Arizona law requires that every person (except for wage earners) who furnishes labor, professional services, materials, machinery, fixtures or tools to a construction project give prior written notice, generally called a 20 Day Preliminary Notice, of their statutory rights to the owner, construction lender, original contractor, and the person with whom the claimant has contracted. What is a common misconception is that this 20 Day Preliminary Notice is actually required not just to preserve and protect claimants “Mechanic’s Lien” rights, but also to protect and preserve the Claimant’s entitlement to most of the numerous statutory remedies allowed by Arizona Statutes.
In other states, the 20 Day Preliminary Notice is referenced by other names – Preliminary Notice, 20 Day Notice, Notice to Owner, Notice to Property Owner. Regardless of the exact title, the purpose in Arizona, and in most of the western states is the same – to preserve and protect a Claimants rights to various of the statutory remedies ensuring payment for work performed on either private or public projects. When the Claimant is a 2nd or lower tier subcontractor or supplier, timely and prompt service of these Preliminary Notices is critical to receiving timely payment.
The importance of the Preliminary Notice is that it offers all interested parties, the Owner, General Contractor, Subcontractors, Lenders and payment bond Sureties, the opportunity to become fully aware of every other party possessing potential lien rights against a property or claim rights against a payment or license bond. In Arizona, the Preliminary Notice is not just required to file a Lien, but is also a pre-requisite to preserving the Claimant’s rights to recover on a Contractor’s License Bond filed with the Arizona Registrar of Contractors and for subcontractors or suppliers to recover against the General Contractor’s Payment Bond. In Arizona, a timely filed Preliminary Notice allows Claimants to also file a “Stop Notice” to the Owner and Lender to ensure timely payment of an invoice.
Of other vital concern is that with few exceptions, each state requires that the Preliminary Notice / Notice to Owner form contain statutorily mandated language. The required language for California is vastly different from that required for Arizona. Nevada differs from Utah. New Mexico, Oregon, Washington – ALL DIFFERENT STATUTORY LANGUAGE REQUIREMENTS. Unfortunately, many preliminary notice service companies and other “specialty” software products available for preparing preliminary notices in house – use one standard form REGARDLESS of the particular state where the project is located. The use of these “form” products or companies which provide only a “National” non-state specific Preliminary Notice form will likely be fatal to a Claimant’s right to recover payment. Such Notices are considered legally defective and are frequently rejected by the Courts. “Substantial Compliance rights to payment.
Lastly, Claimants must recognize that the time period for filing or serving their Preliminary Notices / Notice to Owner varies from state to state. In Arizona, California and Utah, the time is 20 days from first work (to fully protect the Claimant). Nevada –the time is 31 days; Washington 60, and Oregon 10. One fact however is consistent throughout each statutory scheme – a Preliminary Notice / Notice to Owner can never be filed TOO EARLY but it surely can be filed TOO LATE. As a rule of thumb, the Claimant should always have prepared and properly served their Preliminary Notice at the same time they are first preparing their contract, subcontract, proposal, or material order. Doing so at that time – all well prior to even starting work – will assure that the Claimant is fully protected for whatever statutory remedies of payment to which it is allowed.