I Received a Notice to Owner in the Mail; What is it?
- A notice to owner is a notice sent to the owner of a project telling him that someone is working on his job and expects to be paid
- Obtain a release from everybody that sent you a notice to owner
- Pay directly anyone that is issuing only a conditional release or insist you want an unconditional release
- Make sure you obtain a release of any lien on your project
A notice to owner is a notice to you as the owner of the project that someone is working on your job and they expect to be paid for their work or the materials they supply. Even if you paid the general contractor and it was the general contractor who didn’t pay the subcontractors or vendors that sent the notice to owner, you may still be obligated to pay them yet again. Otherwise, they may lien your project.
When you receive a notice to owner, the first thing you need to do is to read what the warnings say so that you understand how it works. After understanding what the document states, make a list of everybody that sent you a notice owner from the beginning of the job until the end of the job.
What to do when you are asked to pay the contractor
Get a release from your contractor directly
You need to obtain a lien release from the contractor, releasing all of his or her rights to you through the period of time of your payment. Doing this ensures that you have evidence that you have paid the contractor and that he has accepted the payment. The lien release also signifies that the contractor has relinquished his rights against your property or under the contract, and that you are released for an agreed period of time.
Get a lien release from everyone on the job that sent you a notice to owner
At the start of the job, you should make a list of everyone that sent you a notice to owner. Maybe it was the plumber, the electrician, the roofer, the material suppliers or the cement delivery company. All of these people may have sent you this document. You need to make a running list and every time you pay your contractor, you need to obtain a release not only from the contractor, but also from these people as well. Most owners make the mistake of being too trusting. They take the contractor at his/her word without actually seeing a lien release. You need to protect yourself and the only way to do this is by obtaining a release from everybody that sent you a notice to owner. Another common mistake owners make is that the believe they don’t need a lien release from a contractor or subcontractor who has finished his work and who has given them a final. That is not correct.
The lien law says that every time you receive a notice to owner, you need to obtain a lien release from each of these people every time you make a payment to the contractor. Every time means every time! Anytime you issue a check, even if it is for people that have been on the job at the beginning, you still need a release every month. That type of release may be what is called a $10 release- a release that only says ten dollars is the consideration. They are not actually entitled to any money but you want to make sure that you obtain a release from everyone that sent you a notice to owner every month or every time you issue a payment. This is the only way you will have the certainty of knowing that the money that you pay is flowing downhill all the way to the people that are actually providing the materials and performing the labor.
You may receive documents that are called conditional lien releases. You need to be careful when you receive these documents. A conditional lien release is conditioned on the person that issued the release actually getting the check. For instance, if you issue the check to the contractor and the contractor gives it to the electrician, but the electrician never gives it to the electrical supply house who gave you a conditional release, that release is no good and you may still be obligated to pay them again. For this reason, you need to make sure that if anyone gives you a conditional release, you do one of two things. You either issue the check directly to them in exchange for the release or you tell them you cannot pay the contractor the bill until you get an unconditional release.
Don’t be afraid to stand up for your rights. Most clients that come to us with mistakes are usually the ones that try too hard to make it work or who have already given too much money in advance. Stand firm for your rights to make sure that you actually get the work that you paid for and that liens don’t land on your job.