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A preliminary lien notice is a document that notifies a homeowner and a general contractor that a person or company intends to file a lien on the owner’s property, his home. The person or company asserting a right to a lien is a lien claimant. A preliminary lien notice is usually required when a lien claimant does not have a direct contractual agreement with a homeowner. In these cases, lien claimants are usually sub-contractors or suppliers to a general contractor who is performing for the homeowner services such as building or remodeling a home. A lien, in this instance, operates as an encumbrance on the property, which means the homeowner will not be able to sell the home without clearing the lien and risks foreclosure of the home to satisfy payment of the debt.
Each jurisdiction will specify what a preliminary lien notice is required to contain. It usually must describe the property that is the subject of the claim of lien. It must also contain the lien claimant's name, address and phone number. The preliminary lien notice must also identify the name, address and phone number of the general contractor that entered into an agreement with the lien claimant. If there is no general contractor, then the lien claimant must identify the person or entity that received the services or supplies.
A lien claimant usually must serve the preliminary lien notice by certified mail, return receipt requested, by hand delivery, or by fax with verification of receipt. If the lien claimant fails to serve the preliminary lien notice properly and with the specified contents, a court will likely refuse to enforce the lien. In addition, many jurisdictions require a lien claimant to serve the preliminary lien notice within a specified time, typically within 60 days of providing the services or supplies. A court will deny the full value of a lien to a claimant if the claimant fails to meet timelines established by law. Each jurisdiction’s timeframes will vary.
After a lien claimant provides preliminary lien notice, he may proceed to filing an actual lien on the property in accordance with the timeframes established in his jurisdiction. The lien will typically contain the demands of the lien claimant, the name of the property owner, the name of the general contractor, a statement of the contract and a description of the property. The statement of demands is the amount of money the homeowner or general contractor must pay to the lien claimant. The lien claimant must sign the lien before a notary swearing to the accuracy of the contents of the lien. The lien claimant must then file the lien with the county clerk where the property is located.
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