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
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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

Image of, and link to, California 20-Day Preliminary Notice form

California 20-Day Preliminary Lien Notices
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Image of, and link to, California 20-Day Preliminary Notice form

California 20-Day Preliminary Lien Notice
Word and PDF versions

  • Instant Download
  • Unlimited Usage
  • Unlimited Free Replacement
  • Unlimited Free Support
  • Includes an Exclusive, In-Depth, How-to Article!

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Preliminary Notices and Dollar Amounts

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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?


Image of, and link to, California 20-Day Preliminary Notice form

California 20-Day Preliminary Notices
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  • Instant Download
  • Unlimited Usage
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  • Includes an Exclusive, In-Depth, How-to Article!

Construction-Business-Forms.com


Serving the Wrong Party

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Property Records are your Friend

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Outsourcing your Preliminary Liens

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Image of, and link to, California 20-Day Preliminary Notice form

California 20-Day Preliminary Lien Notices
Word and PDF versions

  • Instant Download
  • Unlimited Usage
  • Unlimited Free Replacement
  • Unlimited Free Support
  • Includes an Exclusive, In-Depth, How-to Article!

Construction-Business-Forms.com


Preliminary Liens and Notifying the Correct Parties

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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.