Amending a Preliminary Lien Notice
By Dave Barnier
Is it wise to amend a preliminary lien notice?
QUESTION:
If I issue a preliminary lien notice for an estimated amount of $10,000.00 and my customer has purchased more than this amount, all I have to do is reissue another preliminary notice, right?
That's what I've done in
the past but someone told me there should be an amendment prelien I need
to send out? Is this true?
If this is not the case, do I need to indicate on the second prelien that this is an addition to the first one filed?
ANSWER:
For any individual contract, a claimant does NOT need
to serve an amended preliminary notice ("prelim") upon learning that the
total value of labor/materials/equipment has increased under that
contract.
The rule for a prelim to be valid is that, at the
time the prelim is served, the claimant has investigated the likely
total value of labor/materials/equipment to be provided and has made a
good faith estimation of that total value.
A prelim is not invalid because the total value increased after the prelim was served.
In
fact, it is often damaging to serve a second preliminary notice, as
that second prelim may not be served until more than 20 days after the
claimant first provided labor/materials/equipment to the project, and an
argument might be made that the second prelim trumps the first prelim,
resulting in the claimant having lien rights only for the
labor/materials/equipment provided from the date 20 days prior to the second prelim.
While this argument might fail, the fact that the argument might even be made is a bad thing for the claimant.
The situation is different if the increase in labor/materials/equipment is based upon a new contract or purchase order.
It
is not always clear whether an increased order for materials is a new
contract/PO or an amendment to the original contract/PO.
Remember
that a prelim should be served for each contract, so if the increased
labor/materials/equipment is under a new contract, a new prelim would be
required.
Each case should be looked at individually with
an attorney to determine whether the increased
labor/materials/equipment are an amendment to the original contract/PO
or represent a new contractual agreement separate from the original
contract/PO.
--
Thank you to Dave Barnier for the above information. :) Mr. Barnier is a practicing litigation attorney in San Diego CA and can be reached at 619.682.4842.
The information in this article is based upon California law current at the time of writing and is provided for general information, only. The information provided illustrates laws and legal principals in general. Any information or analysis presented in this article is intended solely to educate the reader on general issues. A comprehensive review of facts, documents, and applicable laws is always required before any attorney can competently provide any legal advice regarding any particular situation. In short: Please do not rely on any part of this article when analyzing any specific situation affecting you or your business.
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Article Series: Preliminary Lien Law
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California 20-Day Preliminary Lien Notices
Construction-Business-Forms.com |
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California 20-Day Preliminary Lien Notice
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Amending a Preliminary Lien Notice
Is it better to amend the notice, or issue a new one?
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California 20-Day Preliminary Notices
Construction-Business-Forms.com |
Serving the Wrong Party
When working in Arizona be sure to timely serve the preliminary notice *to the correct parties* or there could be trouble
Getting 'Stiffed' on the Job
Preliminary liens can help save you from being 'stiffed' on the job!
Property Records are your Friend
Research property records when doing your preliminary notices
Outsourcing your Preliminary Liens
Thoughts about using a company that handles your preliminary notices for you
Preliminary Liens - a detailed, step-by-step outline
A detailed step-by-step explanation of how to process preliminary notices
Preliminary Liens
Tracking the paperwork, the proof of service, and the USPS documents for prelims
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California 20-Day Preliminary Lien Notices
Construction-Business-Forms.com |
Preliminary Liens and Notifying the Correct Parties
Make sure your prelims go to the correct entities
Mishandling of, or Not Processing, Preliminary Liens
Mishandling of, or not processing, preliminary liens is one of the top 10 mistakes contractors make
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