What is a Notice of Commencement?
A notice of commencement is a document used in construction that publicly records the beginning and end of a project and identifies the key parties involved. The document when the construction is set to begin and schedule to end. It will also be kept on record at the local or state office in the municipality where the project takes place.
A notice of commencement makes filing a mechanic’s lien more challenging and limits the property owner’s liability. Many counties require a lien to be filed within a certain amount of time, so a notice of commencement puts a clear limit on when liens can no longer be filed.
Notice of Commencement Explained
A contractor, subcontractor, or service provider may file a mechanics lien to ensure they are fairly compensated. This can delay construction and create headaches if the owner wants to sell the property. But the construction industry can often be chaotic, and it’s not uncommon for owners to get hit with surprise liens as a result of a miscommunication or oversight.
A notice of commencement helps establish a clear work timeline for all parties involved and encourages owners to make at least a partial payment to begin work (although not required). It’s still possible to file a mechanic’s lien even with a notice of commencement if you have grounds to do so. But it creates a bit more roadblocks and protections for the owner.
Who Files a Notice of Commencement?
The notice of commencement primarily protects the owner. Therefore, it’s usually their responsibility to file the document. However, it could be filed by someone representing them, such as a broker or an executive at their firm. The notice of commencement may also be filed by the general contractor in charge of the project.
General contractors aren’t the only ones who can file a mechanic’s lien – subcontractors and other service providers such as plumbers, electricians, HVAC repairmen, etc. can also file a mechanic’s lien if they are not paid. So, the contractor may also be the one to file the notice of commencement to protect themselves as well.
States That Require a Notice of Commencement
Not all states use notice of commencement. But there are 11 states where it is required, and there are penalties for not filing it on time (although the exact penalties vary in terms of severity).
The states that require a notice of commencement include:
- South Carolina
- South Dakota
How to File a Notice of Commencement
1. Start Right Away
When filing a notice of commencement, it’s best to get started as soon as possible. In states where they’re required, you may face delays or penalties for not filing the document promptly. So, get started as quickly as possible to get everything you need in time to submit the paperwork.
2. Collect Key Information About Your Job
Next, you should collect as much important data as possible about the job. Determine the start date and the estimated completion date and identify key stakeholders. Each state has different forms and requirements, so do your research to understand what kind of information you’ll need to provide.
3. Be Specific
Try to be as specific as possible when collecting and recording information. The more specific you get, the more protection you’ll ultimately have. For instance, determine the exact date you plan to complete the project and record it in the notice of commencement. The more general or generic you are, the more you leave things up for interpretation that may not end in your favor.
4. Find the Right Form & Fill it Out Carefully
Make sure to find the correct form and fill it out as accurately as possible. The county scrutinizes these forms, which may result in delays or other problems if not properly filled out. So, be meticulous and double-check for any mistakes before submitting.
5. Record Your Notice of Commencement
Once you have a signature from all the key stakeholders, you’ll want to have the document notarized and filed with the county where the job is taking place. In most cases, you can either mail it in, bring it in person or sign the document electronically. Where it needs to be filed will ultimately depend on the state or county and will likely be the clerk or town recorder’s office.
6. Display Your Notice of Commencement on the Job Site
In most states, you must clearly display the notice of commencement on the job site along with any other required permits. So, don’t just mail it in and forget about it. Get a printed copy and display it in an accessible location where anyone can see it.
Notice of Commencement Bottom Line
A notice of commencement is a crucial document that can protect a property owner from unforeseen mechanic liens during a construction project. But the states that require a notice of commencement often have a strict policy about how and when they must be filed. So, research the local regulations to ensure you follow the proper protocols.