An Arizona Preliminary 20-Day Notice, sometimes referred to as a Preliminary Notice or Prelim, is a document that must be sent by any contractor, material supplier, or equipment lessor prior to the recording of a Mechanic’s Lien in the state of Arizona.
Knowing the contents of the notice, who needs to send it, the information included, and the timing of service are crucial for the preservation of lien rights on a project in the event you are not paid for your work.
What is an Arizona 20-Day Preliminary Notice?
Sending a preliminary notice serves as a tool to notify the Lender, Owner, and General contractor of a project, of who the various job-site participants are and who will be entitled to lien rights if they fail to receive payment for their work.
For construction projects in the state of Arizona, a preliminary notice must be served properly for the claimant to retain their lien rights if they remain unpaid for their work.
The notice is sent to the Owner or Public Entity, General Contractor, Lender (if any), Surety (if known and applicable), and the party who hired the claimant, and states the following per Arizona Revised Statutes §33-992.01
- The name and address of the claimant furnishing labor, services, equipment, or materials to the job-site
- A general description of the services, materials, or equipment furnished to the job
- The location of the job
- The name of the party who contracted with the claimant
- An estimate for the total price of the work being furnished
- The Owner, General Contractor, and Lender (if any)
Who is Required to Send an Arizona 20-Day Preliminary Notice?
Arizona law requires that any contractor (including the General Contractor), material supplier, or equipment lessor must send a preliminary notice in order to file a mechanics lien if they are not paid for their work.
On public projects where a mechanics lien is not possible against the property, a preliminary notice is still required to make a claim against the bond in the event of non-payment. General Contractors are not required to send a preliminary notice since they are the party posting the bond.
Why is a Preliminary Notice Important?
It Gives You the Right to File a Mechanics Lien
In order to file a mechanics lien against the property if you do not receive payment for your work, a proper preliminary notice must be served.
Without a properly served preliminary notice, a mechanics lien filed against the property will be invalid. This is why it is crucial to send a proper notice at the proper time – without it you will lose out on the best method of receiving payment if you are not paid for your work.
It Helps Improve the Payment Process
Filing a preliminary notice also may help in speeding up the payment process.
Construction sites often employ multiple trades, and with them the number of subcontractors and material and equipment suppliers can really start to add up. Sending a preliminary notice lets the owner and general contractor know exactly who is on the job and who will be able to lien the property if they are not paid for their work.
With this increased visibility of who is on a job-site, a company who sends a preliminary notice helps to ensure that they are seen and addressed by all parties farther up the contracting chain.
The owner has an interest in preventing mechanics liens from being filed against their property, and receiving preliminary notices prompts them to make sure payments get to whom they need to go.
A preliminary notice protects the money of the party sending it. The party receiving the notice can now protect themselves from having a lien filed against the property and make sure the job continues smoothly. With this mutual level of protection for both parties, payments are more likely to be made on time and with greater consistency – both parties win.
When Does a Preliminary Notice Need to be Sent?
As a rule of thumb, a preliminary notice ought to be served early – soon after contracting for the work or as soon as possible after work commences. In Arizona (like California), a preliminary notice can be served late but it will only cover lien rights for the preceding 20 days from the service of the notice.
If a preliminary notice is served within the first twenty days of providing work, material, or equipment on a project, the entire duration of the job may be claimed on a mechanics lien. If a preliminary notice is served after the first twenty days of a project, it will still be valid but it will only secure lien rights from the twenty days preceding the service of the notice and onward.
Again, as a rule of thumb, serve your notice early!
Sending an Amended Prelim
One important feature of the Arizona law on preliminary notices is the threshold at which a notice must be amended. The initial estimate of work to be performed on a project is often exceeded through change orders or other reasons. When the amount of work provided exceeds 30% of the original estimate, an amended notice will need to be sent to retain your lien rights.
Conclusion
A properly served preliminary notice is a must for nearly all contractors, material suppliers, and equipment lessors in the state of Arizona. It allows you to file a mechanics lien if you are not paid for your work, and may help increase the overall speed and consistency of payments on the job-site.
Remember to serve your notice when required and send it early. It may be the key to receiving payment for the work, equipment, or materials you have provided on a construction project.