Recording a claim of lien is often the contractor or subcontractor’s greatest tool to get paid on a construction project when money is due, but payments are not forthcoming. When a valid claim of lien is recorded, the lienor has a direct cause of action (right to bring a lawsuit or claim) against the property owner. Additionally, the owner’s property interest is subject to foreclosure by the lienor.
A prerequisite to a subcontractor, sub-subcontractor or material supplier (i.e. lienors who don’t have a direct contract with the owner) recording a valid claim of lien is the timely service of a notice to owner. Without the timely and proper service of a notice to owner by a lienor, a claim of lien recorded against the owner’s property is invalid. In brief, timely service of the notice to owner is essential to getting paid especially when the prime contractor is no longer otherwise collectable.
A notice to owner must be served on the owner, each party specified to receive the notice to owner in the notice of commencement, and each party up the chain of contracts who the lienor does not have a contract with. For example, a sub-subcontractor who has a contract with subcontractor on a project, must serve the notice to owner on the prime contractor, the owner and any other party specified in the notice of commencement (i.e. bank, etc.) to receive notice. These parties are then placed “on notice” of the sub-subcontractor’s work at the project and are made aware they must obtain a release for each payment to the prime contractor on behalf of the sub-subcontractor to protect the owner’s property from a lien.
The notice to owner must also be served timely to create valid and enforceable lien rights. Generally speaking, the lienor has forty- five (45) days from its first work on the project to serve the notice to owner. First work typically means the date the lienor sets foot upon the property to perform its contract. In this area of the law “service” means “received” by the owner, etc. In other words, placing the notice in the mail on the forty fifth day is not considered service. The notice must be received in hand by the owner by day forty-five. As a result, confirmation of delivery of the notice is critical for proof of timely service of the notice to owner and otherwise required by the law.
In summary, the notice to owner is a complex and challenging area of the construction lien law that should be treated with caution by a lienor not in privity of contract with the owner. Such a lienor would be wise to serve a notice to owner on every project at the immediate start of every job (if not sooner).
This article does not constitute specific legal advice. If you have a question or issue in this area please consult legal counsel.
A notice to owner must be served by a subcontractor, sub-subcontractor and material supplier on not in privity with the owner. The prime contractor, laborers and the architect may be possible lienors, but do not need to serve a notice to owner.
Also see certified mail log service which allows service to be proven if the mailer keeps a regular US mail log and the notice is mailed by the 40th day from first work.
First work is different for specially manufactured goods. The rule for specially manufactured goods is the date the good’s manufacture begins.