The California Preliminary Notice, also commonly called the California 20-Day Preliminary Notice, is an important tool to protect payments for contractors and subcontractors. It protects three main avenues of payment recovery in case payment issues arise in a construction project.
If you fail to file a preliminary notice or file one that’s deemed invalid,
This is why contractors and subcontractors in California need to be familiar with the rules governing preliminary notices to ensure that your payment rights are protected.
This article answers all the general questions about the California 20-Day Preliminary Notice.
A preliminary notice notifies the owner, reputed owner, and/or construction lender that a contractor or subcontractor retains the right to file a mechanics lien claim, give a stop notice, or assert a claim against a payment bond in case of payment issues or non-payment. 1
After giving the owner and/or construction lender a preliminary notice, you are also permitted to record the preliminary notice with the County Recorder where the job site is located. 2
The laws surrounding payment recovery in case of non-payment differ for private 3 and public works 4 . Preliminary notices are usually required for both public and private projects. However, there are slight differences in the way non-payment and payment issues are handled. This article discusses preliminary notices for private works.
Who is required to give a preliminary notice in California?
Subcontractors and lower-tier subcontractors are always required by California law to give a preliminary notice to required parties. Laborers are not required to give a preliminary notice. 5
The following are considered subcontractors in the California Civil Code:
Those who provide any of the following 6 under a contract with another contractor or subcontractor:
Material suppliers, equipment lessors, and design professionals can also send a preliminary notice. 7
The following are considered design professionals under the Civil Code: 8
Direct contractors are only required to give a preliminary notice to the construction lender in case a project is financed by a loan. 9 Otherwise, direct or prime contractors are not required to give a preliminary notice in California because of the Mechanics Lien Warning 10 already included and required in contracts. However, it is still prudent to do so in order to remind owners to make their timely payment/s.
The following parties must receive a preliminary notice: 11
Separate preliminary notices must be given to each party. Only 1 preliminary notice per recipient is required and that covers the entirety of the work provided the preliminary notice is sent on time. 12
Subcontractors who work under other subcontractors may directly send their preliminary notice to the direct contractor or through the subcontractor they have a contractual relationship with.
To cover all work carried out in a project, the preliminary notice must be given within the first 20 days of work or delivery of material to the project site. 13
If you fail to give a preliminary notice during this timeframe, you may still give a preliminary notice. However, note that only the work or materials delivered from the 20 days preceding the date of notice delivery and onwards will be covered by the preliminary notice.
If you’ve passed the first 20 days, it is still best to send the preliminary notice so you limit the risk of not having recourse in case of non-payment. You will still have protection for all work performed 20 days before the day you delivered the notice.
The first step is to prepare the notice and make sure all information required is complete and accurate.
There is no statutory form for filing preliminary notices. However, California Civil Code has made clear that the following information must be included in the preliminary notice for it to be valid: 14
EVEN THOUGH YOU HAVE PAID YOUR CONTRACTOR IN FULL, if the person or firm that has given you this notice is not paid in full for labor, service, equipment, or material provided or to be provided to your construction project, a lien may be placed on your property. Foreclosure of the lien may lead to loss of all or part of your property. You may wish to protect yourself against this by (1) requiring your contractor to provide a signed release by the person or firm that has given you this notice before making payment to your contractor, or (2) any other method that is appropriate under the circumstances.
This notice is required by law to be served by the undersigned as a statement of your legal rights. This notice is not intended to reflect upon the financial condition of the contractor or the person employed by you on the construction project.
If you record a notice of cessation or completion of your construction project, you must within 10 days after recording, send a copy of the notice of completion to your contractor and the person or firm that has given you this notice. The notice must be sent by registered or certified mail. Failure to send the notice will extend the deadline to record a claim of lien. You are not required to send the notice if you are a residential homeowner of a dwelling containing four or fewer units.
If you are a subcontractor who has not completed or made any payment to a laborer who worked on the project, the notice must include the name and address of the laborer and all people who are still yet to be paid. This may include the laborer’s bargaining representative or any other party that acts on behalf of the laborer, for any of the payments, e.g., health and welfare payments. 15
You may also use Handle to create, fill out, and deliver the preliminary notice to ensure its accuracy and validity.
After checking that all required information is in the preliminary notice, the next step is to give the notice to the parties required to receive them.
You need to give separate notices to the following parties: 16
If you are a direct contractor in the project, you are only required to give a preliminary notice to the construction lender or the reputed lender. However, it is best practice to still give a preliminary notice to the owner even if it’s not required in order to remind them to pay on time.
The following delivery methods are allowed: 17
The final step is to record the preliminary notice with the Office of the County Recorder. 18
Anyone who has sent a preliminary notice to required parties may file the notice with the Office of the County Recorder. The sole purpose of recording the notice with the County Recorder is to get a notification when the owner files a Notice of Completion or Notice of Cessation.
Note, however, that as mentioned in the statutory statement in the preliminary notice, the owner is also required to send parties that gave them a preliminary notice a copy of the Notice of Completion or Notice of Cessation 10 days after filing.
Knowing when a Notice of Completion or Notice of Cessation is filed is important because it shortens the window for a possible mechanics lien claim or sending a stop notice. 19
For projects where the owner files a Notice of Completion or Cessation:
If the owner did not file a Notice of Completion or Notice of Cessation,
Filing the notice with the County Recorder simply means submitting a copy of the preliminary notice to the Office of the County Recorder.
The following information must be included in the preliminary notice for it to be valid: 20
EVEN THOUGH YOU HAVE PAID YOUR CONTRACTOR IN FULL, if the person or firm that has given you this notice is not paid in full for labor, service, equipment, or material provided or to be provided to your construction project, a lien may be placed on your property. Foreclosure of the lien may lead to loss of all or part of your property. You may wish to protect yourself against this by (1) requiring your contractor to provide a signed release by the person or firm that has given you this notice before making payment to your contractor, or (2) any other method that is appropriate under the circumstances.
This notice is required by law to be served by the undersigned as a statement of your legal rights. This notice is not intended to reflect upon the financial condition of the contractor or the person employed by you on the construction project.
If you record a notice of cessation or completion of your construction project, you must within 10 days after recording, send a copy of the notice of completion to your contractor and the person or firm that has given you this notice. The notice must be sent by registered or certified mail. Failure to send the notice will extend the deadline to record a claim of lien. You are not required to send the notice if you are a residential homeowner of a dwelling containing four or fewer units.
If you are a subcontractor who has not completed or made any payment to a laborer who worked on the project, the notice must include the name and address of the laborer and all people who are still yet to be paid. This may include the laborer’s bargaining representative or any other party that acts on behalf of the laborer, for any of the payments, e.g., health and welfare payments.
You only need to send one preliminary notice per required recipient. 21
What is the purpose of recording the preliminary notice with the County Recorder?
Filing the preliminary notice with the county recorder is for the purpose of the county recorder knowing who to send notices to in case/when they receive the Notice of Cessation or Notice of Completion from the owner. Receiving a notice from the County Recorder when the owner files a Notice of Cessation or Notice of Completion is important because it changes the timeline for mechanics lien filing and stop notice eligibility. 22
Filing a preliminary notice to the County Recorder is not enough to retain payment rights. You must always prioritize giving the required parties a preliminary notice as well.
You can send the preliminary notices out to required parties as soon as you start working on the project. If you want to cover all work done on a project, you must send the preliminary notice within the first 20 days of your work or materials delivery to a project. In other words, to be fully protected and have the right to a foreclose on a lien claim, serve a stop notice, or assert your right to a payment bond, you must file no later than 20 days after the first day of work. 23
If you failed to send a preliminary notice within the first 20 days, you should still send a preliminary notice. The difference is that only the work performed or materials delivered 20 days preceding the date of notice delivery as well as all work after the notice delivery will be covered by the preliminary notice.
Yes. Subcontractors are required to send a preliminary notice and file it with the County Recorder. 24
Not only is it in their best interest, but in California, subcontractors who carry out work of more than $400 in value are required to send preliminary notices to the required parties and file them with the County Recorder. Not filing may be grounds for disciplinary action under the California Contractors’ State License Law. 25
Direct contractors are only required to give a preliminary notice to the construction lender in case a project is financed by a loan. Otherwise, direct or prime contractors are not required to give a preliminary notice in California. 26
However, there is no law barring direct or prime contractors from giving preliminary notices to owners or reputed owners. It is still prudent to do so in order to remind owners to make their timely payment/s.
The following delivery methods are allowed: 27
If you fail to give a preliminary notice to the required parties, you lose the right to make a mechanics lien claim, to give a stop notice, or assert your right to a payment bond in case of payment issues. 28
If you missed sending a preliminary notice to the required parties within the first 20 days of a project, you may still send a preliminary notice but it will only cover work or materials delivered in the 20 days preceding the date you were able to give a preliminary notice to required parties. 29
If you are a subcontractor carrying out work of more than $400 in value, not sending a preliminary notice to required parties and filing with the County Recorder is grounds for disciplinary action under the California Contractors’ State License Law. 30
A preliminary notice protects your right to file a lien claim in case of non-payment. It also protects your right to file a stop notice (aka stop payment notice) and assert your right to a payment bond in case of payment issues. To retain these rights, you need to ensure that your preliminary notice is sent and filed correctly, according to the requirements of the law. Otherwise, your preliminary notice will be deemed invalid, and you lose your mechanics lien rights, ability to give a stop notice, and get paid via a payment bond in case of non-payment. 31
Filing your preliminary notice with the county recorder also ensures you get notified when the owner gives a Notice of Cessation or Notice of Completion, which affects the amount of time you have to enforce a lien claim in case you would need it. 32
Under CA Civil Code, the Direct/Prime contractor is required to make the following information available to claimants for the purpose of satisfying preliminary notice requirements: 33
Accuracy is paramount for preliminary notices. It can be difficult to find the correct information and it would help to use a notice management service like Handle that also includes Owner Verification so you can be sure that your preliminary notice is accurate and delivered to the correct person/s or entities.
An invalid preliminary notice results in losing your mechanics lien rights so it’s crucial that you make sure that you follow the requirements. Here are some common mistakes that result in invalid preliminary notices or loss of full or partial lien claim coverage.
Subcontractors might not always know the name and address of the project owner so this can result in the preliminary notice being sent to the wrong address or person. By law, direct contractors are required to provide this information to subcontractors for the purpose of preliminary notices. 34 However, there can be situations where you’re unable to get the information right away, in time to deliver the preliminary notice within the first 20 days. It’s useful to use tools like Handle’s Owner Lookup to get the accurate information of project owners.
Subcontractors need to send the preliminary notice to the contractor or subcontractor they’re hired under. They also need to send a preliminary notice to the owner, either directly or via the direct contractor. It’s always best to send the preliminary notice directly to the owner, because a delay or failure to deliver will result in losing lien rights. 35
To secure your right to recover payments via lien, stop notice, or payment bond on all work performed or materials delivered on a project, you need to send the preliminary notice within the first 20 days of work or materials delivery. If you send the preliminary notice past the first 20 days, you lose the rights on the days preceding the 20 day period before the notice was delivered. Of course, you should still deliver the pre-lien notice even if it’s late. However, this can be a costly mistake in case you encounter payment issues later on. 36 Using construction software with automated deadline management can save you from losing out on payment recovery, especially if you have a lot of projects to manage.
The law requires that notices be in writing–that includes printed and typewritten. You need to deliver a physical notice to the required recipients via personal delivery or mailing. 37
If you want to send the preliminary notice online, another option is to use a lien filing or notice management service like Handle to deliver the notices for you. You just need to sign up and fill out the form online with the help of tools that ensure information accuracy like Owner Lookup, and we will take care of the rest.
