What Is a Notice of Commencement?
A notice of commencement is a legal document that is typically filed or posted at the beginning of a construction project to officially mark the start of the work. It is used primarily in construction and real estate development and serves several important functions related to lien rights and project management.
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 Key Features
1. Project Information
The notice of commencement includes specific details about the construction project, such as the location, description of the work, and the start date.
2. Parties Involved
The notice will also list the names and addresses of key parties involved in the project, including the property owner, general contractor, and any lenders or bonding companies.
3. Lien Rights
The notice helps establish the timeline for lien rights. Contractors, subcontractors, and suppliers need to be aware of the project’s commencement to protect their right to file a mechanic's lien if they are not paid.
4. Public Record
The notice of commencement is often filed with the local county recorder’s office or a similar public records office, making it accessible to all parties involved in the project.
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:
- Florida
- Georgia
- Iowa
- Louisiana
- Nebraska
- Ohio
- Michigan
- South Carolina
- South Dakota
- Texas
- Utah
How to File a Notice of Commencement
- Start Right Away
- Collect Key Information About Your Job
- Be Specific
- Find the Right Form & Fill it Out Carefully
- Record Your Notice of Commencement
- Display Your Notice of Commencement on the Job Site
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. This ensures that all workers, subcontractors, and suppliers are aware of the notice and its contents.
Notice of Commencement Bottom Line
A notice of commencement is a crucial document in the construction process, serving to inform all parties of the project’s start date, protecting lien rights, and ensuring clear communication and legal compliance. Properly managing and filing this document can help prevent disputes and ensure a smoother construction process for property owners, contractors, and subcontractors alike.
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.