Published April 5, 2021
If you’re a property owner or a general contractor planning an extensive construction project, you are most likely required to file a notice of commencement. Let’s dive deeper into what the notice is and determine why it’s needed.
A notice of commencement is basically a document that tells the stakeholders of a construction project when it will start. It outlines the names of the parties involved as well as the dates when the project will begin and when suppliers should deliver their materials and services. It’s filed and recorded in the county where the project is located and must also be provided to all stakeholders.
Not all states require a notice of commencement. But even if it’s optional in your state, you’ll find it beneficial to file one.
Why Is a Notice of Commencement Important?
Aside from being a legal requirement, a notice of commencement helps get all the parties involved on the same page. This makes exchanging waivers and notices a lot easier. But more than that, it also protects their interests.
You see, major construction projects usually involve a lot of service providers and suppliers. In theory, when these suppliers deliver their goods and services, they should get paid. But immediate payment rarely happens in practice. Most of the time, these suppliers are paid at a much later date or when the project is completed.
To ensure that they’re getting paid, they can file a mechanics lien against the property being constructed. Mechanics lien claims can be a total headache for both owners and contractors. Not to mention that it creates a significant financial risk as properties with liens can be hard to sell.
Due to the complex nature of construction, most property owners don’t really know who’s working on their projects. It can also be hard to track who got paid and who hasn’t yet. So someone can just file a lien even if they’re not involved in the project or have not yet rendered their services.
On the other hand, suppliers and service providers usually have no formal way of telling property owners their involvement in the project. Nor do they have a written document of what they need to know about the job.
To ensure fair dealing for both sides, some states require a notice of commencement when filing mechanics liens. This protects property owners and contractors from false lien claims. It also ensures that suppliers get paid for their goods and services.
Is a Notice of Commencement a Lien?
No, a notice of commencement is not a lien. It’s merely a document announcing the commencement of a project. It does not grant the suppliers a legal claim over the property. But it can affect the timeline for filing a lien.
Most states implement a deadline for subcontractors and suppliers to file a mechanics lien. The duration can vary from 10 days to 6 months. If a lien is filed late, it cannot be attached to the property.
What States Require a Notice of Commencement?
As of this writing, only these eleven states require a notice of commencement:
- Florida
- Georgia
- South Carolina
- Texas
- Louisiana
- Utah
- Ohio
- Nebraska
- South Dakota
- Michigan
- Iowa
The filing process, as well as lien laws, vary widely in each of these states. But state laws tend to change every now and then. So if you plan to file a notice of commencement anytime soon, you should check with your local county clerk’s office. Remember that not filing one may lead to serious consequences and stiff penalties.
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About The Author
As an avid traveler, Judy Ponio loves to write blogs about traveling and how to save money when making international calls.