For this week’s Guest Post Friday here at Construction Law Musings, we welcome Justin Gitelman. Justin is the Content Coordinator at Levelset, where over 500,000 contractors and suppliers connect on a cloud-based platform to make payment processes stress-free. Levelset helps contractors and suppliers get payment under control, and sees a world where no one loses a night’s sleep over payment.
As the construction industry continues to adjust to the coronavirus and an uncertain future, contractors are struggling to get paid. During the COVID-19 pandemic, construction businesses across Virginia need to do everything they can to protect their payments, and get paid faster. One simple action that can help fight payment delays: sending preliminary notice on every job.
Subcontractors and suppliers should send preliminary notices out to the GC, project owner, and/or lender at the start of every single project. These tools allow contractors to make themselves visible on crowded job sites, helping contractors get paid more quickly, and, in some cases, securing their right to file a mechanics lien or bond claim.
Preliminary Notices in Construction
The purpose of a preliminary notice is to allow each member of a construction project to know who you are and what work you’ll be performing. With coronavirus in mind, contractors can use preliminary notices to remind the hiring party of their payment expectations. When you submit a preliminary notice on every project, you’ll have legal protection in your corner while also giving yourself a greater opportunity to get paid.
When sending a preliminary notice, be sure to send them at the beginning of a project. This allows the recipients to review your information early, and helps you stand out compared to the many possible subcontractors on large projects. We’ve heard from subcontractors that the GC’s accounts payable department often prioritizes payments to sub-tier parties that have submitted preliminary notices.
How Preliminary Notices Support Contractors During COVID-19
In regard to the COVID-19 outbreak, preliminary notices are more prevalent than ever for construction businesses. Across the U.S., some cities have completely shut down their construction operations in order to combat the virus. This means contractors have to start protecting their money while the entire industry has less cash flow to go around.
Payment can certainly be tough to come by in construction these days, which makes sending preliminary notices all the more beneficial to your business. You may have been on a job site that was completely shut down due to coronavirus. Don’t be left in the dark if this happens to your business. Submit preliminary notices on every job – not just the problem jobs – to help protect your business during the COVID-19 pandemic.
Preliminary notices can primarily support contractors in two ways during the COVID-19 outbreak: by improving communication on jobsites and potentially protecting your payment by securing your right to file a lien.
Virginia preliminary notice requirements
In Virginia, sending preliminary notice isn’t required to protect your right to file a mechanics lien in most cases. Preliminary notices in Virginia are only required on specific private projects on certain residential homes.
However, Virginia has some unique statutes that give extra power to your preliminary notice. The Code of Virginia’s Section 43-11 states that sending preliminary notice, along with other follow-up statements of account, can make the owner or GC personally liable for your payment.
Every state has their own mechanics lien laws that set notice requirements. In some, sending preliminary notice protects your right to file a lien if you’re not paid. In others, you can file a lien without having first sent notice. If you do construction work in neighboring states, it’s important to understand their notice requirements and lien deadlines – and how they differ.
In West Virginia, for example, preliminary notice isn’t required (but sending one is still highly recommended). North Carolina requires preliminary notice in most cases, while Maryland and Tennessee only require notice on public and private jobs, respectively.
In states that use preliminary notice, take care to follow the statutory requirements and submit it according to the deadline. If notice isn’t required on your particular project, send one anyway. You should be doing everything you can to strengthen communication between you and the person who controls your payment right now.
Send preliminary notice – and watch your lien deadlines
During these uncertain times, it’s more important than ever to protect your rights. Your payment bond and mechanics lien claims can project your payment interests – a source of reassurance during this pandemic.
Stay mindful of your Virginia construction deadlines: Lien early, and lien as often as you need to. While you generally have 90 days from the last day of the month in which you furnished labor or materials, your lien amount can only include the last 150 days you were on the job. On projects over 150 days, you may need to file multiple liens – and each one will have a different deadline.
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