Often confused with the Preliminary Notice, the Notice of Intent to Lien is a crucial step in filing a mechanics lien if your project is located in one of the states where it is required. Similar to a warning letter or a demand letter, it’s a way of letting the property owner know that an outstanding invoice hasn’t been paid and, if this isn’t remedied, a mechanics lien will follow.
What is the Notice of Intent to Lien?
The Notice of Intent to Lien is exactly what it sounds like, a notice letter you send to various parties on the project letting them know that, unless you’re paid, you intend to file a mechanics lien against the property. Much like demand letters, they are often successful in motivating parties to pay invoices or at least opening discussions about resolving payment issues.
Sending a notice is generally simpler and much cheaper than filing a mechanics lien, though if it does not bring about resolution, then you will still have to file an appropriate lien. Further, owners and mortgage holders often appreciate the notice because, unlike a mechanics lien, a notice isn’t registered and doesn’t encumber the property like a mechanics lien. It gives them a chance to work towards paying or resolving the issue without having the property tied up under a lien.
Even in states where a Notice of Intent is not required- National Lien and Bond suggests you take the first step of sending this Notice. It may save you the time and money of filing a Lien.
Notice of Intent to Lien vs. Preliminary Notice
A Preliminary Notice is sent shortly after the work begins, letting the owner know who is working on the project, who is expecting payment, and who might be filing a mechanics lien in the future if that payment doesn’t occur. A preliminary notice is collected by the property owner, filed, and only referred to in the future if necessary
A Notice of Intent to Lien is different in that it isn’t filed until an invoice for work completed remains unpaid, generally, 10-30 days before the mechanics’ lien itself is filed. A Notice of Intent is a call to action, to open a conversation, to make a payment, or to investigate an issue. If an owner starts getting multiple notices, it gives them an early heads up of a potential problem with the project. Many payment issues are caused by miscommunication, so when the owner knows that problems are occurring, they can quickly step in and work towards a resolution.
Where is the Notice of Intent to Lien Required?
Twenty-Three states require a Notice of Intent for at least some projects: Alabama, Arkansas, Colorado, Connecticut, Illinois, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Missouri, Nevada, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Virginia, West Virginia, Wisconsin and Wyoming. Some states have a requirement for construction professionals to send a Notice of Intent to Lien before filing a mechanics lien. Some states require the notice, but allow it to be filed concurrently. A few other states require an ongoing accounting notice.
For example, Wyoming and Wisconsin require filing the notice before filing the lien. West Virginia allows a concurrent filing. Virginia only gives filers 30 days from the completion of the project to file a notice. Oregon requires a notice for filing suit, but not for the lien itself. Oklahoma has different notice rules for lessors of equipment and sub-contractors, and Nevada requires notice to home-owners, but not to commercial property owners.
If you’re working on a project in one of these states, you want to make sure you’re following the correct procedure as far as what information your notice contains, how long after the invoice is unpaid the notice is delivered, and how long you wait before filing a mechanics lien.
If you’re running projects in multiple jurisdictions, it might feel complicated keeping up with the different rules and procedures for each. That’s where the team at National Lien & Bond can provide valuable assistance. We will help you set up your processes such that you’re collecting all the right information on the front end and make sure you’re tracking and filing mechanics liens and required notices in a timely fashion. For more information, or to learn about our valuable lien seminars, reach out today.
This blog is for educational purposes only and not intended for legal advice.