Protecting your lien rights begins by complying with the state’s preliminary notice requirements. In Oregon, certain construction parties must serve a very important notice known as the Information Notice to Owner.
The Information Notice to Owner lets a property owner know about their rights and their obligations to their contractors, subcontractors and material suppliers. By serving an Information Notice to Owner, you will be able to communicate with a property owner about your participation and expectations in a project.
This guide will walk you through the process of serving a valid Information Notice to Owner in Oregon. Read on to know about the procedures as well as the best practices that can help you serve a valid Information Notice to Owner and ultimately protect your lien rights and license to practice in Oregon.
Who must serve an Oregon Information Notice to Owner?
All parties with a direct contractual relationship with the property owner of a certain residential project are required by Oregon laws to serve a valid Information Notice to Owner. These parties are typically general contractors and material suppliers who directly contract with the property owner.
Note that not all residential projects require general contractors to serve an Information Notice to Owner. Only parties whose contracts are worth more than $2,000 must serve this Oregon preliminary notice.
Basically, if you are a general contractor working on residential property and your services are estimated to exceed $2,000 – you are required to serve an Information Notice to Owner in Oregon.
Note, however, that you may serve an Information Notice to Owner even if you are not obligated by law to do so. Generally speaking, serving preliminary notices is one way to open communication lines with a property owner, so it is always a good business practice to deliver such notice.
When to serve an Oregon Information Notice to Owner
You are expected to serve an Oregon Information Notice to Owner at the time of signing a residential construction or improvement contract. You must therefore prepare your Information Notice to Owner form before you execute a contract with a property owner.
In some cases, your contract may be worth less than $2,000 when you initially sign it. If throughout the course of a project, your services go beyond the initial $2,000 amount, you will be required to serve an Information Notice to Owner within 5 days of learning about this change.
What happens if you do not serve an Oregon Information Notice to Owner?
Failing to serve an Oregon Information Notice to Owner when you are working directly with a property owner will result in the revocation of your lien rights.
You must serve an Information Notice to Owner in Oregon if you want to be able to file a mechanics lien as a way to recover your payment in case you do not get rightfully compensated for your hard work.
Also note that failing to serve an Information Notice to Owner may result in the suspension of your license to practice. A civil penalty of not more than $5,000 may be imposed on you, so ensure that you comply with this preliminary notice requirement if it applies to you.
How to serve an Information Notice to Owner in Oregon
1. Prepare the Information Notice to Owner
According to Oregon Statutes Section 87.093(1), the Information Notice to Owner form must “describe, in nontechnical language and in a clear and coherent manner using words in their common and everyday meanings, the pertinent provisions of the Construction Lien Law of this state and the rights and responsibilities of an owner of property and an original contractor under that law.”
You may include the following in your Information Notice to Owner:
- The different ways an owner can avoid multiple payments for the same materials and labor
- The right of an owner to file a complaint against a licensed contractor with the Construction Contractors Board
- The right of an owner to receive, upon written request, a statement of the reasonable value of labor and materials that a contractor has furnished for their property
Remember that the rules and rights that you will be writing in your Information Notice to Owner do not have to be written in legal language. Writing them in plain, non-technical language is fine.
Also note that your Information Notice to Owner must contain two signature lines: one for you and one for the property owner. This is to ensure that both of you have understood and agreed upon the information included in your preliminary notice.
2. Serve it on the higher-tier parties
Once you have put together you Information Notice to Owner, you must serve it on the property owner on the same day that you execute the contract or within 5 days upon learning that your services will exceed the initial amount of less than $2,000 worth.
You may serve the Information Notice to Owner by personal delivery, by registered or certified mail, or by first-class mail with certificate of mailing. When delivering in person, make sure that you get a signed copy of an acknowledgment of receipt.
If, for instance, a property gets sold within 75 days after the completion of a project, you also have to serve an Information Notice to Owner on the new owner or purchaser of the property.
Best practices when serving an Information Notice to Owner in Oregon
1. Prepare the Information Notice to Owner early
If you are working on a residential construction or improvement and your services are worth more than $2,000, you have to serve an Information Notice to Owner on the same day that you sign the contract for the project. Preparing your preliminary notice early will save you a lot of time and will make sure that you comply with this very important requirement in Oregon.
2. Do not forget to serve it on the new owner of the property
A residential property may be sold before or soon after its construction or improvement is completed. If a residential property gets sold within 75 days following the project completion, remember that you are also required to serve an Information Notice to Owner on the new owner of the property.
Make sure that you comply with this step, especially if you still have an outstanding payment claim from the previous owner.
3. File an Oregon mechanics lien if a payment dispute arises
An Information Notice to Owner does not qualify as a mechanics lien. It does not get recorded under a property’s public records so it doesn’t encumber a property – if a payment dispute comes up, your best bet is to file an Oregon mechanics lien. You have a higher chance of recovering your payment through a strong mechanics lien claim.