By Diane Dennis
What to do?
This is where we say thank goodness for (properly served) the 20-day preliminary lien notice!
That's why you still file a lien even though the Owner paid, because the Owner didn't do what he was supposed to do, which was to make sure that you got paid.
He can't say that he didn't know you were owed money, because you have proof (the proof is explained a bit further on) that he did indeed receive your 20-day preliminary lien notice which told him that you are present on the job.
There was a subcontractor who didn't get his last two payments. He tried several times to contact the general but he couldn't get an answer or a call back. This was 20+ years ago.
He finally reached out to the Owner of the project. He was nervous to do it but there really wasn't any other way at that time to find out what was going on.
He reached the Owner and come to find out the general had already been paid in full on the project. The sub was realizing that the general had split with his money (turns out he did it to a couple other subs as well).
Through some brief free legal help he found out that because he had done his preliminary lien notice properly, including the copy to the owner, he still had mechanic's lien rights even though the Owner had paid once already.
Ultimately, it's the Owner's responsibility to make sure everyone is paid. Yes the Owner got ripped just like the subs did but he had control over those payments whereas the subs did not.
No ifs, ands, or buts about it, the preliminary lien notice MUST be mailed out within the time allowed by the law.
Lien rights are often lost due to the mistake of sending a late 20-day preliminary lien notice.
The time-frame varies from state to state, so you must check to see what the requirement is in the state the job is located in.
Couple examples: It's my understanding that in one state the 20-day preliminary lien notice must be processed within 8 days of the first shipment or incurring of labor costs, whichever applies to your situation.
I'm told that a couple other states require that the notice be processed before the first shipment or incurring of labor costs.
No matter which state your company might be located in, you need to
follow the prelim laws for the state that the project is located in.
California contractors and suppliers have up to 20 days after the date that work starts or material is supplied. The
lien statutes in most states must be followed precisely, courts do not
afford much latitude with respect to timelines and compliance with
For contractors, this means you've got to process and mail the 20-day preliminary lien notice within 20 days of the first day you either start work or supply material to the project (or place the material order if it's a special order item).
For material suppliers, this means within 20 days of the first day you supply material to the project (or order it if it's a special order item).
The 20-day preliminary lien notice covers all work, material, etc. for up to 20 days prior to the postmark date on the mailing of the preliminary lien notice.
So, if you've been on the job for 30 days and are just now sending the preliminary lien notice, you'll be covered for 20 days back (or from after the first 10 days forward).
You do still want to do the preliminary lien notice even if you're late. If you don't then you won't have lien rights for the balance of the project.
When you send preliminary lien notices you'll want to send it via certified mail *return receipt*.
You're sending the notice via certified mail because you have to have proof of when you sent it. But that doesn't tell you for a fact that it arrived where you sent it to.
When the recipient receives the mail he's required to sign for it before he can have it, but you won't have proof that it was received by the correct person without the return receipt.
When you're in court and the Owner is telling the judge that he didn't get your notice you'll have proof he did because of the return receipt that has his signature, or the signature of his agent.
Maybe even more importantly, you'll know way in advance if the Owner didn't receive it because you won't have the return receipt. That's a red flag that you need to find out what happened to the notice.
Because the Owner has the 20-day preliminary lien notice from you he can't state that he didn't know you were present on the job.
That's why you file the mechanic's lien. Legally you did everything that you could, everything you were supposed to do. Because you made the Owner aware that you were present, the responsibility then shifted to him to make sure you were paid.
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