Are you in the construction industry? If so, you’re undoubtedly aware of the importance of adhering to mechanic’s lien laws in order to prevent havoc.
The notice of commencement is specially created for the purpose of better project management, providing assistance to all participants. This document includes crucial project details, most importantly the date of project commencement. Even though not all states require such a form, it stands to benefit both property owners and general contractors.
In case you wonder what is a notice of commencement, the information below will introduce you to the concept.
Table of Contents
What is it?
The notice of commencement, otherwise known as a notice of contract, is an official document whose role is to designate the start of a construction project. Property owners or general contractors file this document in the county where the project takes place. After filing it, they’re supposed to deliver a copy of it to all the other participants involved in the job.
Additionally, the notice of commencement aims to provide protection to the owner when it comes to filing a mechanic’s lien. It clearly denotes the date when the client has been supplied with materials and labor, thus eliminating any misunderstandings regarding the lien’s deadline. This form is filed either prior to or following the onset of the project in accordance with the requirements imposed by different states.
Which states require such a form?
The notice of commencement isn’t required in the largest part of states, only in a handful of them, such as Georgia, Florida, Ohio, Iowa, and Michigan. In these states, general contractors are legally obliged to file this type of document once they start a construction project. In contrast, states like Texas, South Dakota, and South Carolina impose no such requirements but offer optional protection.
Moreover, in states where the notice of commencement is obligatory, general contractors are advised to get familiar with the state requirements and rules to avoid liability in the future. Even in states when this document is optional, project participants are suggested to either file one if possible or obtain a copy from the notice filed by another participant. Click here to get familiar with six different types of contractors.
How to file one?
Property owners and general contractors are expected to follow a series of steps when filing a notice of commencement. The crucial thing is for them not to waste time preparing the documents, as these forms are generally filed prior to the project onset. Even though the rules differ across states, starting the procedure as early as possible is highly recommended.
The following step involves collecting key information to include in the form, which is supposed to be accurate. For instance, one is required to get a legal property description, as well as essential information related to the construction lender, general contractor, property owner, and commissioner of the project. This information should include their formal name, telephone number, and mailing address.
Furthermore, the form should include the scope and time of work. The former refers to a description of the job, whereas the latter should denote the expected start and completion of work. In the event of using payment bonds, the details of the bonding company should be included as well.
Once you’ve collected the necessary information, make sure to find the correct state form. Unless the form adheres to state regulations, it might be declined. Afterward, the notice of commencement should be recorded in the right recording unit. This unit can refer to the tax records office, the clerk’s, or the recorder’s office in the local county.
It’s paramount to file the form in the right office, as any failure to do so would be detrimental to the procedure. The document can be brought personally to the office, sent by post, or filed electronically. Naturally, the most convenient method is sending the notice of commencement electronically in order to waste time on delivery. Nevertheless, some offices have specific requirements when it comes to delivering the form in person, allowing no electronic filing. The following link, https://www.investopedia.com/terms/e/efile.asp, provides insight into electronic filing.
Even in states where this form is optional, filing one is a wise decision!