The mechanics lien process requires all lien claimants to follow strict rules and deadlines. Lien regulations in each state not only govern when and where to file a mechanics lien, but they also dictate which notices must be served or filed.
The Notice of Commencement is one of the notices that must be filed in certain states in order to protect the rights of top-of-the-chain parties and to communicate important information to lower-tier construction participants.
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As with most lien-related notices, the Notice of Commencement is typically filed early on in a project. This guide explains the filing process for the Notice of Commencement in non-residential projects.
- What is a Notice of Commencement?
- Which states require a Notice of Commencement for non-residential projects?
- Who files a Notice of Commencement in non-residential projects?
- When must you file a Notice of Commencement in non-residential projects?
- How to file a Notice of Commencement in non-residential projects
- Best practices when filing a Notice of Commencement for non-residential projects
What is a Notice of Commencement?
The Notice of Commencement officially determines the start date of a construction project. It is also known as Notice of Contract or Notice of Project Commencement in some states.
Aside from the official start date of a project, the Notice of Commencement also contains relevant information that is helpful for subcontractors and material suppliers when filling out preliminary notices and mechanics lien forms. These pieces of information include the name and address of the property owner, the legal description of the property, the official project name, etc.
Note that the Notice of Commencement is not the same as the preliminary notice or the notice of intent to lien. It is a completely separate notice that typically signals subcontractors and suppliers to deliver a preliminary notice to the property owner. In some states, when a property owner fails to file a Notice of Commencement, any preliminary notice requirements among lower-tier parties are automatically eliminated.
Which states require a Notice of Commencement for non-residential projects?
There are six states that require a Notice of Commencement in non-residential projects:
- Louisiana (only for projects worth over $100,000)
- Utah (only for public jobs)
Nebraska, South Carolina, South Dakota, and Texas are the four states in which recording a Notice of Commencement is optional. All the other states have no specific rules on filing a Notice of Commencement.
Who files a Notice of Commencement in non-residential projects?
A Notice of Commencement is usually filed by a higher-tier party, typically by a property owner or a general contractor. The following table shows which parties must file a Notice of Commencement in every state that requires a Notice of Commencement in non-residential projects:
When must you file a Notice of Commencement in non-residential projects?
The following table shows the deadlines for filing a Non-residential Notice of Commencement:
*Note that a general contractor’s first day of work corresponds to the day when they begin to physically furnish labor or materials to the project.
How to file a Notice of Commencement in non-residential projects
1. Determine if you are required to file a Notice of Commencement
Filing a Notice of Commencement is the responsibility of a top-of-chain party. Property owners, construction lenders, and general contractors must, therefore, familiarize themselves with the NOC rules in their state so they know if they are responsible for recording the NOC.
It is strongly recommended for all top-of-chain parties to have open communication regarding filing the NOC. In states like Georgia, for instance, filing the NOC may be done by any of the higher-tier parties but they must coordinate among themselves to ensure that such a notice is actually recorded.
Louisiana is another state that allows any of the higher-tier parties to record the NOC, although the penalties for failing to file one falls only on the general contractor. When filing the NOC, the Louisiana general contractor must also secure the signature of the property owner.
There are variations in NOC rules in every state, so be sure that you know the specific NOC regulations that apply to where you are located.
2. Prepare the Notice of Commencement form
Every state also has different Notice of Commencement forms, but they all generally contain the following pieces of information:
- Name and address of the property owner
- Name and address of the general contractor
- Legal property description
- Brief project description
- Name, address, and contact details of the construction lender, if applicable
- Name(s) of the property owner’s legal representatives
- Expiration date of the NOC
- Signature(s) by the property owner(s)
All these details must be as specific as possible. If you are a property owner, you want to write your specific mailing address so all the preliminary notices may be delivered to you. Otherwise, you might run the risk of not receiving the pre-lien notices then facing a mechanics lien claim from a party whom you did not know was working on your property.
3. Record the Notice of Commencement
When the NOC form is ready for filing, you may now have it recorded in the correct office:
It is very important that you file your NOC in the right office. Also note that you should file your NOC in the applicable office within the same location as your property.
4. Display the Notice of Commencement on the project site
The last step is to post the Notice of Commencement on the project site, and it must be displayed in a location that is visible to all project participants. The point of displaying the NOC on site is for participants to know all the pertinent information about the project, so it must not be hidden and tucked away in a drawer in your office.
Note that in Ohio, a copy of the filed NOC must also be served by the property owner on the general contractor.
Best practices when filing a Notice of Commencement for non-residential projects
1. File the NOC as early as possible
Some states require the NOC to be filed before work on a project begins, while others give at most a 15-day period after a project commences. It is best practice to prepare the NOC form early and to file the document earlier than the deadline. Preparing the Notice of Commencement form early gives you time not only to gather all the required information, but also to verify its accuracy.
2. Make sure that the NOC is recorded by the responsible party
Even if you are not responsible for filing the NOC in your state, you should take it upon yourself to ensure that the NOC is recorded. Communicating with other top-of-chain parties is a good business practice, and asking them about the Notice of Commencement is one of the best ways to open communication lines even before a project starts.
3. Verify the accuracy of the information on the NOC
As with all mechanics lien forms, you should also make it a good business practice to verify the correctness of the information that you include in the Notice of Commencement. Check the spelling of the names and addresses, and make sure to be as specific as possible. It is very important that you write the specific addresses as this will ensure that you receive all the necessary notices for subcontractors and suppliers.