I have this situation in several states, Mississippi, Louisiana, Alabama and Texas

Answered 5 days ago

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Matt Viator

Legal Associate zlien

That's a good question. Let's break down each state's preliminary notice rules, then look at other options for recovery when a lien claim might not be available. In Alabama, no one hired directly by the property owner is required to send a preliminary notice. But, for those who are hired by someone other than the owner, sending a preliminary notice (called a "Notice to Owner") will entitle them to file what's called a "Full Price Lien" (meaning, they'll be able to file a lien for the full price of their work, regardless of what anyone else has been paid). But, if no preliminary notice is sent, an Alabama sub or supplier will still be able to lien for the "Unpaid Balance" (meaning, they'll be able to file a lien for the amount that remains unpaid between the owner and the owner's prime contractor). So - even where no preliminary notice is sent, Alabama subs and suppliers will still be entitled to some lien rights. Moving to Louisiana, preliminary notice may or may not be required. For parties hired directly by the owner, a Notice of Lien Rights is required - and failure to send that notice, when hired by the owner, will be fatal to a lien claim. But, for other project participants, sending a preliminary notice is typically not required in Louisiana in order to preserve lien rights (though, companies renting equipment must send a Notice of Lease within 10 days of delivering that equipment). For residential projects, a notice is required before a lien filing can occur, but that notice is more akin to a Notice of Intent to Lien than a preliminary notice. For material suppliers in Louisiana, a Notice of Non-Payment must be delivered at least 10 days prior to filing a mechanics lien. Other than the exceptions above, preliminary notice is generally not required in Louisiana. For more info on Louisiana notices and liens, this resource should be valuable: Louisiana Lien & Notice Overview. On to Mississippi... In Mississippi, parties hired by the property owner aren't generally required to send preliminary notice (unless requested), and parties hired directly by the project's general contractor don't need to send notice either. However, when a sub or supplier is hired by someone other than the general contractor, then notice must be sent within 30 days of first furnishing labor or materials. For MS residential projects only, parties hired by someone other than the owner must send a Notice of Intent to Lien at least 10 days prior to filing a Mississippi mechanics lien. But again - that's not really a "preliminary" notice. Mississippi Lien & Notice Overview. As for Texas... Unless a supplier is specially fabricating materials, the failure to send a "preliminary" notice won't have a tremendous effect on lien rights. A retainage notice should be sent in order to best protect retainage amounts in case a lien must later be filed, but even if the retainage notice isn't sent, a sub or supplier could preserve the right to lien retainage amounts by including them in their monthly notices. As for monthly notices, failure to send monthly notices will result in a loss of lien rights for the months for which notice wasn't sent. So, a claimant could send monthly notices for some months and preserve the right to lien for those months - it's not necessarily an all-or-nothing affair. But, for months where a monthly notice was required but not sent, failure to send monthly notice will result in a loss of lien rights. More on Texas monthly notices here: Texas Lien & Notice Overview; and Texas Monthly Notices. As for options when a mechanics lien is no longer available, there are some tools that can help recover payment. For one, regardless of whether a mechanics lien can or would be filed, sending a document like a Notice of Intent to Lien can help to recover payment. A Notice of Intent to Lien acts like a warning shot - it informs recipients that if payment isn't made, a mechanics lien will be filed. Because a mechanics lien is such a drastic remedy, property owners and contractors typically do not take lien warnings like this lightly, and it could help grease the wheels toward payment. Further, completely outside the mechanics lien process, there are always options for recovery - like threatening to pursue, or actually pursuing legal action. Where payment is owed but unpaid, a sub or supplier may well have an action under breach of contract, unjust enrichment, prompt payment laws, or retainage laws. But remember, as mentioned above, the failure to send preliminary notice will not automatically destroy the chances of filing a valid and enforceable mechanics lien.

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