Protecting your lien rights in Arizona begins with serving the 20-day preliminary notice.
The preliminary notice in Arizona — also known as the 20-day notice — is one of the most important documents that you have to understand if you’re a construction professional working in the state.
Serving an Arizona preliminary notice is not only a legal requirement for filing a valid mechanics lien, but it is also a good business practice that opens communication lines between you and higher-tier construction parties.
This guide will walk you through the step-by-step procedures concerning the Arizona preliminary 20-day notice, from filling out the form properly to serving it to the right parties using the correct methods.
- Who must serve the 20-Day Arizona Preliminary Notice?
- Why is it important to serve the 20-Day Preliminary Notice?
- How to Serve the Arizona Preliminary Notice: 3 Simple Steps
- 1. Prepare the Arizona 20-day notice form
- 2. Send the preliminary notice to the right parties
- 3. Secure an affidavit or receipt or sign an affidavit of mailing
- 3 Common Mistakes When Serving the Arizona Preliminary 20-Day Notice
Who must serve the 20-Day Arizona Preliminary Notice?
The Preliminary 20-Day Notice must be served by every construction participant who furnishes labor, professional services, materials, fixtures, or tools to a project.
This means that whether you’re a general contractor, a subcontractor, or a materials supplier — as long as you have the right to file a mechanics lien then you are required by the Arizona statutory laws to serve the preliminary notice.
The only parties that are exempted from the Arizona 20-day notice requirements are persons who are performing actual labor for wages. Otherwise, you will have to submit the preliminary notice in order to protect your lien rights.
Why is it important to serve the 20-Day Preliminary Notice?
The preliminary notice in Arizona is a “necessary prerequisite to the validity of any lien claim,” according to A.R.S 33-992.01(B). This implies that in order for any of your lien claim to be considered valid, you must first be able to prove that you have fulfilled the 20-day notice requirement.
The right to file a mechanics lien is exclusive to the construction industry, and it allows construction participants to secure payment from delinquent clients.
Unfortunately, payment disputes and delays are fairly common in the construction industry. So even if no payment issues have come up yet, it is still highly advisable that you take the necessary steps to retain your lien rights.
If payment issues arise down the road, you know that your lien rights are protected and you can exercise this right to claim that payment that you’ve duly earned.
On top of preserving your lien rights, serving a preliminary notice also opens the communication lines between you and the property owners. The 20-day notice lets the property owners know about your role and participation in a project, which can be helpful in getting your invoices paid.
Property owner(s) may sometimes lose track of which contractors, subcontractors, or material suppliers are working for them, especially in large-scale projects. By sending them a preliminary notice, you help them know who you are and how much payment you are expecting for your work.
A 20-day notice, therefore, does not necessarily promote friction between you and higher-tier construction parties. Serving a preliminary notice can even help foster good business relationships among construction stakeholders.
Recent rule change on amended notices
Arizona is one of the few states where, by statute, a new amended preliminary notice must be sent if the contract price or amount furnished becomes 30% or higher than the original value.
This means that, if over the course of the project, the contract price exceeds the amount declared on the preliminary notice by 30 percent or more*, an amended 20-day notice must be issued. The new notice must be served to avoid losing your lien rights.
Note: It’s wise to anticipate having to file an amended notice as an increase of 30% is really something that’s common in construction projects, what with change orders, extensions, and other reasons.
*The previous threshold was 20% but the passing of SB 1304 in May 2019 raised the threshold to 30%, effective August 27, 2019.
How to Serve the Arizona Preliminary Notice: 3 Simple Steps
- Prepare the Arizona 20-day notice form
- Send the preliminary notice to the right parties
- Secure an acknowledgement of receipt or sign an affidavit of mailing
1. Prepare the Arizona 20-day notice form
The first step to serving the 20-day notice is making sure that you have the right document with all the required information.
What information should be on the Arizona Preliminary Notice form?
The Arizona statutes require the following information to be on the 20-day preliminary notice:
- A general description of the labor, professional services, materials furnished or to be furnished to the project.
– This is a brief statement on the type of service, labor, or materials that you have furnished or that you will furnish to the project.
- An estimated total price of the labor, professional services, materials furnished or to be furnished to the project.
– This is the reasonable estimated price of your services to the project. This information may be sourced from your written contract with the party who hired you, if available.
- The name and address of the person furnishing labor, professional services, materials, machinery, fixtures or tools.
– This is your identification as the potential lien claimant.
- The name of the person who contracted for the purchase of labor, professional services, materials, machinery, fixtures or tools.
– This is the name of the person who hired you to work in the project.
- A legal description, street address, location with respect to commonly known roads or other landmarks in the area or any other description of the jobsite sufficient for identification.
– This is the property description of the project location that should be sufficient for identification.
Aside from the information above, the following statement must also be included in the Arizona 20-day notice, and it must be written in bold-faced type:
|In accordance with Arizona Revised Statutes section 33-992.01, this is not a lien and this is not a reflection on the integrity of any contractor or subcontractor.|
Notice to Property Owner
If bills are not paid in full for the labor, professional services, materials, machinery, fixtures or tools furnished or to be furnished, a mechanic’s lien leading to the loss, through court foreclosure proceedings, of all or part of your property being improved may be placed against the property. You may wish to protect yourself against this consequence by either:
What if you don’t know where to get some of the required information (e.g. name and address of the lender)?
You can issue a written request to the property owner or any higher-tier party so they can tell you the information that you need for your preliminary notice. The property owner must give you the required information within 10 days of receiving your written request.
If you did not receive the information within 10 days, the property owner or the interested party may not use “inaccuracy of information” as a defense against the mechanics lien.
Note, however, that sending this written request does not extend the deadline for serving your preliminary notice. If you do not have all the information required, you must issue the written request at your earliest convenience.
2. Send the preliminary notice to the right parties
Once you have completed the 20-day notice form and it’s all signed, the next step would be to serve the preliminary notice.
There are two important parts to this step: you must send the notice on time and you must send it to the right people.
When should you serve the Arizona Preliminary Notice?
The preliminary notice is called the 20-day notice in Arizona because it must be sent within 20 days after the first day of furnishing labor or materials to the project.
What happens if fail to submit the Arizona Preliminary Notice within 20 days?
Luckily, failing to serve the preliminary notice in Arizona within the 20-day period does not invalidate one’s lien rights. You may still file the preliminary notice even after the 20-day time frame has passed.
However, if you submit your notice late, your mechanics lien can only cover the work that you’ve done 20 days prior to sending out the notice. This means that if you begin working on August 1 and you submit your preliminary notice on August 30, you only claim a lien for the work that you have done starting from August 11.
Also keep in mind that an Arizona preliminary notice is considered “served” at the time of mailing. This means that even if your notice does not get officially delivered within the 20-day time frame, you will still meet the notice requirement as long as you sent it out within this time frame.
On whom should you serve the Preliminary Notice?
The preliminary notice in Arizona must be sent to the following parties:
- Property owner, or the reputed owner
- General contractor, or reputed contractor
- Construction lender, if any
- Person with whom the claimant has a direct contract
In practice, it is highly advised that you send the preliminary notice to all the parties that higher than you in the contracting chain. If you’re a material supplier to a subcontractor, for example, you must send the notice to the subcontractor, the general contractor, the property owner, and the lender, if any.
How should you serve the Arizona preliminary notice form?
The Arizona preliminary notice must be served by first class mail sent with a certificate of mailing, or by registered or certified mail.
Another option is to serve the Arizona 20-day notice online. You may serve your preliminary notice via the Handle app. Handle will not only serve the notice for you but it will also ensure that the form that you have is properly filled in with all the required information.
Handle also takes care of serving the notice to the right people and ensuring that they have received the document. By serving your preliminary notice through Handle, you are able to focus on other urgent tasks.
3. Secure an affidavit or receipt or sign an affidavit of mailing
After you have served your 20-day notice, you must also be able to prove that you have actually fulfilled the notice requirement.
Arizona requires that all preliminary notices are served with an “acknowledgement of receipt” that must be filled out by the party receiving the notice. The receipt must be in substantially the following form, according to A.R.S 33-992.02:
Signature of sender
Acknowledgment of receipt of preliminary twenty day notice
This acknowledges receipt on (insert date) of a copy of the preliminary twenty day notice at (insert address) .
Date: _______________________________________ (Date this acknowledgment is executed)
Signature of person acknowledging receipt, with title if acknowledgment is made on behalf of another person
The recipient of your preliminary notice is expected to sign and return the acknowledgement within 30 days from date of mailing. If the recipient fails to return the acknowledgement receipt, then you as the sender can sign an affidavit of mailing.
The affidavit of mailing is legal document that proves that you have served the 20-day notice as required. Because this affidavit will serve as your proof, you must include in this affidavit all the relevant details on how you served the notice, including time, place, and manner of mailing.
The affidavit must also state the name of the person to who the preliminary notice was mailed, including his or her job title/capacity with regard to the project.
You must also attach to the affidavit the certificate of mailing (if you served the notice via first class mail) or the certification or registration (if you served the notice via certified or registered mail).
3 Common Mistakes When Serving the Arizona Preliminary 20-Day Notice
1. Failing to serve the preliminary notice within the first 20 days of work
Some construction participants delay the submission of the 20-day notice because failing to serve it before the 20-day deadline does not result in the revocation of their lien rights.
However, know that even if you are allowed by law to submit the notice late, the coverage of your mechanics lien will only be effective for only the previous 20 days before you mailed your notice and for all the work done after this mailing date.
Serving the preliminary notice after the 20-day time frame may not only result in your not getting the full amount for your services — you may also start to develop terrible business practice that may not be beneficial in the long run. Some states are not as lax as Arizona when it comes to pre-lien notice deadlines.
2. Failing to include all the required information / statements in the form
The Arizona preliminary 20-day notice has simple requirements, but sometimes even the simple things can be missed. Make sure that you provide the complete names of the required parties, and make sure that you declare the correct estimated amount for your services.
Padding the amount with unnecessary fees can backfire. The owner or the contractor may contest your claim and your mechanics lien may be invalidated.
Also remember that you can always issue a written request to the property owner or any other interested party. If they fail to respond to your info request, they may not be able to use “inaccuracy of information” as a defense against a lien claim.
3. Failing to secure proof of notice receipt
Arizona requires all its potential lien claimants to prove that they fulfilled this 20-day notice requirement.
You must always remember to attach the acknowledgement of receipt form to the preliminary notice that you are serving, and you must keep track whether you have received the signed acknowledgment or not.
If your 20-day notice has not been acknowledged within 30 days after the date of mailing, then you must prepare an affidavit of mailing to prove that you indeed submitted the document.