In California, the 20-day preliminary notice is essential for contractors and suppliers to secure their ability to file a mechanics lien or bond claim. State legislation mandates that this notice be provided for both private and public construction projects within California.

Beyond safeguarding payment rights, issuing preliminary notices is considered a best practice that offers advantages to all parties involved in a project. Recipients of these notices—such as general contractors, property owners, and financial institutions—use them to identify all stakeholders participating in the construction effort. This comprehensive overview facilitates the process of requesting, obtaining, and managing lien waivers in the future.

Fortunately, the requirements and deadlines for preliminary notices in California are relatively clear and easy to follow.

This detailed guide covers all aspects of California preliminary notice system. It includes best practices for issuing notices, highlights common pitfalls to avoid, and answers frequently asked questions. Continue reading to ensure you correctly handle the 20-day preliminary notice process.

Key Takeaways

• Timely Submission is Crucial: To secure lien rights, the California Preliminary Notice must be sent within 20 days of first providing labor or materials. Missing this deadline can result in losing the right to file a mechanics lien, making timely submission essential.
• Proper Documentation Matters: Maintaining records, such as proof of mailing and a Declaration of Delivery, is vital. These documents ensure compliance with California’s lien laws and provide critical evidence if disputes arise. Maintaining these documents is also crucial for preserving the right to file a stop payment notice.
• Preliminary Notices Benefit All Parties: Beyond protecting payment rights, preliminary notices keep all project stakeholders informed, which helps prevent surprises, reduces payment delays, and promotes a smooth and transparent payment process on construction projects.

What Is a California 20-Day Preliminary Notice?

The California preliminary notice form is surprisingly simple. Although it might appear complex at first glance, you’ll find it easy to navigate after spending a little time with it.

You can obtain a complimentary California preliminary notice form here. These forms are designed by construction attorneys to ensure compliance with California laws.

There are multiple reasons why the California preliminary notice is vital. Most importantly, contractors and suppliers anticipating payment must issue preliminary notices to retain the right to file a mechanics lien California or pursue a bond claim for the project. A preliminary notice is also essential for protecting the right to issue a payment notice in case of non-payment.

In essence, failing to send a preliminary notice in California means forfeiting your lien rights. This requirement applies to both private projects (such as commercial and residential) and public projects (including state, city, municipal, and government endeavors).

California’s preliminary notice regulations are similar to those in other states. Generally, these notices are designed to promote good faith and collaboration, benefiting all parties involved in the project.

Where Did the Term “preliminary 20-day notice” Come From?

People might use various terms to describe this form. Common alternative names include “California Preliminary 20-Day Notice” or the abbreviated “Preliminary 20-Day Notice.” Prior to a legislative update in 2012, the procedure lacked an official designation, and professionals in the field referred to it using different terminology. On July 1, 2012, a law was enacted that standardized the name to “Preliminary Notice.” Despite this official change, some individuals still use different names when discussing the document and its associated process.

What is a Preliminary Notice?

A Preliminary Notice, also known as a 20-Day Preliminary Notice, is a document mandated by California law that contractors and suppliers must send to property owners, direct contractors, and construction lenders (if applicable) within 20 days of first providing labor or materials to a construction project. This notice serves to inform the recipients of the sender’s involvement in the project and their intention to file a mechanic’s lien if they are not paid.

By sending this notice, contractors and suppliers preserve their lien rights, which is crucial for securing payment. The Preliminary Notice is a fundamental step in the payment process, ensuring that all parties are aware of who is contributing to the project and helping to prevent payment disputes.

Why Send a California Preliminary Notice?

In California, submitting a preliminary notice is crucial to uphold your right to file a mechanics lien on a construction project. To ensure proof of service, it is important to use reliable delivery methods, such as an express service carrier, rather than regular mail. However, this requirement serves multiple purposes beyond just protecting lien rights.

In this section, we’ll delve into the reasons behind the necessity of preliminary notices, their significance, and why you must issue one.

1. Enhancing Communication Among Stakeholders

While the primary reason contractors and suppliers issue preliminary notices is to safeguard their California mechanics lien and bond claim rights, the main objective is to facilitate information sharing. These notices inform property owners, developers, construction lenders, and general contractors about all parties involved in the project. This transparency helps prevent unexpected liens from unknown contractors or suppliers who may not have been paid. Establishing clear communication through preliminary notices allows all stakeholders to address payment issues early, avoiding larger conflicts later on.

2. General Contractors’ Liability for Workforce Compensation

In California, general contractors (GCs) have a heightened responsibility to know every individual working on their projects. A law effective from January 1, 2018, holds GCs accountable for the wages and benefits of all employees on a job site, including those of subcontractors and their subcontractors. This expands the liability risk for GCs significantly. The preliminary notice process helps ensure that payments are handled smoothly, reducing the risk of mechanics liens and other payment-related complications by promoting timely and accurate payments.

3. Mandatory Compliance to Avoid Penalties

Although some contractors and suppliers may choose to send preliminary notices selectively based on project value or internal policies, it’s important to recognize that in California, sending a preliminary notice is almost always required. According to California Civil Code §8216, preliminary notices are mandatory for projects exceeding $400, which is a very low threshold. Failure to comply can lead to disciplinary actions under the Contractor’s State License Law, making it essential to adhere to these requirements consistently.

4. Protecting Lien Rights

Not sending a preliminary notice in California effectively nullifies your ability to file a mechanics lien, stop notice, or bond claim if you are not paid. Given the frequent payment disputes in the construction industry, this represents a significant risk. Ensuring that you send the preliminary notice correctly is vital to maintaining your lien rights and securing payment.

5. Accelerating Payment Processes

Issuing preliminary notices not only secures your lien rights but also helps in getting paid faster. By making your invoices more visible and demonstrating organized management, you prioritize your payments. This leads to better cash flow, which is crucial in the construction industry, where cash flow issues are common. Property owners and large general contractors track who have sent notices to ensure all parties are protected and remain in a secure financial position.

6. Fostering Positive Working Relationships

Beyond the legal and financial benefits, preliminary notices contribute to maintaining good relationships among project participants. They ensure that all parties are aware of who is involved in the project, which is particularly important in large-scale jobs. Avoiding surprise liens and payment issues helps prevent conflicts that can disrupt the project and damage professional relationships. Although some may worry that sending notices could create tension, in reality, preliminary notices are a standard practice that benefits everyone involved. Successful companies consistently issue these notices, reinforcing their professionalism and reliability.

What are the Benefits of Filing a Preliminary Notice?

Filing a Preliminary Notice offers several significant benefits for contractors and suppliers:

• Preserves Lien Rights: By sending a Preliminary Notice, you ensure that your right to file a mechanic’s lien is protected in case of non-payment. This legal safeguard is essential for securing your financial interests.
• Secures Payment: The notice alerts property owners and direct contractors to your involvement in the project, prompting them to prioritize your payments to avoid potential liens.
• Speed Up Payment: Preliminary Notices help streamline the payment process by keeping all stakeholders informed, which can lead to faster payments for contractors and suppliers.
• Protects Against Non-Payment: By clearly stating your intention to file a mechanic’s lien if unpaid, the notice provides a layer of protection against non-payment, encouraging timely settlements.

These benefits highlight the importance of sending Preliminary Notices as a standard practice in the construction industry.

Addressing Common Concerns

• Missed Deadlines and Payment Securing Options: If you’ve missed the deadline to send a preliminary notice, options to secure payment may be limited, especially if there’s no dispute over unpaid invoices. However, it’s always best to consult with a legal professional to explore possible remedies.
• Waiving Lien Rights: Failing to send a preliminary notice typically results in the loss of lien rights, making it impossible to file a mechanics lien if payment issues arise later. Given the unpredictable nature of payment disputes in construction, adhering to the notice requirements is essential.

Preliminary notices in California are not just a legal formality but a vital part of the construction payment process. They protect your rights, facilitate smooth payment flows, and support positive working relationships among all project stakeholders. By consistently issuing preliminary notices, you ensure that your interests are safeguarded and contribute to the overall success of your construction projects.

Who Must Send a California Preliminary Notice? Who Receives It?

In California, it’s mandatory for contractors, suppliers, and vendors to issue preliminary notices for every construction project within the state. This obligation extends to both private and public projects. However, the specific requirements can vary subtly based on the project type. Accurately identifying whether a project is private or public is crucial, though it can be more complex than it initially appears.

Private Projects: Required Senders and Recipients

Private construction projects encompass commercial, residential, and industrial developments, essentially any project that doesn’t fall under the “public” category.

Entities that must always issue a 20-day preliminary notice for private projects include:

• Subcontractors
• Material Suppliers
• Equipment Renters

General contractors and direct contractors are also required to send preliminary notices if a construction lender is involved in the project. This stipulation for general contractors has been in place since July 1, 2012. However, pure laborers are exempt from this requirement in California.

Recipients of the 20-day preliminary notice from subcontractors and material suppliers must include the following:

1. The Property Owner (or the designated owner)
2. The General Contractor
3. The Construction Lender (if applicable)

For general contractors, the preliminary notice needs to be sent only to the construction lender, provided one is part of the project.

In tenant improvement projects, it’s advisable to inform the tenant as well. Generally, using preliminary notices to keep all relevant parties informed is considered best practice. If a particular recipient, such as a lender, is not involved in the project, there is no need to send a notice to that entity.

Public Projects: Required Senders and Recipients

Public projects include work undertaken by government entities, state universities, cities, municipalities, counties, and other state-level operations. Federal projects, governed by the U.S. Miller Act, do not fall under California preliminary notice requirements, as the Miller Act itself does not mandate such notices.

A key distinction for public projects is that general contractors are not required to send preliminary notices. This differs significantly from private projects. The rationale is straightforward: on public projects, the recourse for non-payment is through bond claims against the general contractor’s bond, rather than mechanics liens. Since a general contractor cannot file a bond claim against themselves, there is no necessity for them to issue preliminary notices.

For other parties involved in public projects (excluding laborers), preliminary notices should be directed to:

1. The public entity commissioning the work
2. The general contractor
3. The surety (if known)

For more detailed information, explore our guide on How to Get Paid on California Public Projects.

Limited Exception: When Preliminary Notices Are Not Required

While preliminary notice California rules are comprehensive, there is a narrow exception. This stems from a 1984 court ruling which established that if a property owner is already aware of a party’s involvement in a construction project, they cannot contest a mechanics lien on the basis that they were not notified of that party’s participation.

This means that lien rights may still be preserved even if a preliminary notice was not sent, provided that:

• The property owner was aware of your role in the project
• They knew you were providing labor or materials
• This knowledge existed within 20 days of you commencing work or supplying materials

However, it’s important to note that this exception does not guarantee the preservation of lien rights. It merely suggests that there might be an opportunity to file a lien claim despite the absence of a preliminary notice. Additionally, it’s uncertain whether this exception applies to other required recipients, such as general contractors, lenders, or sureties.

Complying with California’s preliminary notice requirements is essential for securing your rights and ensuring smooth payment processes in construction projects. Whether dealing with private or public projects, understanding who needs to send and receive notices can prevent legal complications and foster better working relationships among all parties involved. Always consult with a construction law professional to navigate these requirements effectively and take advantage of any available exceptions.

When Do I Send a California Preliminary Notice?

To secure your lien rights, you need to send the preliminary notice within 20 days of first providing labor or materials on a project. Many organized companies streamline this process by sending notices as soon as they obtain the project details, applying this practice to every project. The reality in construction is that payment timing can be unpredictable, so early notice is key.

Though this requirement seems simple, questions about timing often arise.

Let’s address some common concerns:

Can You Send a Preliminary Notice Early?

Is it possible to send a preliminary notice before starting work or supplying materials, or would that be considered premature? Interestingly, courts in some states have previously invalidated early notices. In California, however, there’s no issue with early submission. Contractors and suppliers can indeed send a preliminary notice in advance without concern.

What About Sending a Notice Late?

In California, it’s generally better to send a late notice than not to send one at all, as even a late notice can preserve lien rights for recent work. However, be aware that if the notice is sent more than 20 days after starting work or supplying materials, it only protects lien rights for the preceding 20 days.

For example, if you send the notice on Day 25, you won’t have lien rights for any work done on Days 1 through 5, but coverage will start from Day 6 onward.

The only time a preliminary notice is “too late” is if more than 20 days have passed since your last work on the project.

What Information Is Included in a California Preliminary Notice?

The California preliminary notice doesn’t have strict formatting rules. It can be printed on any color paper, follow a variety of layouts, and have any number of pages. However, California lien law specifies that certain details must be included in preliminary notices.

This essential information includes:

• The name and address of the property owner (or reputed owner)
• Contact details of the prime contractor
• The name and address of the construction lender, if applicable
• A site description that is detailed enough for clear identification, ideally including the street address
• The name, address, and project role of the party issuing the notice (the “claimant”)
• The name and address of the party that contracted with the claimant
• A general description of the work or materials provided
• An estimated total price of the work or materials to be supplied
• A specific, 235-word notice statement in bold font, which reads:

NOTICE TO PROPERTY OWNER: EVEN IF YOU HAVE PAID YOUR CONTRACTOR IN FULL, if the individual or company providing this notice has not been fully paid for labor, services, equipment, or materials supplied for your construction project, a lien may be placed on your property. Foreclosure of the lien could lead to loss of all or part of your property. To protect yourself, consider (1) requiring your contractor to provide a signed release from the party issuing this notice before making payment, or (2) taking other measures suitable to the situation. This notice is a legal statement of your rights, as required by law, and is not intended to reflect on the financial condition of your contractor or anyone they employed on the project. If you file a notice of cessation or completion of your construction project, you must, within 10 days, send a copy of it to your contractor and the party that issued this notice via registered or certified mail. Not sending this copy may extend the lien filing deadline. Residential homeowners with four or fewer units are not required to send this notice.

Important Reminder: California’s lien laws enforce these requirements strictly. To avoid jeopardizing your mechanics lien rights, ensure that your preliminary notice fully complies with these specifications.

Do I Need to Record the Notice With the County Clerk in California?

Although California does not require a preliminary notice to be recorded, doing so can offer a potential benefit. Under California law, construction participants have the option to file a 20-day preliminary notice with the county recorder in the county where the project is located.

When a preliminary notice is filed in this way, the county recorder’s office is obligated to notify the filing party if a notice of completion or cessation is recorded for the project. This notification can be helpful in tracking deadlines for retainage payments or mechanics lien filings.

What if the California Notice Requirement is Met When Sent, Not Delivered?

When it comes to ensuring the California preliminary notice is sent on time, questions often arise about when the notice is officially considered “delivered” or “served.” Is it valid as soon as it’s mailed, or only once it reaches the recipient?

With a 20-day deadline to serve the preliminary notice, the process would be challenging if actual delivery had to occur within that timeframe.

Fortunately, California law doesn’t require actual delivery within the 20 days. The requirement is satisfied as long as the notice is correctly mailed within that period.

California Code §8116 clarifies this point, stating that preliminary notices are considered “given…when deposited in the mail” in the proper manner.

This leads us to the next crucial aspect — understanding the correct method for sending the California 20 day preliminary notice and what constitutes “proper” delivery under the law.

How Do I Send a Preliminary Notice in California?

Now that you’re almost ready, it’s important to properly send your California preliminary notice.

Here’s how:

How to Send a California 20-Day Preliminary Notice

1. Use Certified or Registered Mail: Send your notice via certified or registered mail, express mail, or overnight delivery through an express carrier. Using an express service carrier like UPS or FedEx ensures proof of service, which is crucial for protecting claim rights. You don’t need a return receipt; the key date is when the notice is mailed, not when it’s delivered. Keep proof of mailing. If the owner is out of state and standard methods aren’t feasible, send the notice via certified or registered mail to the construction lender or original contractor. The most cost-effective option is USPS-certified mail, which provides tracking for under $5.00.
2. Personal Delivery: While hand-delivering the preliminary notice is sometimes possible, it’s not recommended in California. Mailing the notice remains the most reliable method. We discuss this in detail in “Can I Deliver Preliminary Notices by Hand?”
3. Certified Mail vs. Certified Mail Return Receipt: It’s acceptable to send a preliminary notice by simple certified mail without a return receipt. The essential aspect is having proof of mailing, not delivery. For more details, see our article on sending notices by certified mail.

Documentation and Proof of Mailing with Registered or Certified Mail

Since California law considers the notice served once it’s properly sent, maintaining thorough documentation is crucial.

Here’s what you need to keep as evidence for each preliminary notice sent:

• A scan of the notice you mailed
• Affidavit of mailing, detailing when, how, and by whom it was sent
• Certified or registered mail tracking number and delivery status log
• Certificate of mailing from the post office
• Records of recipient research to confirm accurate addressing

One commonly overlooked requirement is the Declaration of Delivery. This simple document is signed by the individual who mailed the notice, stating their identity, the date the notice was sent, that it was a preliminary notice, and how it was sent.

Handling Returned Notices

Although California’s law considers the notice effective upon mailing, you should still aim for successful delivery. If your mailed notice is returned as “Rejected” or “Unclaimed,” you’re typically covered. However, it’s wise to re-send a copy via standard First-Class mail, as this type of mailing cannot be rejected and provides additional security if there’s a delivery dispute.

For “Undeliverable” notices, you may need to investigate the reason for the failure and take corrective action to ensure your lien rights remain protected.

Optional Filing with the County Recorder

California law allows you to record your preliminary notice with the county, although this is not a requirement. Filing in the county recorder’s office could provide a benefit, as counties are supposed to notify contractors and suppliers if a Notice of Completion is recorded. This notification can help track lien deadlines.

However, this option has drawbacks:

1. Cost: Filing with the county often exceeds $60 in fees (for example, Los Angeles County). This does not include additional time or courier fees.
2. Uncertain Benefit: Counties are not strictly required to provide Notice of Completion alerts, and this process is not always reliable. Many contractors prefer to rely on the project owner to provide completion notices directly.

Common Mistakes When Sending a Preliminary Notice

When sending a Preliminary Notice, contractors and suppliers should be mindful of common mistakes that can jeopardize their lien rights:

• Missing the 20-Day Deadline: Failing to send the notice within 20 days of first furnishing labor or materials can result in losing your lien rights for the initial work period.
• Incorrect Recipients: Ensure the notice is sent to the correct parties, including the property owner, direct contractor, and construction lender. Missing any of these recipients can invalidate the notice.
• Incomplete Information: The notice must include all required details, such as the name and address of the contractor or subcontractor, the property owner’s information, and a description of the work performed.
• Improper Delivery Method: Use the correct delivery methods, such as registered or certified mail, express mail, or overnight delivery. Failure to do so can render the notice ineffective.
• Lack of Proof of Delivery: Retain proof of delivery, such as a return receipt requested, to verify that the notice was sent and received. This documentation is crucial in case of disputes.

Avoiding these mistakes ensures that your Preliminary Notice is valid and your mechanics lien rights are protected.

Best Practices for Filing Preliminary Notices

To ensure that Preliminary Notices are filed correctly and effectively, contractors and suppliers should follow these best practices:

• Timely Submission: Send the notice within 20 days of first furnishing labor or materials to the project. Early submission is often beneficial.
• Correct Recipients: Ensure the notice is sent to the property owner, direct contractor, and construction lender (if applicable). Double-check recipient details to avoid errors.
• Complete Information: Include all required information in the notice, such as contact details, a description of the work, and the estimated total price.
• Proper Delivery Method: Use registered or certified mail, express mail, or overnight delivery to send the notice. Retain proof of mailing and delivery.
• Documentation: Keep a record of all Preliminary Notices sent, including the date, recipient, and delivery method. Maintain copies of the notice and proof of delivery for your records.

By adhering to these best practices, you can ensure that your Preliminary Notices are effective in protecting your lien rights and facilitating smooth payment processes on construction projects.

Get in Touch

The California Preliminary Notice is a crucial step for contractors, suppliers, and vendors aiming to protect their right to file a mechanics lien or bond claim on construction projects. Required for both private and public projects, this notice not only secures payment rights but also fosters transparency, enhances communication among stakeholders, and helps prevent potential payment disputes.

This guide provides a comprehensive overview of California’s preliminary notice requirements, detailing best practices, common issues, and the benefits of maintaining thorough documentation. By understanding these regulations and taking action promptly, construction participants can avoid complications, support positive project relationships, and ensure the smooth flow of payments. Properly sending and documenting your preliminary notice protects your lien rights and plays a vital role in the success of your projects in California.

At CRM Lien Services, we have been serving customers across the country with required reference documentation for lien claims since 1986. We provide expert guidance, helping contractors and suppliers safeguard their payment rights through seamless and timely preliminary notice and lien filings.

We have a wealth of expertise, are licensed and insured, and have a team of highly knowledgeable document processors. If you’re looking for a straightforward process for filing a preliminary notice and mechanics lien, give us a call or shoot us an email.