:

The protection of a Preliminary Notice begins 20 days before it sent out.  This means that if a Subcontractor or Supplier claimant delivered $100,000 in materials on February 1, that same claimant must serve the Preliminary Notice on or before February 21 (the sooner the better), or the claimant will not be able to pursue an enforceable Mechanics Lien, Stop Payment Notice or Payment Bond claim for that $100,000.  There are very few exceptions. Best practice: A Subcontractor or Supplier must send out the Preliminary Notice as soon as an agreement to provide work or materials to a California construction project is in place (See California Civil Code 8204).

Not Sending the Preliminary Notice by Certified, Registered or Express Mail Service:

A Preliminary Notice cannot be effectively be sent by regular US mail, or by Fax, or by e-mail.  It is true that a Preliminary Notice can be effectively “hand delivered”, but the problem with hand delivery is that months or years later, when it comes time to “prove” that the document was actually delivered, reliable proof of hand delivery usually comes up short.  More reliable methods of delivery authorized by the law include certified mail – return receipt requested, registered mail, express mail and overnight delivery by an express service carrier like UPS or FedEx. If you cannot prove you used an authorized method of service, you might as well not send out the Preliminary Notice at all.  Best Practice: Subcontractors and Suppliers should serve the Preliminary Notice by certified mail, return receipt requested or by Registered mail or by Express Mail or through overnight delivery by an express service carrier like UPS or FedEx (See California Civil Code 8110).

Failure of “Direct” Contractor to Send a Preliminary Notice When There is a Construction Lender:

The service of a Preliminary Notice is generally an issue for Subcontractors and Suppliers. However, there does exist a circumstance when the “Direct Contractor” (the Contractor who has a contract directly with the owner of the property) too must serve a Preliminary Notice in order to make an enforceable claim for construction funds.  Under California Civil Code 8200(e)(2) a Direct Contractor must serve the “Construction Lender” with a Preliminary Notice. Failure to do so will generally forfeit the Direct Contractor’s claims against funds held by the lender, including the right to record a fully enforceable mechanics lien. If you are the Direct Contractor and there is a construction loan, always be sure to serve that lender with a Preliminary Notice (See California Civil Code 8200(e)(2)).

Failure to Safeguard Proofs of Service:

It is important to safeguard proofs of service of the Preliminary Notice.  Each proof of service document should include an identification number matching an identical number on the document to be served.  The proofs of service must be retained, whether anyone signed for them on delivery or not. It does not generally matter if the intended recipient signed to indicate receipt.  What generally matters is that each proof of service was properly addressed and delivery was properly attempted, even if service was refused. Keep your return receipts and records of service attempts, even if no one signed for the document.  You will need those proofs of service later to prove procedures were followed.

Failure to Use the Proper Current Preliminary Notice Form:

The Preliminary Notice form was changed by statute in 2012 (SB 189).  New language has been added to the form. Failure to use the proper, current form puts any claim based on the Preliminary Notice at risk.  Be sure to use the most current form available or you will risk your right to pursue a Mechanics Lien, Stop Payment Notice or Payment Bond Claim to secure your payment.

Overstating the Preliminary Notice:

Overstating the amount listed in the Preliminary Notice can impact the enforceability of any later Mechanics Lien, Stop Payment Notice or Payment Bond Claim on which the Preliminary Notice is based.  List on the Preliminary Notice the proper dollar amount of the contract, subcontract or purchase order for the project. Do not anticipate change orders, interest which might or might not be accrued, or attorney fees which might or might not be incurred.  Use only the principal amount of the contract, subcontract or purchase order or other correct amount based on a rational determination.  Failure to do so may result in loss of later collection rights, including loss of Mechanics Lien and Stop Payment Notice rights (see California Civil Code 8422 and 8504).

There are many other mistakes that can be made in processing and serving the Preliminary Notice.  These include not putting the correct information into the correct locations on the form, accidentally including an incorrect address, inadequately describing the work performed or material supplied, failure to indicate the method of service or not signing the document.  Every failure exposes the claimant to the possibility that the Preliminary Notice will be challenged in court. With a document so vital to the success of a claim for payment on a construction project, Contractors, Subcontractors and Suppliers must take the time and do the best job possible. 

The Private Works: Preliminary Notice | Are You Using the Correct Form?

William L. Porter | Porter Law Group

The Private Works – Preliminary Notice form which contractors, subcontractors and suppliers had become accustomed to using for many years changed in 2004. Despite this change in law, many in the construction industry have still not started using the correct new form.  Changes in the law, championed by the American Subcontractors’ Association, gave a significant new benefit to subcontractors and suppliers by giving the subcontractor or supplier some expectation of actually receiving notice of when a Notice of Completion or a Notice of Cessation has been recorded on many private works projects. The law also changed the language of the California Preliminary Notice that subcontractors and suppliers must use to protect their mechanics’ lien, bond claim and stop payment notice rights.  If Owners do not send out the Notice of Completion as required by law they incur a diminishing of the protections afforded to them when they record a Notice of Completion or Notice of Cessation on many private works projects.

The revised law requires private project owners to notify all subcontractors and suppliers within 10 days after recording a Notice of Completion or Notice of Cessation that a Notice of Completion or a Notice of Cessation has actually been recorded.  In order to receive such notice, the subcontractor or supplier must properly serve the new form of Preliminary Notice. If this properly occurs and the private project owner provides the required notice, then the subcontractor or supplier will have 30 days to record a Mechanics’ Lien. However, if an owner under such circumstances fails to properly notify a subcontractor or supplier within 10 days after recording a Notice of Completion or Notice of Cessation, then the Subcontractor or supplier will have 90 days to record a Mechanics’ Lien.  The details of the law can be found in California Civil Code sections 8190, 8414 and 8416.

In order to benefit from the new law the subcontractor or supplier must add the following new language, in boldface type, to the Preliminary Notice they are using under the section entitled “NOTICE TO PROPERTY OWNER”: The required language now reads as follows:


EVEN THOUGH YOU HAVE PAID YOUR CONTRACTOR IN FULL, if the person or firm that has given you this notice is not paid in full for labor, service, equipment, or material provided or to be provided to your construction project, a lien may be placed on your property. Foreclosure of the lien may lead to loss of all or part of your property. You may wish to protect yourself against this by (1 requiring your contractor to provide a signed release by the person or firm that has given you this notice before making payment to your contractor, or (2) any other method that is appropriate under the circumstances. This notice is required by law to be served by the undersigned as a statement of your legal rights. This notice is not intended to reflect upon the financial condition of the contractor or the person employed by you on the construction project. If you record a notice of cessation or completion of your construction project, you must within 10 days after recording, send a copy of the notice of completion to your contractor and the person or firm that has given you this notice. The notice must be sent by registered or certified mail. Failure to send the notice will extend the deadline to record a claim of lien. You are not required to send the notice if you are a residential homeowner of a dwelling containing four or fewer units.

Please note that the new law does not apply to public works projects or owner-occupied personal residences of less than 5 units. Moreover, the new law does not apply to those subcontractors and suppliers who fail to serve a Preliminary Notice at all or, of course, when no Notice of Completion or Notice of Cessation has been recorded.

If you have not already done so, please be sure to update your Preliminary Notice forms as soon as possible.  Failure to do so could result in loss of legal rights important for the collection of debt for work performed and materials supplied to private works projects

Navigating Complex Preliminary Notice Requirements

Scott Wolfe | Zlien | February 26, 2016

Sending preliminary notice is the most important step in mechanics lien compliance. A majority of states require preliminary notice (sometimes called a pre-lien notice or notice to owner) from contractors, material suppliers, and other construction parties. Even if preliminary notice is not required, however, it is best practice to send this document on all projects for a variety of reasons.

Preliminary notice requirements and deadlines can creep up quickly. In some states, such as Georgia and South Dakota, preliminary notice is only required if the property owner or general contractor files and posts a Notice of Commencement. In most cases, the person filing notice of commencement must notify all sub-tier parties. Preliminary notice deadlines are measured from the filing of the notice of commencement rather than from the date the lien claimant began work on a project. To recap, notice of commencement can be a good thing as well as a challenge for lien claimants. It may pile on additional preliminary notice requirements, but it also clearly identifies the project start date and simplifies the process of determining deadlines.

The rules governing preliminary notice requirements vary so widely from one state to the next that keeping them straight is tough, especially for companies that work in more than one state. Most of the time, required preliminary notices are due within three months from the start of a project. The first two weeks of work can fly by, so it’s a good idea to prepare preliminary notice as soon as a contract is signed. Another benefit of starting this process early? Preliminary notices often require information about the project and other involved parties (such as the owner, lender, or GC) that can be tough to find, especially on large projects with multiple tiers of hiring. If you get a head start on submitting the document, you have some buffer time to locate the information you need.

And what happens if a deadline slips by? Is it still worth sending preliminary notice even if it’s late? The answer is, it depends. In states where sending preliminary notice is optional, there is, as you might expect, no late penalty, because there is no deadline. Other states offer limited protection to lien claimants that send preliminary notice late. For example, if California’s 20-Day Preliminary Notice is sent within 20 days of first furnishing labor or materials on a project, lien rights are fully protected. If the notice is sent late, it protects only the work done in the preceding 20 days. For example, if notice is sent on day 30, the claimant has no protection for work provided on days one through 10.

Other states’ lien statutes are less forgiving when it comes to missed deadlines. In a majority of states, sending preliminary notice late is fatal to lien rights. (Note: North Carolina and Virginia fall into this category.) It is essential to stay on top of notice requirements in these states in order to avoid unnecessary financial risk.

It’s clear that preliminary notice requirements are complex. Numerous considerations come into play when determining when to send preliminary notice. One must know when these documents are required, what information they should contain, when deadlines fall, and if those deadlines are strict or flexible. The best way to stay on top of these rules and requirements is to implement a strong credit policy with a preliminary notice program at its core. Several tools exist to assist with preliminary notice management, including software platforms that automate and simplify the process.

Navigating these provisions and requirements may seem intimidating or confusing, but keep in mind…

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