California 20 Day Preliminary Notice Forms (also known as prelims, preliens, CPN (although that may change since CPN means California Preliminary Notice but California is no longer in the title of the forms), Notice to Owner Forms and more) are used to protect your lien rights when doing work on California construction projects.
This page is about how to do California Preliminary Notices.
If you need a Preliminary Notice Form or a Notice to Owner Form for another state please click here.
However please do feel free to continue reading if you'd like because much of what is written can be applicable to your state as well.
Who has to do a California Preliminary Lien Notice and why?
Prior to July 1 2012 it was contractors and suppliers on a construction project who were not contracted directly with the owner of the property who must serve preliminary notices to protect their lien rights.
Now Direct Contractors are required to serve preliminary notices as well.
A Direct Contractor (DC) is ANY contractor that contracts directly with an Owner.
General Contractors, you are now known as DC's and you are required to serve a preliminary notice on the lender if there is one.
All you "smaller guys" e.g. cabinet installers, electricians, flooring installers, plumbers, etc. are now required to serve preliminary notices as well (again only on the lender if there is one).
Any contractor or supplier that does not do a preliminary notice stands a good chance of not having lien rights or stop payment rights should the project go south (which unfortunately is happening a lot these days).
In addition to losing lien rights, the California State License Board (CSLB) has the legal right to discipline licensed contractors who do not do a preliminary notice when they're required to. [California Civil Code 8104(b).]
The preliminary notice serves to notify those various people/companies that your company is involved with the project and that you have lien rights.
Who do you have to give the California 20-Day Preliminary Lien Notice Forms to?
Typically the preliminary notice has to be served on the owner, the original contractor, the lender if any, and any other financially-interested party(ies).
As mentioned elsewhere ALL contractors now have to do this (it's not just Subcontractors anymore) in order to preserve and protect your lien rights. You'll need to keep track of the proof of receipt by each of the parties you've served because you'll need it for proof so be sure you send it to everyone who should get a copy of it.
Direct Contractors, you need to send your prelims to any lenders on any projects you do.
How do you serve the Preliminary Lien Notice Forms?
There are several ways to serve the notice and I'm sure that different contractors have different preferred methods. The method I always use, and that I find the majority of my customers use, is the certified-mail method.
It can be a pain because you have to go to the post office and fill out special paperwork and pay extra fees to do it but should you end up needing proof at a later date that you did serve your notice this is going to be one of the easiest ways to do that.
To make it easier I pick up a stack of the special cards that need to be mailed out and I keep track of the postage costs and I send the preliminary notices via certified mail from my office rather than having to go to the post office. Check with your post office, you may be able to do the same thing.
The twenty days (20 days) that is referenced in the form indicates how far back you're protected from when you served the notice. If you properly serve the notice before you've been on the job for 20 days then you're covered for the entire project. Say you've been on the job for 15 days or maybe you haven't even started the job yet - because you served the notice before you were on the job for 20 days you have lien rights all the way back to when you began the job through to the end.
Stay on top of that because if you serve the notice 25 days after you start the job or 35 days or 60 days, etc., you will have lien rights that go back no further than 20 days prior to the date you served the notice, forward through the end of the job. That means that the first days you were on the job that fall outside of that 20 day period are not covered with lien rights. You might have civil recourse but not having a lien makes it extra difficult.
But, even if it's been longer than 20 days DO serve the notice even though it's late. If you don't serve it all then you won't have the lien rights mentioned in the paragraph right above this one - for the entire project. Better late than never.
Plus you'll want to avoid that possible discipline by the license board that I mentioned above.
Which version of the Preliminary Lien Notice - Private Works or Public Works?
When it comes to the Preliminary Notice forms, there is often question as to whether the Private Works form or the Public Works form should be served.
An easy way to determine which version to use is to find out if there are any government funds involved, even if only for a portion of the project. If no government funds are involved then you'll use the Private Works preliminary notice form
Most residences are private works because most residences do not have public (government) funds involved in the work being done on their homes.Public works preliminary notice forms
are used when doing work such as courthouses, schools, infrastructure, prisons, etc. (as long as it's a state of California project; federal projects, no matter which state they're located in, are a whole new can of worms).
If you do work on both private and public works projects then please consider the bundled package
which contains both the private and public works versions - and it's significantly less expensive than purchasing the two forms individually.
Doing the California Preliminary Lien Notice forms is a total pain in the behind but if you don't do them then you're risking your lien rights and discipline by the license board.
Where can you get more information about Preliminary Lien Notice Forms?
The above information is an extremely condensed version of how the preliminary notice is supposed to be served.
I have written an in-depth article that provides detailed information about Preliminary Notice Forms (updated to the July 2012 laws). It'll guide you through exactly how to do the preliminary notices from before the project starts all the way through the end (there's more involved than many think there is).
When using that article you'll be doing these forms like a PRO in no time! :)
Currently I include this in-depth article with the purchase of the preliminary notice forms available at my website. This exclusive article is not available anywhere else, online or off.
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More information about the Preliminary Notice Forms, Private and/or Public Works
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