If you are a subcontractor in California, it is crucial that you familiarize yourself with the state’s 20-day preliminary notice requirement. When you operate without knowledge of this requirement, you may unwittingly forfeit your right to pursue action for nonpayment in the future.
Here is what you should know about who must file a 20-day preliminary notice and when.
What is the 20-day preliminary notice?
The 20-day preliminary notice is a tool that you, as a California subcontractor, can use to secure your right to file a mechanic’s lien in the event that a customer refuses to pay you for completed work. You must serve this notice to the general contractor, owner and, if applicable, construction lender within 20 days of commencing work or furnishing materials for a job.
There are two main reasons California established this requirement. The first is that the labor board believed it would help everyone invested in a project better anticipate their financial obligations. The second is that by requiring contractors to file such a notice, the board believes it can prevent payment problems from arising between customers and subcontractors.
Regardless of why the law exists, it is imperative that you abide by it. Failing to file a notice prohibits you from pursuing a mechanic’s lien in the event a customer defaults on payment in the future, and the state can fine you if you do not file in a timely manner.
Are there exceptions to the requirement?
State law does allow for a few exceptions to the 20-day preliminary notice requirement. The first is if you plan to provide less than $400 in labor or materials. The second is if you are the general contractor on a project. The third and final exception is if you are a laborer. The reason for the final two exceptions has to do with an assumption that the owner knows who the general contractor and laborers on a project are and that they expect payment for their work.
As a subcontractor, it is crucial that you understand how to protect your right to future payments. A lawyer can inform you of your rights and responsibilities and take the necessary steps to do so.