Effective Now: New California Preliminary Notice Requirement for Public Work Projects

The preliminary notice requirements on private construction projects in California are simple: if you didn’t contract directly with the property owner, you must deliver a 20-day preliminary notice within 20 days of first furnishing labor and/or materials to the project. The same rule, however, did not exactly apply to those working on state or county projects (public work projects).

While there was a preliminary notice requirement on these public work projects, if a subcontractor or supplier failed to deliver the notice, there was a safety net allowing notice at the very end of the construction project (15 days from the notice of completion recordation, or if not recorded, 75 days from completion of the project).

However, in 2011, SB 293, Padilla, amended the law to eliminate this preliminary notice safety net.

Preliminary Notice Required Every Time on California Public Works Projects

The new law in a nutshell is that everyone on a public works project in California who did not contract directly with the prime contractor must give a preliminary notice within 20-days of first furnishing labor and/or materials to the construction project. There is no longer a safety net allowing claims at the completion of construction, and therefore, those who do not properly send their preliminary notices on-time, will no longer have any rights to make a claim against the payment bond or to file a stop notice.

Preliminary Notice must be given to:  (i) The public entity; and (ii) The contractor with the direct contractual relationship with the public entity (the “direct contractor”).  There is a special additional requirement if the work was commissioned by the Department of Public Works or the Department of General Services for California, such that the notice must be given to the disbursing officer of the department construction work specifically.

The only exception to this notice requirement is that those who are 100% laborers (not laborer companies) are not required to furnish the notice. Remember also that unlike on private works, where the notice is required if you did not contract with the owner, on public works the notice is only required if you didn’t contract with the direct contractor.  This is an important difference.

When the Law Is Effective? Now!

The law can be a little confusing about which portions go into effect on January 1, 2012, and which go into effect on July 1, 2012, especially regarding the new preliminary notice requirements. However, to be safe, all affected subcontractors and suppliers should consider the new preliminary notice requirements to be fully effective as of January 1, 2012.

Also, while this post only talks about SB 293′s effect on California’s preliminary notice requirements, the bill has a longer reach.  For a quick breakdown of the bill’s full legal impact, see these two articles:  SBC approved by California Legislators and is Headed to the Governor and New Payment Rules in 2012.

Also, you can read the Full Text of the Chaptered SB 293 here.

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Scott Wolfe Jr

About Scott Wolfe Jr

Scott Wolfe Jr. is the CEO of zlien, a company that provides software and services to help building material supply and construction companies reduce their credit risk and default receivables through the management of mechanics lien and bond claim compliance. He is also the founding author of The Lien and Credit Journal, a leading online publication about liens, security instruments and getting paid on every account. Scott is a licensed attorney in six states with extensive experience in corporate credit management and collections law, with a specific emphasis on utilizing mechanic liens, UCC filings and other security instruments to protect and manage receivables. You can connect with him via Twitter, LinkedIn and Google+.

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