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Preliminary Notice FAQ
A South Dakota preliminary notice – also known as a Notice of Furnishing – is a letter sent by a contractor or supplier to the property owner at the start of a construction project. In many states, a preliminary notice is required to be sent in order to secure the right to lien.
South Dakota has another pre-lien notice for general contractors, known as Notice of Project Commencement. This pre-lien notice is a document that is filed with the registry of deeds and declares the official start date of a construction project.
Parties who have no direct contract with the property owner are required to serve a South Dakota Notice of Furnishing if the general contractor files and posts a Notice of Commencement [i].
General contractors are not required to file a Notice of Commencement, but if they choose to do so, they will obligate lower-tier parties to serve them a preliminary notice [ii].
The South Dakota Notice of Furnishing is served within 60 days of the last day of furnishing labor or materials to the project.
The South Dakota Notice of Commencement may be filed within 30 days of commencement of work.
Failing to serve a Notice of Furnishing when required to do so will extinguish your lien rights.
Failing to file a Notice of Commencement will not have a direct effect on a general contractor’s lien rights as it is an optional notice.
Intent To File FAQ
A South Dakota notice of intent to lien is sent before the filing of a mechanics lien becomes necessary. Although only a number of states require that this notice be sent, many construction participants send a notice of intent to lien as an uncostly way to have payments for invoices settled.
No, a South Dakota notice of intent to lien is not required in the lien process. However, you may opt to send one anyway as it reminds the property owner of any outstanding balance.
In South Dakota, a notice of intent to lien may be sent 10 days before filing a mechanics lien. It advises the owner of your intention to record a lien if the payment is not satisfied.
Failing to send a South Dakota notice of intent to lien has no effect on your lien rights because this notice is not required in South Dakota.
Mechanics Lien FAQ
A South Dakota mechanics lien is an effective tool that helps make sure you will be paid for the construction materials and/or labor you supplied. It is a legal claim that can effectively recover payment for contractors and suppliers.
This means that if you file a valid mechanics lien in South Dakota and you do not get paid for your work, you have the right to enforce the lien through a lawsuit. This enforcement action can either prompt the client to settle or force the sale of the property. The proceeds of the sale will be used to settle your unpaid bill.
A mechanics lien in South Dakota must be filed within 120 days of the date when you last furnish labor or materials to the project.
A South Dakota mechanics lien is enforceable within 6 years of the date when you last furnish labor or materials to the project. [iv]
South Dakota has no licensing requirements before you can file a mechanics lien.
When a mechanics lien is satisfied by “payment, foreclosure, compromise, or another method,” you must execute and serve on the property owner a satisfaction document that includes the following information: the date of satisfaction, the date of filing the mechanics lien, the amount claimed, the property description, and the names of the claimants and property owner(s). [vi]
Executing this document must be done before two witnesses and it must be notarized and filed in the same registry of deeds where the mechanics lien was recorded.
No court in South Dakota has yet considered the validity of the “pay-if-paid” and the “pay-when-paid” clauses.
[vi] South Dakota Code § 44-9-21Handle.com provides answers to Frequently Asked Questions (FAQs) to contractors and others who are seeking information regarding preliminary notices, intent to file, mechanics lien, and other construction questions. These are provided for informational purposes only, and we cannot provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options, selection of forms or strategies.