Sending a Notice To Owner can help get you paid – if done timely and correctly. Here are the mistakes to avoid.
In the state of Florida, if you are not contracted directly by the owner of a property, sending a Notice To Owner can secure your lien rights and/or bond claim rights. This communication lets your customers know you are serious about getting paid on your terms, not theirs. General contractors often say they will pay first those who send notices; those who don’t will get paid last, if at all.
A Notice To Owner is particularly helpful in certain situations. Say that the owner pays the general contractor, but the general contractor doesn’t pay you. Or the owner doesn’t pay the general contractor, so the general contractor can’t pay you. Still another scenario is when the person who hires you claims to be the owner, but is in reality the property’s tenant. (Sometimes, a general contractor fills out a Notice of Commencement incorrectly, submitting the owner as the person responsible for the construction, when the tenant actually is.)
Therefore, especially when you are doing a build-out for a tenant, the Notice To Owner is a way to make the owner aware that as a supplier or subcontractor, you should be paid as payment is made to the contractor on the job. In the event you are not paid, liening a property protects your equity interest in the project. Or, if you are working on a bonded project, a Notice To Owner secures your claim on bond rights.
Be sure to adhere to deadlines. A Notice to Owner must be received by the 45th day after work begins on the project. If your trade is specialty fabricated material – perhaps a unique door for a project – you start counting days when you start fabricating. Ideally, a Notice To Owner should be sent as soon as you sign a contract – the first day you are “on the property.”
Waiting until the last minute to Notice someone is an unsound business practice. It jeopardizes your ability to get paid. If the general contractor delivers a final payment affidavit and the owner disburses that final payment before you have filed your notice, you may be out of luck.
A few other Notice-to-Owner issues can also impede getting paid.
- Do you have the right job address and precise city. An error on a document can make it unenforceable.
- Enter the job That’s the customer’s address where the work is being done, not your corporate office address.
- Include a description of the property on the Notice To Owner.
- Send a Notice To Owner not only to the owner, but also to the general contractor and all parties that may be on the Notice of Commencement.
Public projects, such as schools, courthouses, public hospitals, and municipal offices owned by the government, cannot be liened. They have what’s called “sovereign immunity.” You can’t foreclose on such a property. But you do have the right to get paid for the work you do there. So that’s when you should file a claim on the project’s bond. In Florida, public projects over $400,000 must be bonded; projects below $200,000 have no bond; and bonding projects between those two amounts is at the discretion of the governmental entity.
In your Notice-To-Owner information gathering, ask whether the project is bonded. If you are working for a subcontractor, he or she might also have a bond on the project. Get a copy of any bond on the project. If the general contractor is required to have a bond, he or she would be required to record the bond in the county where the work is being done. But that’s no guarantee that it will be. Remember that in the middle of a project, funds can run tight. Don’t wait until then to look for a bond.
Finally, if you receive an amended Notice of Commencement, it’s best to send a revised Notice to Owner. If a Notice of Commencement is terminated, it’s crucial to stay on top of your rights and filings. Contractors, subcontractors, and suppliers need to be paid 100 percent, including retainage. If not, they need to be listed on the termination affidavit. If a Notice of Commencement is terminated, the time to record a lien is reduced to 30 days from termination of the old money. Pay special attention to receiving this notice! Not adhering to new deadlines could cost you.
As you can see, Notice to Owner mistakes can be avoided with some attention to detail. Doing it right matters.