Category Archives: Notice of Non-Responsibility

Notice of Non Responsibility Service Options

The Notice of Non Responsibility is a multi step process which includes:

  1. Research and Prepare
  2. Review, Approval, and Return of the prepared Notice by the Client
  3. Deliver to the appropriate Recorder’s Office for Recordation
  4. Recordation with Conforming Copies
  5. Delivery the executed Notice of Non Responsibility to the property
  6. Posting the Notice of Non Responsibility in an compliant location
  7. Recording “Proof of the Posted Notice of Non Responsibility”

We refer to the above as a TurnKey process when you elect to have CRM complete all 7 steps. However, as this can be a very costly endeavor, CRM offers our clients to pick and choose which of the above steps they may want to complete on their own, allowing CRM to facilitate the remaining processes.

So how much will the Notice of Non Responsibility Service cost? Lets examine each of the steps to get an idea of how the Notice of Non Responsibility is created and made compliant with the Statute:

First and foremost is the fee to research and prepare a Notice of Non Responsibility.

CRM charges a flat rate fee of $90.00 for this service. This fee is not subject to any discounts as the individual cost to do the work for 1 notice or 100 notices does not change. Every time a Notice of Non Responsibility is ordered the process is the same. There are no shortcuts and no economy of scale.

The Notice of Non Responsibility must be recorded in the Recorder’s Office for the County where the property is located. So the next service to consider is how you want to have the Notice of Non Responsibility sent to the County Recorder’s Office for recordation. This can be accomplished by Certified Mail, FedEx, or Courier. So here the choice becomes anywhere from $5.00 to $240.00 per notice (or batch of Notices) depending on the location of the Recorder’s Office and the available options to submit your notice for recording. Allowing ample time for recording in remote areas is suggested.

In addition to your preference as to “How to send it to the Recorder’s Office” you must also include the fee for Recording the Document. Every Recorder charges a different fee for this service. We have seen some as low as $8.00 per page while others can range in the $30.00 plus area. Neither CRM nor anyone else has control over these costs. They are dictated by the Recorder’s Office and everyone is charged the same fee.

Your final decision in the Notice of Non Responsibility process is how you want to have the notice posted on the building. This is a critical part of the service and cannot be left undone. However, here is an area where you could save some money by considering several strategies. The most economical is for you to have one of your On Site agents post your own notices. While this would surely eliminate receiving a posting charge from CRM, it is not always the preference of our clients. Often the On-Site agent is not that close to the building and the posting activity can really take away from his or her daily responsibilities. The other issue we usually see is that your agent may not be familiar with the laws that govern the posting requirement and could cause misunderstanding between the Tenant and the person doing the posting. However, if you truly want to minimize this cost, posting your own is definitely an option to consider.

If you prefer to have CRM handle the posting for you, it is possible to save by consolidating posting activities. When you have multiple notices to post at the same property CRM can batch those notices which are still within the legal timeframe for serving and have them all posted during a single trip to the property. As the posting service represents the largest cost in the Notice of Non Responsibility process, we want our clients to consider all of their options. CRM will take care of this service for you. However, because of the scheduling, travel, and cost of having an experienced and knowledgeable agent perform this service, it becomes a very expensive part of the process and should be considered with a complete understanding and awareness of the cost involved to facilitate a successful posting.

So to help simplify the Posting Cost Estimating Process, CRM charges $80.00 per hour for posting a single Notice of Non Responsibility. This usually averages about $160.00 or 2 hours for each notice that we post. This fee includes the labor and the transportation to and from our Brea offices to the property where the notice must be posted. It also includes taking digital photos of the posted notices, which serve as proof that the posting was in fact completed. One thing you may count on is that CRM has carefully selected the couriers we use. Their fees are fair based on the quality of service they perform as well as their understanding of the nature of the work and their dependability. Not all couriers are the same. We found that we can only use those who are truly professional in their business model and the people they employee. It is possible to save money with a lower cost courier. However, when you consider the serious nature of the Notice of Non Responsibility, we found that it does not pay to compromise this activity for the sake of a few dollars.

Contact us for a free proposal to complete any of your construction notice needs.

Notice of Non-Responsibility-A possible defense against a Mechanics Lien

While a Notice of Non-responsibility is an important step for property owners to take in order to protect themselves from a mechanics lien brought forward by improvements made by tenants, it is only a possible means of defense against a mechanics lien. It is very beneficial to understand the parameters of the notice of non responsibility and under which circumstances you may be protected from becoming liable for a mechanics lien filed against your property.

Let’s take a look at an illustration:

A Tenant receives approval from his Landlord (Property Owner) to make tenant improvements to the unit he is leasing in order to improve his business. He is the owner of a Hair Salon located in the leased property and has contracted to install new sinks, chairs, and stylist work stations. He understands that he will be liable for all payments to any of the trades or materials suppliers who participate in this project. The Property Owner, with the understanding that the tenant is accepting all liability for this tenant improvement, agrees to allow the tenant to make these changes.

 In order to protect himself from any payment defaults on the part of the tenant, which may be cause for mechanics liens being filed against the property,  the Property Owner files a Notice of Non-Responsibility. This notice of Non-Responsibility is posted at the leased property to communicate to all contractors that he bears no legal liability for the project, and that should they have any issues collecting money owed for improvements made or materials supplied,  they should direct their collections efforts exclusively with the tenant and refrain from filing any mechanics lien against the Property Owners interest in the leased property.

Ensuring the effectiveness of your Notice of Non-Responsibility

In order to be effective, a Notice of Non-Responsibility must be prepared, recorded and posted properly, which requires strict adherence to the statutes set forth by the state in which the lease property is located. For example in California if you prepare, record and post the notice correctly – but fail to complete the process within 10 days from the day you first became aware of the pending tenant improvements, the notice may be unenforceable to protect you from a mechanics lien.

Strengths and Weaknesses

It is possible that the tenant may elect to forgo his lease and abandon the property before the project is completed. Leaving all of the contractors and materials suppliers with unpaid invoices for this project. This could result in the Property Owner being named in a mechanics lien for unpaid balances due to tenant improvements made to his property. Many are surprised when this happens because they believed the Notice of Non-Responsibility would serve to prevent anyone from filing a mechanics lien. Unfortunately, this is not always the case.

In order for the Property Owner to not be found liable for the improvements, they will have to prove that the property did not benefit from any of the changes made, and that the work done was solely for the benefit of the tenant.

For example, if the Property Owner has re-leased the same property to a lessee who will benefit from the improvments made to the property, the property owner may be found to be benefitting from the improvements and can be held liable in court to pay what is owed. Alternatively, if they wish to re-lease the unit to be used for a different kind of business, and therefore must undo all of the work that was done, they may be able to have any mechanics liens discharged for lack of cause. Keep in mind, that if any part of the project is found beneficial to the Property Owner long term, such as new electrical wiring or improved plumbing, they may still be asked to make good on monies owed, or a portion thereof.  If the Property Owner has received upon the initial leasing of the unit certain licensing fees, special payments, or an additional month’s rent – they may be asked by the court to use these funds to pay the mechanics lien holders.

From a standpoint of “Best Practices”, a Notice of Non-Responsibility is a smart solution to position the property owner from becoming liable to a mechanics lien. However, it is important that you understand that the notice of non-responsibility is only a possible means of defense and due diligence should be exercised when granting a tenant permission to make tenant improvements which may impact the property owners exposure.

If you would like to speak have someone who understands the process of the notice and/or would like to discuss your specific situation in further detail with an expert at CRM Lien Services, please contact us today for a free consultation.