Articles

New Changes in Preliminary Notice Law

Most of you are familiar with the requirement that in order for a subcontractor to preserve its Mechanic's Lien, Stop Notice and Bond Rights, it generally must serve a so-called Preliminary or 20-Day Notice. The law governing Preliminary Notices was significantly changed back in 1995. If you have not familiarized yourself with those changes, you should do so before tackling the new changes discussed below.

Effective January 1, 2000, more changes to the law become effective. Of special note are the following:

1. "If the notice is given by a subcontractor who has failed to pay all compensation due his or her laborers on the job, the notice [in addition to the other requirements] shall also contain the identity and address of any laborer or any express trust fund to whom employer payments are due."

   So long as no such payments are due, this information need not be provided. Therefore, if the notice is served for example prior to starting work on the job, this requirement should not come into play.

2. The bold face language appearing on the form labelled "Notice to Property Owner" has been changed.

   Subcontractors will have to purchase or create new forms which include the new language requirements.

3. There is a new requirement that one who provides a Preliminary Notice to the owner must also provide "an affidavit form and Notice of Rights" to the owner.

   These forms have not yet been developed. It is unclear what effect is to be given to the requirement that these yet-to-developed forms be provided.

MR. KERSHNER IS WITH THE LAW OFFICES OF GARY KERSHNER, A MEMBER OF THE EXCHANGE SINCE 1955 AND IS CURRENTLY SERVING ON ITS BOARD OF DIRECTORS. THE LAW FIRM ACTS AS GENERAL COUNSEL IN LITIGATION AND NON-LITIGATION MATTERS FOR A VARIETY OF SMALL AND MEDIUM-SIZED BUSINESSES. MR. KERSHNER CAN BE REACHED AT (510) 832-6500. THIS ARTICLE PROVIDES GENERAL INFORMATION ABOUT CURRENT LEGAL ISSUES. IF YOU HAVE A SPECIFIC LEGAL QUESTION OR NEED LEGAL ADVICE, YOU SHOULD CONTACT AN ATTORNEY.