Preliminary notices — sometimes called pre lien notices or notices to owner (NTOs) — are sent by construction project participants at the start of construction or supply work to provide other parties notice that they are working on the project. Most states require subcontractors and suppliers to provide the notice to key project stakeholders like the property owner, the general contractor, and the construction lender. The notice does not create any mechanics lien or bond claim rights, however, it’s possible for a party to lose their lien and security rights if a required notice is not sent. The notices must typically be sent by certified mail, certified mail return receipt requested, or by registered mail. You can learn more in this article: What is a pre lien notice?
Getting paid in the construction industry is tough, and so the question for contractors and suppliers is simple: How to break through the mess and get your invoices paid? Preliminary notices are step one to getting paid in the construction industry.
Sending preliminary notices is common in the construction industry. Parties furnishing labor or materials to a project send these construction notices to protect their lien rights and to comply with local laws requiring these notices. Other parties, such as property developers, lenders, and general contractors, look forward to receiving preliminary notices from subcontractors and suppliers because they provide more visibility as to who is contributing to the job. In fact, zlien research reveals that more than 83% of notice recipients find the documents helpful, or just part of every day business.
Since preliminary notices are helpful and promote better project transparency, they have the effect of prioritizing a contractor or supplier’s invoice above others who have not sent the notice, and thus get companies paid more often and more quickly.
Some companies already appreciate the benefit of sending these preliminary notices and have sophisticated policies in place that need to be managed. Other companies are contemplating the costs and benefits of sending preliminary notices. In either case, it’s common for administrators and finance professionals to spend a lot of time doing busy work like research prelim notice laws, managing notice requirements, and handing the paperwork involved with preparing, mailing, and tracking preliminary notices.
zlien’s technology empowers companies to eliminate the busy work associated with preliminary notices. We help companies send the right notice document at the perfect time on every project, so they can focus on more meaningful work. We send thousands of notice documents every month for contractors and suppliers across the country, empowering them to get what they earn on every project.
Preliminary notices are also known as construction notices, notices to owner, NTOs, and pre lien notices, but are distinguished from notices of intent to lien, monthly payment notices, and dunning letters. Preliminary notices are sent at the start of a construction project before any payment disputes arise, and usually before any payments are due.