When to Amend a Preliminary Notice: Understanding the 20% Rule

As a contractor or subcontractor, you're likely familiar with the importance of serving a preliminary notice at the start of a project. This notice is a critical step in securing your right to file a mechanic's lien in case of non-payment.

However, a less discussed but equally important aspect is knowing when to amend this notice. The law isn't specific about the exact dollar amount that necessitates an amended preliminary notice, but it does indicate that significant increases in the original estimated value of services require an update.

Why Amend a Preliminary Notice?

Amending a preliminary notice becomes necessary when the scope of your work or the cost of materials increases significantly beyond what was initially agreed upon or estimated. These changes could be due to project expansion, unexpected challenges, or changes in material costs.

The 20% Rule: A Practical Guideline

A useful guideline is to serve an amended notice whenever the estimated value of your services increases by 20% or more. This rule of thumb helps maintain clarity and legal compliance without the need for constant amendments for minor changes.

Situations That May Require an Amended Notice

Expansion of Project Scope: If additional work is requested beyond the initial agreement, and this increases the project's value by 20% or more, an amendment is necessary.

Unforeseen Challenges or Delays: These might cause an increase in labor or material costs, pushing the project value up.

Change in Material Costs: If the cost of materials increases significantly during the project timeline, affecting the overall project cost.

How to Amend a Preliminary Notice

Review the Original Notice: Ensure you have accurate details of the initial notice.

Calculate the Increase: Determine if the project's increase in value hits or exceeds the 20% mark.

Prepare the Amendment: Include updated project details, revised estimated total value, and any relevant changes in services or materials.

Serve the Amended Notice: Follow the same procedure as the original notice, ensuring it reaches the necessary parties, such as the property owner, general contractor, and lender, if applicable.

 Easy Law Construction Notices is not a law firm, and nothing in this article should be construed as legal advice. If you are seeking legal advice regarding construction matters, you can contact The Green Law Group, LLP, for a free initial consultation.