The Arizona 20-Day Preliminary Notice: Miss It and You Lose the Lien

As a contractor, you may be familiar with completing work, but having to fight for payment. By doing work before getting paid, contractors take significant risks. The 20-Day Preliminary Notice plays an important role for contractors to enhance protection.

In Arizona, the law states that you must provide a 20-Day Preliminary notice to specific individuals in order to file a mechanics lien. If you do not serve this notice, you will be barred completely should you not be paid for your work. An Arizona business contracting lawyer can help ensure you are protected on all sides when doing your job.

The following article will break down exactly what this notice is, why it is so important, and how to go about filing it.

The Arizona Preliminary 20-Day Notice: What it is and How it Affects a Lien

The 20-Day Preliminary Notice is a formal written letter delivered to certain individuals that states what you as a contractor are providing: labor, materials, equipment, or a service. Serving this letter is standard practice and ensures transparency. It shows there are no hidden sub-contractors or any other hidden involved services.

This letter is also essential in allowing a contractor to file a lien against the owner should they refuse to pay. In knowing exactly who is working on their job and what is involved, the owner remains completely liable for payment and a lien can be placed on their property should an issue arise.

The Key to a Successful Preliminary Notice: 20-Day Timeline

In order to have the right to be paid for all of your labor, tools, and service, you must serve this preliminary notice within 20 days of first delivering materials or starting work on the job site. However, if you are later than the 20 day deadline, all is not lost.

You can file the preliminary notice at any point during your job, but Arizona only allows for a 20 day “reach back”. This means that if you send the notice late, it will only cover the materials and labor that is completed 20 days prior to the notice. Anything past 20 days will be lost should you need to file a lien.

Who Should You Send the Preliminary Notice to?

There are four main recipients that must obtain a copy of the preliminary notice:

The property owner
The original contractor
The construction lender
The party who hired you

In some situations, a contractor may not be able to identify who the property owner or lender is. In these cases, they can use the individuals most believed to be the owner or lender. If the alleged owner or lender turns out to be incorrect, the preliminary notice will still be seen as valid despite the missing information.

When a Job Scales Up: The 130% Rule

While the preliminary notice lists the labor, tools, and other services, construction jobs rarely stay exactly within the original job scope and estimate. Because of this, the original preliminary notice will protect your lien rights for up to 130% of your work.

Anything beyond that 30% extra will require a Supplementary 20-Day Preliminary Notice. This notice must be sent within 20 days of the additional work or materials being provided and it can be helpful to have a lawyer ensure the details are correct on this additional notice.

Sending the 20-Day Preliminary Notice the Correct Way and Why it Matters

When a contractor or other worker is providing the preliminary notice, it must be sent in a very specific way or it will not be valid. The main ways to send this notice includes:

USPS Certified Mail
Registered Mail
First-Class Mail with a USPS Certificate of Mailing

The notice is considered “served” the moment it goes into the mailbox, not the day the recipient receives it. This is important to remember as it can impact the timeline by a few days. Additionally, it is absolutely crucial to keep a copy of the preliminary notice, your Affidavit of Service, and the USPS mailing receipt to prove that the notice was sent should the need for proof arise.

How the Preliminary 20-Day Notice Impacts Stop Notices and Payment Bonds

The Preliminary Notice and the 20 day timeline does not only impact mechanics liens, but it also opens the door to Stop Notices and Payment Bonds. Stop Notices allow a contractor to target the un-dispersed construction funds. It essentially acts as a wage garnishment ensuring the contractor is paid before anything else is completed.

Payment bonds are used for public property jobs where liens cannot be placed against the properties. Instead, a contractor can post a payment bond through a surety company. The 20-Day Preliminary Notice must be sent in order to preserve the rights to a bond.

Common Pitfalls to Avoid When Protecting Lien Rights

There are several things to remember when ensuring your lien rights are protected. Without the following, you may lose your ability to claim money you are rightly owed for the work that you completed.

Licensing: In order to successfully file a lien as a contractor, you must have an active license with the Arizona Registrar of Contractors.

Signatures: When it comes to owner-occupied homes, contractors must have the signature of the original owner on a written contract. Without it, you will be marred from having any lien rights.
Guessing Details: Do not randomly guess anything like owner details, lender information, or legal descriptions as it can invalidate notices. However, as stated above, there are exceptions for if you are making a best guess in good faith given the information is not easily acquired.

Benefits of Using a Lawyer to Prepare Your Preliminary Notice

There are many details to the 20-Day Preliminary Notice. In most situations, if the details are incorrect or if you guess on any of them, you could lose any lien or bond rights. This is significant for contractors who are paid after the work is complete so ensuring the preliminary notice is accurate is a form of risk protection.

Hiring a lawyer to prepare the notice for you ensures every detail is accurate, it is sent in the correct timeframe, and you are able to utilize the best tools for your situation. Especially if the scope of your work is large, it is essential that all the details are accurate!

Reach out to Our Contracting Lawyers to Ensure Your Lien Rights are Protected!

Don’t wait to get our lawyers on your team. At Denton Peterson Dunn, we will make sure your payment process is smooth and efficient. From drafting documents to auditing job files to enforcing unpaid construction claims, we will be by your side pursuing success and payment every step of the way.

Contact us today to get our Arizona contracting lawyers on your team!