California Preliminary Notice
The owner won't pay and the supplier didn't do the California preliminary notice
QUESTION:
Our company supplied seed to a subcontractor for a project but we didn't do a California preliminary notice. Now the subcontractor is telling us that the owner won't pay the invoices.
We have normal net 30 terms since we are not contractors and do not file Prelims as a normal course of business.
The debt is now over 4 months old so my question is whether I can still file a lien?
I sent a Prelim
but it was months after the 20 day period so I assume that does not have
any benefit.
Sue Ward
ssseeds.com
Without a California preliminary notice having been served *properly*, you can't file a mechanic's lien
ANSWER:
You have a good understanding of the rules.
Unfortunately, your good understanding is correct.
If
your contract was with a subcontractor, you would only have lien rights
for materials provided after the date that is 20 days prior to the date
on which you served the property owner with a California preliminary notice.
Luckily,
you have rights against the subcontractor.
The subcontractor will owe
you on the terms of your agreement. Suppliers often are able to dictate
the terms on which they sell materials on credit.
Your contract
may include service charge terms and an attorneys' fees provision that
will be useful with your customer.
 |
California 20-Day Preliminary Lien Notice / Pre-Lien
Construction-Business-Forms.com |
Your customer cannot avoid paying you on the basis of non-payment by the owner
Your customer cannot avoid paying
you on the basis of non-payment by the owner.
Even if you had
valid lien rights, you would not be obligated to await the outcome of an
expensive lawsuit to foreclose upon your lien.
The right to lien is
exactly that -- a "right." It's not an obligation and it doesn't impact
your right to be paid by your customer on the terms of your agreement
with your customer.
Your subcontractor should acknowledge that
and then attempt to convince you to forebear from pursuing a lawsuit by
demonstrating to you that they are aggressively pursuing payment.
If
the subcontractor does ask you to wait, you might consider asking the
subcontractor for a promissory note with a payment due date a few weeks
or months away. The promissory note would be an easier debt to enforce
in court than the invoices for the seed. You would want to make sure
the promissory note had favorable terms to maximize its benefit.
--
Thank you to Dave Barnier for the above information. :) Mr. Barnier is a practicing litigation attorney in San Diego CA and can be reached at 619.682.4842.
The information in this article is based upon California law current at the time of writing and is provided for general information, only. The information provided illustrates laws and legal principals in general. Any information or analysis presented in this article is intended solely to educate the reader on general issues. A comprehensive review of facts, documents, and applicable laws is always required before any attorney can competently provide any legal advice regarding any particular situation. In short: Please do not rely on any part of this article when analyzing any specific situation affecting you or your business.
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Article Series: Preliminary Lien Law
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California 20-Day Preliminary Lien Notices
Construction-Business-Forms.com |
Preliminary Notices and Conflicting Addresses
If the address on the Grant Deed is
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The Who, What, When, Where, Why, and How - not necessarily in that order :o)
The California Preliminary Notice Covers Up to 20 Days Back
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A preliminary lien notice won't do you any good if they don't go to the correct entities.
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Unfortunately, a prelim is required to file a lien, even if you're a supplier.
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Arizona requires preliminary liens prior to mechanic's liens.
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When a Preliminary Lien Notice is Refused
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Preliminary Liens When There's More Than One Location
The potential ramifications of using one preliminary notice for several locations when they're all under the same contract
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California 20-Day Preliminary Lien Notice
Construction-Business-Forms.com |
Preliminary Notices and Dollar Amounts
Make sure the $ amount on the prelim is as accurate as possible
Preliminary Liens and Non-Responsibility
Why you should serve the owner with a prelim even if he posts a notice of non-responsibility
Preliminary Notices and Signatures
Can the signature on a preliminary notice be a copy/fax or must it be 'wet'/original?
Amending a Preliminary Lien Notice
Is it better to amend the notice, or issue a new one?
|
California 20-Day Preliminary Notices
Construction-Business-Forms.com |
Serving the Wrong Party
When working in Arizona be sure to timely serve the preliminary notice *to the correct parties* or there could be trouble
Getting 'Stiffed' on the Job
Preliminary liens can help save you from being 'stiffed' on the job!
Property Records are your Friend
Research property records when doing your preliminary notices
Outsourcing your Preliminary Liens
Thoughts about using a company that handles your preliminary notices for you
Preliminary Liens - a detailed, step-by-step outline
A detailed step-by-step explanation of how to process preliminary notices
Preliminary Liens
Tracking the paperwork, the proof of service, and the USPS documents for prelims
|
California 20-Day Preliminary Lien Notices
Construction-Business-Forms.com |
Preliminary Liens and Notifying the Correct Parties
Make sure your prelims go to the correct entities
Mishandling of, or Not Processing, Preliminary Liens
Mishandling of, or not processing, preliminary liens is one of the top 10 mistakes contractors make
At one time the California preliminary notice form was mandated by California to be titled "20-Day
Preliminary Notice Form" (exactly, word for word). The California mandate has since changed and
the form is now known as the "Preliminary Notice Form" (again, exactly, word for word). Make sure what your state requires and make sure your forms are valid.
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