Mechanics Lien Laws, Preliminary Notices, and Change Orders
Must change orders be included in the preliminary notice, in order for the notice, and a lien, to be valid?
The similarity between a claimant's preliminary notice estimate and the value actually bestowed to a project is irrelevant in determining whether the Preliminary Notice is valid and acceptable for lien rights.
Similar to a claimant's obligation to reasonably investigate the ownership of the property before stating the owner's name within his Preliminary Notice, mechanic's lien laws state that the claimant must only make a reasonable effort to estimate the value of labor and/or materials and/or equipment etc. that he expects to provide to the project.
For a subcontractor, this amount will usually be the subcontract price.
For a supplier, the supplier should ask his customer what quantity of materials the contractor expects to purchase from the supplier for the project and use that information to determine the appropriate amount of the estimate.
The claimant must make a reasonable effort to estimate the value that he expects to provide. That typically does not include as yet unordered change orders.
Even if the claimant ultimately is owed an amount much larger than the amount stated on his Preliminary Notice, the claimant may still recover on a mechanic's lien for this much-increased amount if the claimant's estimate on his Preliminary Notice was made reasonably using some form of information available to the claimant.
The claimant will lose his mechanic's lien rights if the estimate in his Preliminary Notice is completely random.
The claimant would be smart to make a record of any conversations it has that form the basis of his understanding as to his estimate within his Preliminary Notice.
Once the Preliminary Notice has been served, the claimant need not revise his estimate on the notice even if change orders come into play that increase or decrease the value of the job.
Similar to the
situation involving the claimant learning new owner information, it may
be smart to send an update letter to the owner, but again it is
important to consult with a construction attorney before taking any specific steps.
The claimant need not revise his estimate even if change orders come into play that increase or decrease the value of the job.
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Please scroll down, below the comments box, for a series of articles on mechanics lien law...
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Article Series: Mechanic's Lien Law
Mechanic's lien laws
Lack of in-depth knowledge, or access to information, will cost you.
How to file a California mechanic's lien: 3 easy steps
It can seem intimidating but really, filing the mechanic's lien is the easy part...
Extending a mechanic's lien
Can, and should, a mechanic's lien be extended?
Notice to owner
How to prepare and serve this important document
Mechanics Lien Form Dollar Amounts
The value of a mechanic's lien isn't always equal to the contract balance owed to the claimant at the end of the project.
California Mechanics Lien Form
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Mechanics Lien Form, Attorney Fees, and Interest
You can collect both, in different manners, but neither can be added to the mechanics lien form.
Mechanics Lien Judgment vs Money Judgment
There are definite differences between them.
Filing a Mechanic's Lien in Colorado
Contains an infographic with easy step-by-step information on how to file a mechanic's lien in Colorado.
How soon can a mechanics lien form be recorded?
If you record a mechanic's lien too soon you could lose all rights.
The California Preliminary Notice Covers Up to 20 Days Back
Just because you missed the deadline doesn't mean that all is lost!
The Mechanics Lien Form Deadline to Record
The deadline is either 30 days or 90 days, depending on...
California mechanic's lien laws, preliminary notices, and change orders
Do you have to do a preliminary notice for change orders?
Property Lien and Equipment Rental Companies
Can an equipment rental company file a property lien (aka mechanic's lien)?
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