Pre Lien Registration

Chris Johnson

As I read through quite often a number of folks are on here requesting "What to do...GC did not pay me, etc."

In California we have a pre lien registration all sub contractors should (not mandatory...but a fool if you don't) file within 20 days of starting a new project. The pre lien notifies A) the GC, B) The H.O. and C) the financial lenders of your contract value.

This pre lien is registered with the county property register and when you are paid in full upon completion of the job you notify the county again and it is removed.

This I find to be a very useful tool and am just wondering how many other states have such a creature or something similair to this to help ensure payment in full and no excuses from a tardy GC?

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Chris

cleveman

Not aware of such a thing here. First time I have heard of such a deal.

So if you are not paid or fail to remove the pre-lien, does it automatically become a lien?

My initial reaction is that the GC's wouldn't like this because the homeowner can see what everyone is making, add it up, and see that out of an $80,000 job, the GC paid out $25,000 to subs and his share was $55.

Also, it must be very easy to see what jobs are going for. If you're losing bids, you can see what the person got the job for.

BKFranks

It's only a 20 day preliminary notice.

NOTICE TO PROPERTY OWNER
If bills are not paid in full for the labor, services, equipment, or materials
furnished or to be furnished, a mechanics’ lien leading to the loss, through
court foreclosure proceedings, of all or part of your property being so
improved may be placed against the property even though you have paid
your contractor in full. You may wish to protect yourself against this
consequence by (1) requiring your contractor to furnish a signed release by
the person or firm giving you this notice before making payment to your
contractor, or (2) any other method or device that is appropriate under the
circumstances.

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mikezap

So if you are not paid or fail to remove the pre-lien, does it automatically become a lien?
No.

My initial reaction is that the GC's wouldn't like this because the homeowner can see what everyone is making, add it up, and see that out of an $80,000 job, the GC paid out $25,000 to subs and his share was $55
Usually it is for an unpaid balance. The othe subs are not a part of the pre-lien.

Also, it must be very easy to see what jobs are going for. If you're losing bids, you can see what the person got the job for
I don't think you can just walk in and find all the information on any given project. I'm not sure if it's public record. Only to find out "if" property has liens filed against it.
Anyone clear(er) on this?

RCPainting

We have that in Utah. Part of our license requirement is that we attend 8 hours of continuing education. State offers a 4 hour class to teach how to use the program.
The dollar amounts are not listed. It is only to file a "right to lien". You have to have filed within 20 days of commencing work. Then you file a notice of completion when work is done.
It is generated when a permit is issued, I have sent a letter to people on list and have picked up a few jobs from it.
I think it is good for the HO as well. I also put info about it in my proposal to HOs.
You have to register to use, you can check it out at http://www.utah.gov/cnr/

parkerfairfield

They're also called "Mechanic's Lien"

As to in Iowa ... I did a Google search
Here's one specific to Iowa: http://www.uslegalforms.com/construc...lien-forms.htm


They're GREAT security.

• If you're sub-ing to a GC... then you need to do the PRE LIEN notice ... which means that it needs to be processed within the first 20 days of your working on the jobsite. Here they're filed at the County Recorder's office.
• If you're working for a HO, then it's 90 days from your last day of work. If you've forgotten to file one and the HO stiffs you ... volunteer to do more work (maybe you "forgot" something) on their house... then ask for payment after you're done. If they say no, then file a Mechanic's Lien the next day. HEY, the INVITED YOU to finish the job. Don't get angry, get paid.

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BKFranks

Here's the actual California 20-Day Preliminary Notice
http://www.builderslaw.com/pdf_forms...n%20Notice.pdf

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skyhook

Friends in Oregon automatically file a lien at the beginning of the project, then file their release when they get paid. Some contracts have the 20 day preliminary notice built in.

Re: American Building Contractors Association, form no. 210

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R. Demary

Hey guys, I have been reading through the posts and still have a question that my company needs answering... we've tried looking all around the internet, asking lawyers, asking other contractors and no one will give us a straight answer.

We have just recently heard about pre-liens and swear by them now... but we have a client whom we did some work for without putting a pre-lien on her house, and now she owes us a good chunk of money. And other than taking her to court, do any of you know any other means of collecting our dues... any other liens we could put on the house?

Any help in this matter is greatly appriciated... the last thing we need is AN OTHER court case.

Thanks!

parkerfairfield

I did this ... and the HO was worried enough afterwards to pay up.

I'd talk to your lawyer about his thoughts ... as I'm not one...

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skyhook

I'm no lawyer but been there many times. A lien is a cloud over the tittle. Makes it hard to re-fi or sell until the lien is released or perfected. She could bond around it but it starts the clock and deadlines will have to met. The lien is also the beginning of a court case in your situation so be prepared to file a lawsuit. You could win by default if she doesn't pony up with an atty. She could fight and say the work was substandard but atty fees could outrun the recovery sum in short time. Best to try and settle out of court.

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Chris Johnson

You can still place a lien without a pre-lien, it is a little more difficult but can be done.

The pre-lien only applies to sub-contractors and suppliers...the prime contractor does not file one. As a sub-contractor if your contract is directly with the owner you become a prime contractor and no pre-lien is needed.

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Chris

BKFranks

California -

PRELIMINARY (LIEN) NOTICE
(On private works of improvement)
The Preliminary Lien Notice is primarily for the benefit of the owner of a property who is building a new structure, remodeling an existing building, etc. The lien laws permit a person or company who contributes to a work of improvement on real property to obtain a judgment against the property if they were not paid for the work they did or were not paid for the material they furnished. Under the old lien laws it was possible for the owner of the property to pay the General Building Contractor in full, but if the General Building Contractor did not pay the subcontractors, material man, equipment suppliers, etc., the subcontractors plus anyone else having a claim could then file a mechanics' lien against the property. In many instances the owner of the property did not learn of the General Building Contractor's failure to pay the subcontractors, material man, etc. until after the job was completed. He did not even know who the subcontractors, material man, etc. were. Now this Preliminary Notice section of the lien laws ascertains that the property owner will be notified promptly of those persons contributing to the work of improvement on his property. This law also protects the subcontractors, etc. by informing the owner who the subcontractors are and what labor they are contributing to the work of improvement on his property.

WHO SERVES THE PRELIMINARY LIEN NOTICE?
When the owner enters into a contract with a General Building Contractor or any original contractor for a new structure, for the remodeling of a home, commercial remodeling, etc., the owner will be notified by the General Building Contractor or any other Original contractor that the lien law permits the new structure or remodeled property to be security for payment of all bills associated with the improvement being done. This is the payment "Notice to Owner" shown on a previous page. Any contractor having a direct contract with the owner is an .original or prime contractor, although he may be either a General or Specialty Contractor; this contractor does not have to furnish the
Preliminary Notice to an owner. But, any person, firm, company, material man, etc. that contributes to the work of improvement and does not have a direct contract with the owner will notify the owner of their contribution to the work of improvement. This is done with the "Preliminary (Lien) Notice." This notice must be served for any job (labor, services or materials) of$400.00 or more. However, if the job is less than $400, failure to file though there will be no penalty, will still result in loss of lien and stop-notice rights. It is highly advisable that preliminary notice be filed for all jobs, no matter what the value.


WHO RECEIVES THE PRELIMINARY NOTICE?
The subcontractors, material man, equipment suppliers, etc. who do not have a direct contract with the owner must, within 20 days, after first providing labor, equipment, materials, services, etc. for the job serve the (I) owner, (2) original (prime) contractor and (3) the construction lender (if there is one) with a notice. All persons who are not contractors and do not have a direct contract with the owner or owner/builder must serve this notice to the
construction lender. The lien laws state that it is mandatory that this notice be served upon the proper parties. When the cost of the work of improvement is in excess of $400, the failure of any licensed contractor to give the required notice constitutes grounds for disciplinary action by the Registrar of Contractors. When the cost of the work is under $400, it will not bring disciplinary action by the Registrar of Contractors but it will forfeit the contractors' right to file a mechanics' lien on the property. ]n fact, whether the amount of labor, materials, equipment, etc. is either over $400 or under $400, if the notice is not provided to the owner, General Building Contractor and construction lender, if there is
one, the contractor's rights to a mechanics' lien and stop notice are forfeited. Service of this notice may be given by delivering the notice to the person to be served personally, or by leaving the notice at his address or place of business with some person in charge. It may be sent by first class mail, registered mail or certified mail, postage prepaid, addressed to the person to whom notice is to be given at his residence (or place of business) address, or at the address shown by the building permit on file with the authority issuing the permit. If the name of the person to be served is not known, it may be addressed to "Owner," "General Building Contractor," and "Construction Lender," at the jobsite.
If a person supplies labor, materials, etc. to a project and did not file the Preliminary Lien Notice before the 20 day period after first supplying labor, services or materials, he cannot file a mechanics' lien against the project. But, if this same person supplies additional labor, materials, etc. and does file the Preliminary Lien Notice before the 20 day period expires after supplying the new labor, materials, etc. then he has the right to file a mechanics' lien on the project for this additional labor, materials, etc.

CA_Lien_Process.pdf

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concretemasonry

Some stes require that the owner be notified of the right to file a lien, so they can make sure that they know who should give a realse to (either full or partial) when they make any payments.

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Dick

Engineer, designer and consultant recently active domestically and internationally on construction and design in about 35 countries.