Montana Preliminary Notice FAQs

About Montana Preliminary Notices

Montana’s preliminary notice rules and requirements are complex, and not well or clearly defined by statute or the courts. While requiring preliminary notice is the default in Montana, the exceptions to the requirement nearly consume the requirement that preliminary notice be sent. The parties that appear to be specifically exempted from the preliminary notice requirement by statute are:

1. an original contractor who furnishes services or materials directly to the owner at the owner’s request;
2. a wage laborer performing labor for a contractor or subcontractor (employee of construction participant);
3. any party furnishing labor or materials to a residential property for 5 or more families, when the work is done pursuant to a real estate improvement contract; and
4. any party furnishing labor or materials to a construction project the is at least in part commercial in character, when the work is done pursuant to a real estate improvement contract. Some projects that may otherwise be residential can be considered commercial if separate work was done prior to the residential part of the project. JTL Group, Inc. v. New Outlook, LLP, 223 P.3d 912 (Mont., 2010)

When these exceptions are peeled away, it appears that the only parties technically required to send preliminary notice in Montana are: parties, other than direct contractors or laborers, working on completely residential projects on dwellings of less than 5 families.

Notwithstanding the foregoing, however, it is likely advisable to send preliminary notice anyway on most projects, just to be safe. There is little jurisprudence providing guidance on these issues, and other sections of Montana law seem to contemplate notices being required in other circumstances.

One of the circumstances that clouds the water with respect to preliminary notice requirements is the statutory section setting forth the calculation of the deadlines related to Montana preliminary notices. Montana law provides a preliminary notice deadline of either 20 or 45 days after first furnishing labor or materials to the project. The base deadline is 20 days, which applies in all circumstances other than those that give rise to the specific 45-day deadline. The 45-day deadline applies

“when payment for services or materials furnished pursuant to a real estate improvement contract, excluding a contract on an owner-occupied residence, is made by or on behalf of the contracting owner from funds provided by a regulated lender and secured by an interest, lien, mortgage, or encumbrance for the purpose of paying the particular real estate improvement being liened.”

So, breaking that down a little, the 45 day deadline applies to projects: 1) other than an owner-occupied residence; where 2) payment is made by a lender with a security interest in the property. Since, it appears from the exceptions above that notice is only required from some participants on residential projects of less than 5 “units” it appears the 45-day deadline would only apply to residential projects which are not the owner’s residence and are funded by a lender. And, accordingly, the 20-day deadline would apply to owner-occupied residential projects, and other residential projects that are not being funded by a lender.

Montana has another interesting rule regarding preliminary notices, as well. After the notice is sent (either by certified mail or personally delivered), it must also be filed with the county’s clerk and recorder within 5 days. Few states require the recordation of preliminary notices, but Montana is one of them. Even more rare, Montana specifically requires that, if a participant is paid after filing the preliminary notice, a release of notice must be recorded. Generally, since notices are usually not recorded, and do not encumber the property (since they are not liens themselves), there is no need to “release” them. However, Montana specifically requires that notices be released within 5 days of request from the owner if payment for the labor or materials subject of the notice has been made.

Finally, Montana allows a subcontractor who has not been paid to make a written request on the property owner to be notified when the property owner makes any subsequent payments. If this request is made, the owner must inform the sub of any progress or final payment made to the GC. There is, however, very little information related to this notice in the statute, however, as there is no specific time period, content, or delivery requirements outlined by Montana law.