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
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
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.