Guide to Streamlining California 20-Day Notices, a cash flow crash course

For most construction businesses in California, sending 20-Day Preliminary Notices is critical to protecting lien rights and getting paid quickly.

Whether you have an in-house 20-day notice process, use a service provider, or have no idea what an NTO is – join construction payment expert Jack Stallard for a live webinar.

You’ll hear:

• What is the purpose of 20-day notices and what are the rules for sending them in California?
• How do I explain 20-day notices to the people I work with?
• How can I start sending 20-day notices on all jobs without adding more to my plate?

Speaker 1 (00:22):
All right. Good afternoon, everybody. I’m gonna give us just a minute for some more of the participants to join, but we’ll get started in just a couple minutes to anyone just now joining. We started in just a minute. I just wanna wait for a few more of our attendees to arrive, but we’ll get started pretty soon and we’ll be covering California 20 day preliminary notice, and then we’ll walk through some Q and a at the end.

Speaker 1 (03:05):
All right, let’s go ahead and get started. So if you cannot see my screen, please let me know in the chat. But throughout this, we’re gonna be covering the guide to streamline streamlining California’s 20 day preliminary notice. It’s gonna be a cash flow cry Ash course. We’re gonna talk through sort of best practices and then also all the requirements for the California 20 day. So my name is Jack Stallard. I am a construction payment expert here at level set, and I work on our training and onboarding team to prepare our users, to send out these kinds of document on their own and pursue payment to become payment heroes and just a little background about level set. We are here to be a payment help to our customers. We, there are thousands of contractors and suppliers who use us to protect and speed up payment every day.

Speaker 1 (04:00):
With level set, you can send notices and payment paperwork electronically as, as by any required mailing formats. We can find and verify property and job details for you with our research team. And we can also send you alerts when payment problems arise on jobs that you’re working on or jobs in your network. Plus, there are tons of other features that we could spend all day talking about, but today we’re here to talk more about the Cal for, and so what we’re gonna cover today we’re basically going to talk about what a preliminary notice is, and specifically what the 20 day in California is how it’ll help you get paid, how to properly or accurately send a California 20 day. And then we’re going to talk about some D front ways to streamline that process. And then at the end, we have some time set aside for Q and a.

Speaker 1 (04:51):
So please feel free to ask questions in the Q and a section. Don’t be shy if you’re thinking about sending in a question, someone else probably is too. So please don’t be afraid to send a question in the chat or in the Q and a field. We will get to those at the, of the webinar though, we will be going through kind of all of the different resources first, and then we’ll be talking about any questions you might have. And also after this, we will be sending you the recording of this, so that you’ll have this on hand in case you have any other questions, or you just wanna double check what we discussed today.

Speaker 1 (05:28):
And so you’re probably asking if you don’t already know what exactly is a 20 day preliminary notice, you’ve probably heard of it, but it’s not always something that everybody’s familiar with. But if you work in construction in California, more likely than not, you know, about this document but these are preliminary notices sent at the start of all types of construction projects in California. So whether it’s residential, commercial state or federal, these notices are going to come into play, and they’re going to be super important for obtaining payment in situations where you might not get paid on time. And the purpose of this preliminary notice is pretty multi-layered. And we’ll be getting into that, starting with the different ways that your role on a project or the type of project can contribute to those different layers. And so starting a off with general contractors on private construction projects in California, GCs typically must send a preliminary notice, especially if the job has a lender on it within 20 days of providing labor or materials and must be sent to the lender and it can be sent late on the flip side of that with public projects in California, general contract are not usually required to send a preliminary notice since general contractors will usually not make a claim against their own bond for non-payment.

Speaker 1 (06:45):
Since there are no bond claim rights in that situation, there is no preliminary notice requirement.

Speaker 1 (06:53):
And then for subcontractors on private construction projects subcontractors and supplier must send a preliminary notice within 20 days of first providing materials or labor. And it must be sent to the owner, the general or prime contractor and the lender if applicable. This can also be sent late. And then on the public projects where you are fulfilling the role of a subcontractor you must send a preliminary notice 20 days after first providing that labor materials. And it must be sent to the public entity, the primer general contractor, and the surety, if applicable, and just like the other forms, you can always send this one late.

Speaker 1 (07:33):
And so while we’ve been talking about the sort of definition of what the prelim does, you’re probably thinking, why should I send the this is typically a visibility document. It’s primarily meant to share information with people up and down the chain on your project. So lets other people know that you’re here on this job. This is what you’re doing on the site. And this is how to get a hold of you if you, if they need anything from you. Basically it’s a way to ensure that the project is gonna run smoothly because it creates clearer lines of communication. But it’s important to remember that they are required documents as well. In fact, failure to send a prelim in California is grounds for disciplinary action under the contractor state license law, according to California civil code, the preliminary notice is only optional. If the work is less than $400.

Speaker 1 (08:21):
So this is to definitely something you’re gonna wanna send out and failure to provide. Notice is actually fatal to mechanics, lien and bond claim rights in the state of California. In other words, if you don’t send your preliminary notice correctly, you can’t later file a mechanics, lie, a stop notice or bond claim if unpaid people who are required to receive these notices who are typically general contractors, property owners and lenders rely on notices to paint a picture of all the parties that are working on the project. This makes it much, much easier for them to facilitate smoother payment on the job, because there are clearer definitions of who is doing what and who has already sent this visibility document out. And so that’s gonna bring us to getting paid faster. It might surprise you that construction companies that send preliminary notices get paid significantly faster than the companies that don’t send them.

Speaker 1 (09:08):
That’s because you’re prioritizing your invoices when you send notices by making sure they are visible and what the results. This is the result of getting paid faster, much better cashflow. And finally sending a preliminary notice is a required in order to preserve the right to file a valid mechanically in your bond claim in the chance that you’re not getting paid for the project since this one document can be sent at the beginning of the job, you can basically create a safety net can fall back on by filing a valid claim if you’re not paid. And anytime you encounter slow payment, this is a, you know, this is great insurance for later. The problem for contractors and suppliers though, is that you can never know when your lean rights will be needed. It’s really unfortunate when someone gets stiffed on a job or they’re completely without options because of missing this simple requirement.

Speaker 1 (09:55):
And so we see that these unfortunate circumstances all the time, and it creates a very difficult and painful position. And you can bet that those in the situation would give almost anything to go back in time and just send that little notice. And so that’s why we’re here today to talk about ways to send this and how important it’s to get this out there. And so your next question is probably if I don’t send a prelim within 20 days in California, can I still file a lie if I don’t get paid? So this is one of the most common questions that we hear at level set. And in California, there are very specific and strict rules regarding the preliminary notice to owner for full protection. California usually requires preliminary notices to be served no later the in 20 days after the claimant has first furnished labor or materials, which is where that 20 day title comes from.

Speaker 1 (10:44):
A lean claimant who failed to provide notice within 20 days of first providing labor materials may provide the notice at a later date, but they will only retain lean rights for materials or labor furnished within the 20 days per eating the late notice, as well as any contributions thereafter. So that’s where that can be sent late line comes in. And so this is something to keep in mind if you’re ever in a situation, excuse me, where you’d like to send this late, rather when you’ve missed the deadline. And so if it’s been more than 20 days since you provided labor materials and you forgot to send the notice, you will don’t have the right to file a lie for those specific amounts. And if you don’t provide a preliminary notice at all, you’ll not have the right to file a lean in California, meaning you’ll lose your lean rights.

Speaker 1 (11:31):
And so a really important question here is who needs to send this document? And so the short answer is basically everyone, contractors, subcontractors, material suppliers, and vet additionally general contractors on private projects that involve a lender will also need to send this. But a good rule of thumb is to send a prelim as a proactive tool. There two specific parties though who are exempt from California’s notice requirements. One would be a pure laborer who is not required to give preliminary notice and anyone with a direct contractual relationship with the property owner, they’re only required to give preliminary notice to the construction lender if the project has a lender. So the two are laborers that are not doing any other specific roles on the project. And then if you’re in a direct contract with the property owner and if there is no lender involved, but otherwise, basically everyone does need to send this or is highly recommended to. And so next we’ve talked about who needs to send it. So who needs to receive this notice for project for private projects, California requires that the notice be sent to the owner general contractor and lender, if there is one and then for public projects preliminary notices, it must be sent to the public agency in charge, as well as the GC and the surety.

Speaker 1 (12:54):
And so, so something that is very difficult to find is the information for the owner, owner, designee, general contractor lender, or surety. And so this is definitely one of the most difficult tasks when preparing to send one of these prelims and figuring out the identity of these parties involved can sometimes you’ll run into situations where there is no easy solution for this. In some states finding the property owner may be as simple as, you know, searching a county assessor’s website or going into the county index, however, California doesn’t provide property owner information online. So you often have to make a phone call, but on the flip side of that orange county and Fresno county, won’t give out information over the phone specifically many other as well, but it just depends. And this creates some roadblocks for getting through to this information.

Speaker 1 (13:43):
And so if you’re able to go personally into the county assessor’s office, that’s the most accurate way to obtain the information. It may be inconvenient to go into the county assessor office to verify who the property owner is. Each time you begin work on a project. So this can be, you know, extremely fruitful, but it can also end up being kind of a big use of your time. So because of the difficulties presented with these different options, since you can’t access this online and you will either need to call or show up to the county assessor’s office it’s becoming much more to send out preliminary information requests at the start of a new project. Basically companies will send out an information sheet that’s sent to be filled out and sent back with any contracts associated with the project that makes things way easier since it gives you everything you need from the get go.

Speaker 1 (14:33):
Additionally with level set, we can make the whole process much faster, much simpler with our scout feature. Depending on the package here, scout allows a team of level set researchers to go find this hard, to get information for you either automatically or upon request. That means you don’t have to dig for any UN unnecessary data, trying to find the little bits that you need. And we’ll take care of all of that for you. This is information that can sometimes take hours or days to find, and we’ve got it down to sometimes even just a few minutes and any way you choose to go about getting this information, though, it’s really important that you get it in a timely manner so that you don’t miss that 20 day mark for delivering this document. That way you’re able to retain all your lean rights. And you’re also delivering this to all the parties who need to see this.

Speaker 1 (15:18):
And so we talked a little bit about how you can send the preliminary notice late, but we haven’t really covered whether you can send it early. And so the short answer to that is yes, you can send a preliminary notice early or late in the state of California. You can even send one before materials are shipped. If that’s something that’s gonna be happening on your project. So the rule is that the preliminary notice must be sent within the 20 day notice period. Actual delivery is not required within that period. The requirement is considered met if properly sent within the period, but it’s best to be proactive and get it out as soon as you can, if you miss the required date, it’s not a complete loss, but California prelims can be sent after the due date, but not too late. As we discussed earlier, if it’s sent late a lie claimant who does so will only retain lie rights for materials or labor furnished within the 20 days proceeding, the late notice, a notice should be filed, even if it is late, because the failure to provide it is at all is absolutely fatal to a California mechanics lane.

Speaker 1 (16:16):
So you might as well go ahead and send them in early, get it done and out of the way. So then later on, you don’t have to worry about sending anything like a notice of intent to lean or a mechanics lane or fol or following up with a late preliminary notice.

Speaker 1 (16:30):
And so another question that might be coming to mind is when is a 20 day preliminary notice requirement considered satisfied? So the preliminary notice is considered delivered at the time of mailing. And again, best practice is to get these notices out as early as possible. So the earlier you mail this out, the sooner that these requirements will be satisfied, also, I do wanna point out that the notice must be delivered by certified mail or personal delivery with evidence of the delivery. So it’s important to not only deliver this notice, but to keep evidence of the delivery. So you can later prove compliance with the requirement.

Speaker 1 (17:06):
And so you may also be thinking like, are there any cases where you wanna send multiple notices? If there’s a situation where you feel like you have multiple contracts or something where you need to send out more than one of these, typically if work spans over separate lots parcels or tracks of land, one notice to owner is still acceptable, as long as they’re owned by the same person. And there’s only one prime contract, there’s more than one prime contract and or owner, then you’ll want to send multiple preliminary notice notices, even if it is not necessarily required, it’s definitely the safest way to proceed and a good way to completely cover your bases.

Speaker 1 (17:43):
And so you’re probably also wondering what kind of information you need to include on the document. So California’s preliminary notice may look a little intimidating at first, but it’s actually a very simple form. Once you spend a little bit of time with it, California prelim notice requirements are very similar to the requirements of other states and generally speaking they are good faith, collaborative documents that benefit all project participants. Like we said, at the beginning of this they’re visibility to documents that are meant to provide clear communication to all parties up the chain on a project. And this here is our level set preliminary notice for California. And so all of our prelims have this first friendly professional cover page that provides all of your information. And then on the next pages are where we’ll include all the statutory required language. So it protects your lean rights while also maintaining your relationships and basically keeping a friendly demeanor with your customer.

Speaker 1 (18:40):
And so you’re probably asking yourself, how do I start sending these on all of my jobs? And so I’m sure at this point in the webinar, you’re all convinced that you need to send the is on everything, but you might still be thinking like, how do you, how do you do this without it turning into a ton of work? And so that’s where level set comes in. So starting a new process can be super intimidating and it’s a lot to learn and keep track of. So that’s why we exist. We are built to have these requirements as part of our platform to tell you when you need to send things and how they need to be sent, we’re here to save you a bunch of time and make it easy. So it’s not adding extra work to your plate. So as soon as you would enter any project information into level set, and the dates, your beginning work typically will then calculate and track all your deadlines for you based off of the state you’re working in and your role on the project and depending on what your customer’s role is and the type of project we will tell you when and how, and if you need to send this document.

Speaker 1 (19:41):
And so with the preliminary notice creation, we have the most up to date, legally accurate templates for preliminary notices and every state, including California. And we mail the documents for you. We’ll upload a, all the, excuse me, all the documentation and proof of mailing to your level set account, where it’s stored indefinitely, you can access digital copies, you can download it, email it, it’s yours for your records, and you’ll be able to reference it and go access it with just a couple of clicks. And so we spoke a little bit about job research just by actually when we were talking about the different ways to obtain information from the county. And so something that is super important about level set and super helpful about level set is that we have our scout research team and our scout research solution to give you access to the job and property stakeholder details that you need to have to make these preliminary notices accurate. It, we confirm all the details that you give us. And then we’ll find anything that you are, that you don’t already have on hand. And then from there we’ll mail the documents for you, and we’ll upload all the documentation and proof of mailing to your level set account, just like we said before, where you can just access it with a couple of clicks.

Speaker 1 (20:55):
And so also if you are looking for any additional legal assistance when it comes to reviewing contracts and the steps you can take proactively to ensure payment on your jobs, we have an amazing network of vetted construction attorneys to help you out. We have local California attorneys who you can partner with to help you with current payment related legal issues or help you be more proactive to avoid these kinds of things in the future. And so this is part of our legal guard program where you’ll be paired, like I said, with the local construction attorney, and they can do anything from reviewing contracts and other documents to basically being your legal partner through level set. And so it would just be a one flat yearly rate for proactive and reactive legal services.

Speaker 1 (21:39):
And so if you’re ready to get started and you’re interested in requesting a demo from level set from our sales team, you can go to this level set.com/request link to request a demo from one of our sales reps. And you’ll be able to access that link directly when the webinar is sent out with the recording. And so now we’ve gotten to the Q and a portion of our webinar. And so if you have any questions, please go ahead and drop ’em in the chat or in our Q and a function up above.

Speaker 1 (22:42):
And please, if you, if you feel like you have any confusion about anything, or if you’d like something cleared up, it’s definitely more likely than to out that someone else attending the webinar has the same question. So please don’t be shy. All right. So Peter said that he is in Georgia. So technically depending on the state, there are different requirements and level set has a ton of blogs and articles that you can use to a general contractor. Excuse me. So generally you can go and see on level set if you go to our California prelim blog you’ll see, what’s required of you depending on what, you know, like the environments in California dictate, it depends certain types of jobs, as well as the role you might play on the project and the person who’s either hiring you or who the property owner is, can all play different roles in determining whether or not you’ll need to send this document.

Speaker 1 (23:58):
Okay. And so Anita asked to explain again about whether it’s okay to send late after 20 days. So when I was explaining when it’s okay to send the document late what happens is if, whenever you send it after the 20 day deadline the amount that it covers changes. So the idea is that if you send it by the 20 days initially then that covers the first 20 days of work. If you were to go file a lien but if you send it late, then that would that 20 days would be adjusted to 20 days before you sent the document. And then anything thereafter, does that make sense? Okay, great. And yes, Peter with the the general contractor role on a California project with a 20 day, unless there’s a lender present, you generally will not need to send a preliminary notice, but it just depends on the different parties on the project. All right. Do we have any other questions today have me to give y’all a couple minutes to come up with anything? I know we just went through a lot of information, so I totally understand if you need a second to kind of digest everything.

Speaker 1 (25:54):
So Anita, this is gonna be sent out to you with the slides, as well as a recording of the webinar that we just did. So you’ll be getting a copy of all slides with all the links that were embedded into the different pages. And you’ll also get the video of me presenting. So you’ll get to see any explanations I gave again, as well as all the plain text on the webinar. And yes, Peter, these are gonna be sent via email. So you’ll get the file as well as the recording. All right. Well, I’m gonna stay in our webinar until about one 30 answer. Any more questions you might have, and then from there, I just wanna say thank you everybody for coming today. I know this is often an intimidating document to you know, start sending out and it’s definitely a great learning about it is a great way to start becoming more proactive and protecting your lean rights from day one. All right. And so there are no more questions I am gonna stay, like I said, but if you don’t feel the need to stay and you don’t have any other question thank you so much for coming to the webinar. And I’m happy to give you a couple more minutes back in your day.

Speaker 1 (28:59):
So Peter, typically what I would recommend anytime you have any legal advice, questions, if you’re a level user we have a free legal advice platform called the expert center. If you wanted to ask that question but since I’m not an attorney, I typically don’t give legal advice because you, I definitely wanna go get legal advice from an attorney or lawyer rather than from me, but we do have some resources to you on level sets, website. If you’re not a level set user you can view conversations had between our level users and construction attorneys and payment in the All right. Well, it looks like we don’t have any more questions. So I’m gonna go ahead and end the webinar now, or actually so Peter, you’re asking could you mail a, so you’re asking about the mechanics lean. So typically with the mechanics lean, there is go going to be a required mailing format associated with the delivery of a mechanics lane. And so I believe just like the California preliminary notice in general, the two types of delivery that are acceptable are certified mailed return receipt or in person delivery.

Speaker 1 (30:51):
All right. Well, thank you again, everybody. And you’ll be getting the recording as well as the slides for this sometime tomorrow, but I hope y’all have a great day and I’m looking forward to seeing y’all become payment heroes. If you’re not already a level set user. Thanks.