Lien and Bond Services, LLC

1. What is the purpose of the preliminary notice?
A prelim (Pre-lien, Notice to Owner, Notice to Contractor, Materialman's Notice) establishes the legal right of the business entity, providing products or services which improve the value of the real property, and "ARE NOT" in a direct contractual relationship with the owner of real property, to file a Mechanic's Lien against the title of the property and if necessary bring a foreclosure suit against the property in order to recover the value of the products or services provided.

2. When should a prelim be filed?
This depends on the State Requirements for the document. However, the following logic has been deemed advisable in most situations: File the prelim the same day you begin work or ship products to the job. Reason is that most information needed to accurately prepare the prelim is more easily obtained from the entities apart to the job at the beginning of the business relationship. Should you be in a position where a prelim is required by State Statute, failure to file the prelim at the beginning could jeopardize all or part of your investment of products or services supplied to the job.

3. When must I file an amended preliminary notice?
You must file an amended preliminary notice anytime job information is inaccurate, or changes from the information on the original preliminary notice. In Arizona, if the actual services provided exceed more than 20% of the original preliminary notice dollar amount, you must send an amended preliminary notice to all parties in order for your lien rights to be valid for the full dollar amount. Most other states do not require this, but to be sure what your state statutes require, please give us a call for clarification.

4. Do I need an Attorney to file a prelim?
In most states, the prelim, mechanic's lien, stop notice and bond claim can be filed by the individual business or their agent and does not require an attorney. It does require thorough knowledge of the process, time requirements, formats and that the acceptable serving conditions and methods are satisfied. However, this process is not considered to be practicing law. Therefore, no attorney is required.

5. When do I need to get my Attorney involved?
If you were required to file a prelim, and effectively have done so, and you also filed, served, and recorded an appropriate mechanic's lien, and your recorded lien has not expired. (A foreclosure law suit may be initiated). You will need an attorney to orchestrate the process from this point forward.

6. Should I file a prelim on every invoice?
No. Many states require the entity not in direct contractual relationship with the property owner to file a prelim only if the value of the investment of products or services to the property exceeds a certain limit. (Refer to the statues for individual states for prelim limits). You also may not file a prelim for maintenance or other activities which do not increase the value of the real property. You need only to file one prelim for all the invoices issued to a customer who is using your products or services on the same job.

7. How much will it cost and what all is included to have Lien and Bond Services file our prelims?
The cost is relevant to the quantity of prelims filed during a given month. However, the worst case scenario is $35.00 per document plus postage. For this small fee Lien and Bond Services will research, verify, prepare, and serve the prelim to the Owner, Lender(if any), General Contractor(if different than the Sub Contractor), Your Customer (the Sub Contractor) as well as send you a formal hard copy of the served document. Please contact us for a complete pricing list.

8. Why should I use a service when I could do this myself?
There are many reasons to use a service. However, the best reason is the research that the service provides. Regardless of what your sales or customer service team may enter on your sales order, rental contract, or other transactional documentation. The researching of the REAL property Owner, the TRUE LEGAL description of the Property, as well as the verification of the names and addresses of all the entities named in the prelim is crucial. Any slight discrepancy can be grounds for the courts to disallow the prelim due to inaccuracies. This should be by far your most compelling reason to choose a service. Other reasons are: The service acts as a buffer between you and your customer in securing this sensitive information. The service is dedicated to this process which requires them to keep current with changes in state statues, recording disciplines, and the time constraints in having your documents filed and served while they can still protect your lien rights.

9. Once a prelim is filed, how long is it valid?
The prelim is valid until the job is competed. The job is completed when one of two things occur. (a) The owner of the property files a Notice of Completion or (b) a Notice of Cessation. While the Notice of Completion is a formal document which is required to be recorded with the County Recorders office in the County where the real property exist, the notice of cessation is not filed and is implied to exist when work on the job ceases.

10. When should I file a Mechanic's Lien?
As soon as you decide that you have waited long enough for your customer to pay you for the products or services they used on the job named in your prelim, providing the duration of time of a recorded notice of completion or a notice of cessation has not elapsed. Again this is subject to the various state statues. However, it is usually 60 - 90 days after a notice of completion or notice of cessation is filed.

11. Do I need to keep track of Notice of completion filings?
This is a great practice. However, according to many County Recorders offices, less than 10% of all building permits issued have a Notice of Completion recorded. Therefore, Lien and Bond Services recommends our "Lien Watch" service for those customers who need to know the real status of the jobsite.