What is a Notice of Commencement?

What is a Notice of Commencement?

A Notice of Commencement is a document that formally sets the beginning date of a project, or the date on which a supplier first provided materials or labor. It is filed and recorded in the corresponding local or state office in the county in which the project is located, and generally must be provided to other project participants and posted on the jobsite.

A Notice of Commencement is filed by the owner or prime contractor, but that filing may result in a requirement (or option) that the sub-contractor, material or equipment supplier also file.

The filing of a Notice of Commencement by an owner or prime contractor can impact the deadlines and filing timeline for second tier suppliers and laborers. This can protect the owner because it creates a limit on when a lien can be filed, and limits the amount of liability for such a lien. A lien that is sent late may not be able to attach to the property.

In many cases, the timeline for filing a mechanics lien runs from when you first provided labor or materials to a construction project. This is great if you can accurately pinpoint and document the date you started, but if you don't keep detailed records, or if someone contests the date, then you may find yourself in a difficult situation - the Notice of Compliance sets a clear, formal date, for calculating all of these other deadlines.

The notice is generally filed right before or shortly after the work on the project begins. Requirements vary by state, so be sure to check the laws of the state you're in to confirm the details.

Where is a Notice of Commencement Required?

In some states (including Florida, Georgia, Iowa, Michigan, and Ohio) a Notice of Commencement must be filed when a project is started in order for any party to later file a mechanics lien. Other states, such as South Carolina, South Dakota, and Texas, offer it as an optional protection that owners and prime contractors can use to limit the filing of mechanics liens after the project is complete. It is important to understand the notice rules in your state, as failing to provide notice can limit your rights, and giving notice can protect you from future liability.

Once the Notice of Commencement is filed, the date on it indicates the official beginning of the project. Deadlines for mechanics liens are then measured based on this date, including deadlines for preliminary notices and lien filings. If you're working in a state that requires the filing of a Notice of Commencement, you would be wise to obtain a copy for your records and enter the date on the notice into your payment and lien tracking software to make sure you don't miss any filing deadlines.

If you're in one of the states where filing a Notice of Commencement is optional, it's still a great practice, especially on larger projects, to file one or to get a copy of the notice filed by the owner or general contractor. It will show you the date the project commenced and also the amount of liability the owner or general contractor has. Once the Notice of Commencement is filed, the value of the liens by second and third tier contractors and suppliers may be limited. A third-tier contractor cannot file a lien for more than the value of what the general contractor owes to the second-tier contractor above him.

As a Subcontractor, what do I need to know about Notice of Commencement?

The filing of a Notice of Commencement by the general contractor or property owner affects preliminary notice and mechanics lien requirements and deadlines for subcontractors , material suppliers , equipment providers and other parties providing labor or supplies to the job. This protects the owner or general contractor, but creates additional hurdles and limits the lien process timeline for potential lien claimants. A notice of commencement may limit your rights to file a lien, affect timelines, and may add additional notice requirements (such as a preliminary notice) for the commencement of your work.

Another important note in some states, if the owner or general contractor files a notice of commencement, subcontractors and material suppliers must also file a notice of commencement when they begin work to notify the owner that they're working on the project and failure to do so could mean forfeiting your ability to file a mechanics lien.

The easiest way to know if a notice of commencement has been filed it to look around the jobsite, as in most states requiring or providing an option for notice, a copy must be posted in a conspicuous place on the physical job site itself. A brief inspection of the premises may be all that is required to know whether or not a notice of commencement was filed. A subcontractor or material provider can also ask the general contractor for a copy of the notice.

It's a good business practice to send preliminary notices on every project, whether or not there is a specific requirement and whether or not a notice of commencement was filed. There are many benefits to doing so, and you never need to worry whether you missed a deadline or failed to protect lien rights due to an unknown notice of commencement.

If you want someone to explain the details of the laws in your state, or need help filing a mechanics lien, give the lawyers at National Lien & Bond a call. We're experienced construction attorneys with knowledge of all 50 states and can help you file the right paperwork and the right time and collect what you're owed.

This post was originally published on June 12, 2017 and was updated to reflect new information on August 20, 2018.