In most states, construction participants are required to serve a preliminary notice to protect their lien rights. If you do not serve the correct preliminary notice on time, chances are you will not be allowed to file or enforce a valid mechanics lien.
Alabama follows the same rules: certain construction parties are required to serve certain preliminary notices prior to filing a mechanics lien. Just like in other states, there are strict rules and requirements that apply when serving preliminary notices in Alabama.
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There are two Alabama preliminary notices that you need to know about: the Notice to Owner and the Notice of Unpaid Lien. The rules on which preliminary notice to serve vary depending on what you do in a project. This guide discusses the requirements that you need to learn before you serve these Alabama preliminary notices.
- Who must serve preliminary notices in Alabama?
- When do you serve Alabama preliminary notices?
- Whom to serve your Alabama preliminary notices on
- What happens if you fail to serve Alabama preliminary notices?
- How to file Alabama preliminary notices
- Best practices for serving Alabama preliminary notices
Who must serve preliminary notices in Alabama?
Notice to Owner
The Notice to Owner—also sometimes referred to as Pre-Work Notice to Owner or Notice to Owner Prior to Performance—must be filed by material suppliers and subcontractors who also furnish materials to a project.
Notice of Unpaid Lien
The Notice of Unpaid Lien is a required preliminary notice for those who have no direct contractual relationship with a property owner. The parties who must serve this preliminary notice include subcontractors and material suppliers.
Parties who have no direct contract with the owner and who provide materials to a project are required to serve both Alabama preliminary notices.
When do you serve Alabama preliminary notices?
Notice to Owner
There is no set deadline for serving the Notice to Owner in Alabama. However, keep in mind that since this is also called Pre-Work Notice to Owner, it should be sent prior to providing the materials to a project.
Even though there is no hard-and-fast deadline, serving the Notice to Owner before furnishing the materials guarantees that you have your full lien rights intact. This is very important in Alabama because the state imposes a distinction between a Full Price Lien and an Unpaid Balance Lien.
If you want to preserve your lien rights for the full price of your services, you should serve the Alabama Notice to Owner before you start supplying the materials.
Notice of Unpaid Lien
As with the Alabama Notice to Owner, there is also no set deadline for delivering the Notice of Unpaid Lien to the property owner. The only requirement is that you should serve this notice before you record a mechanics lien.
However, it is important to understand that this preliminary notice preserves your right to file an Unpaid Balance Lien. In Alabama, subcontractors and other lower-tier parties who are not in charge of providing materials have lien rights only over the amount that is yet to be disbursed to the hiring party by the time they serve the Notice of Unpaid Balance.
The best practice is, therefore, to serve your Notice of Unpaid Balance early on in a project, when the property owner has not yet disbursed most of the payment to the general contractor.
Whom to serve your Alabama preliminary notices on
Both the Alabama Notice to Owner and the Alabama Notice of Unpaid Lien Balance must be served on the property owner. If a project has a construction lender, it is best practice to also serve the preliminary notice on the lender.
What happens if you fail to serve Alabama preliminary notices?
Failing to file a Notice to Owner prior to furnishing materials to a project only entitles a material supplier to an Alabama Unpaid Balance Lien. If you are providing materials to a project, you should always serve a Notice to Owner before you commence your work to ensure that the full price of your services may be recoverable via a mechanics lien.
Failing to serve an Alabama Notice of Unpaid Lien Balance when required will prohibit you from filing a valid Alabama mechanics lien.
How to file Alabama preliminary notices
Notice to Owner
1. Prepare the Notice to Owner form
The Alabama Notice to Owner form must include the following details:
- Name of the property owner
- Description of the materials to be furnished
- Description of the property location
Alabama Code also requires that your Notice to Owner sufficiently be in the following form:
2. Deliver the Notice to Owner to the property owner and the construction lender, if applicable
Serving the Alabama Notice to Owner may be done via personal delivery or certified mail with return receipt requested. You must deliver your Notice to Owner to the property owner, as required. Additionally, you may also choose to serve your Notice to Owner on the construction lender, although doing so is not mandatory.
Notice of Unpaid Lien
1. Prepare the Notice of Unpaid Lien form
The Notice of Unpaid Lien form in Alabama should have the following details:
- The name and address of the property owner
- The name and address of the party who hired you
- A description of the labor and materials that you provided
- A description of the property location
- The amount owed (or your contract amount)
- A statement saying that you will be filing a mechanics lien if you do not get paid the right amount
Unlike a Notice to Owner, there is no statutory template for the Notice of Unpaid Lien. Your Alabama Notice of Unpaid Lien form should be fine as long as you provide all the required details.
Be very careful when completing the form as Alabama is quite strict about the accuracy of the details included in notices. Ensure that all business names are written completely and that there are no spelling errors, especially in names and addresses.
2. Serve a copy of the Notice of Unpaid Lien on the owner and the construction lender
You may serve the Notice of Unpaid Lien Balance in Alabama via certified mail with return receipt requested or personal delivery. You are required to deliver this preliminary notice to the property owner, and you can also serve it on the construction lender, if applicable.
The point of delivering the preliminary notice to the construction lender is to ensure that they too are aware of your participation in a project. Typically, when a party serves a Notice of Unpaid Lien Balance, the owner and the lender will withhold the claimed amount so they can cover for the outstanding payment in case payment disputes arise.
Best practices for serving Alabama preliminary notices
1. Serve the preliminary notices early
Preliminary notice deadlines are tricky in Alabama because there are no fixed numbers of days within which you must serve the documents. The key, however, is to serve the preliminary notices as early as you can. The Notice to Owner must be served at any time before you start furnishing materials, and the Notice of Unpaid Balance Lien must be served as soon as possible before the owner disburses most of the payment to the general contractor.
2. Verify the accuracy of the details included in your preliminary notice forms
Alabama enforces strict rules on the correctness of your mechanics lien claim, so your preliminary notice forms must contain correct and accurate information. The names should be spelled properly and in full (including suffixes such as Ltd. and Inc.) and the addresses must be written accurately as well. Double-check your Alabama preliminary notice forms before delivering them to the higher-tier parties.
3. Serve the preliminary notices on the construction lender, if applicable
You are only required to serve the Alabama preliminary notices on the property owner, but it is a good practice to also serve the document on the lender. The more parties who know about you, the better. The construction lender may step in to settle payment disputes or ensure that they have enough funds to cover any outstanding payments, so serving on them your preliminary notice could help you get paid faster.