Serving a preliminary notice can fast-track the payment process in a construction project. When construction professionals serve a preliminary notice, they help property owners track which parties are working on their projects. Furthermore, letting an owner know that you are aware of your lien rights by sending a preliminary notice is one way to get them to make sure that you are properly compensated for your hard work.
However, serving a preliminary notice in Maine is only an optional step. No construction participant is required to hand the property owners a preliminary notice. But this does not mean that you should not deliver one at all.
There are benefits to serving a preliminary notice in the state. This guide explains how to serve a preliminary notice in Maine and why it is considered best practice to do so.
- Who must serve a preliminary notice in Maine?
- Why serve a Maine preliminary notice?
- When do you serve a Maine preliminary notice?
- What happens if you fail to serve a Maine preliminary notice?
- How to serve a Maine preliminary notice
- Best practices for serving a Maine preliminary notice
Who must serve a preliminary notice in Maine?
Technically, no potential lien claimant is required to serve a Maine preliminary notice. However, note that serving a Maine preliminary notice can protect your payment rights in the state.
In Maine, a property that gets bought by a bona fide purchaser may be transferred lien-free unless a mechanics lien has been enforced or a notice has been filed in the Registry of Deeds.
Furthermore, property owners of owner-occupied projects are liable to pay only the general contractors unless preliminary notice is served. If you are a lower-tier contractor, serving a preliminary notice can protect your lien rights in case a general contractor receives payment but fails to disburse the money to their subcontractors.
Why serve a Maine preliminary notice?
It is best practice to serve a preliminary notice in Maine, especially for those who have no direct contract with the property owner.
1. You inform the property owner that you are part of their project.
In Maine, property owners must be aware that a lien claimant has performed work on a project in order for a Maine mechanics lien to be valid. Even though serving a preliminary notice is not required, doing so is enough to have documented proof that you have duly informed the property owner of your participation in their project.
2. You establish a communication line with higher-tier parties.
Sometimes, payment disputes stem from the lack of proper communication among roject stakeholders. Serving a preliminary notice is one way to avoid communication issues. At the beginning of a project, you can serve a preliminary notice so you establish a communication line with the property owners and general contractors.
3. You protect your lien rights on owner-occupied projects.
If you are working on an owner-occupied project, whether residential, commercial or industrial, the property owner is expected to be liable only for the payment to the general contractor unless you serve a preliminary notice. By serving a preliminary notice, you preserve your lien rights in case the general contractor does not release your payment.
When do you serve a Maine preliminary notice?
There are no set deadlines for serving a preliminary notice as it is not a mandatory action.
However, if you choose to file a preliminary notice in the Registry of Deeds so you can protect your rights in case a property gets sold, you should do so as soon as you begin working on a project.
The same applies if you serve a preliminary notice to protect your lien rights while working on owner-occupied projects. Serving a Maine preliminary notice is best done while the property owner has not given the full payment to the general contractor.
In general, it is best practice to file or serve a preliminary notice in Maine as soon as you begin working on a project.
What happens if you fail to serve a Maine preliminary notice?
There are no direct consequences for failing to serve a Maine preliminary notice. Serving a preliminary notice in Maine is optional, but it is one way to be proactive in case payment disputes arise and you want to strengthen your lien claim.
How to serve a Maine preliminary notice
1. Prepare the Maine preliminary notice form
According to 10 M.R.S.A. § 3255, a Maine preliminary notice should include the following details:
- a description of the property sufficiently accurate to identify it
- the names of the owners
- a statement that the claimant is going to perform or furnish, is performing or furnishing or has performed or furnished labor, materials or services
- a statement that the claimant may claim a mechanics lien
The preliminary notice that you serve on the owner must also include the following warning at the top of the document:
Under Maine law, your failure to assure that …………………………………………………………………….. (name of the claimant giving notice) is paid before further payment by you to …………………………………………………………………….. (name of contractor) may result in your paying twice.
2. Serve the preliminary notice
There are two ways to go about delivering your preliminary notice in Maine. If you want to protect your payment rights in case a property gets purchased by a bona fide purchaser, you need to file your preliminary notice form in the Registry of Deeds in the same county where the project is located. You need to do so as soon as you begin working on a project.
If you want to simply establish communication lines with the property owner and subsequently protect your payment rights (for those working on owner-occupied projects), you can serve the Maine preliminary notice by personal delivery or by certified mail with return receipt requested.
Be sure to keep all receipts and proof that you have served on the owner the preliminary notice. Keep copies of your mailing documents or get an acknowledgment of receipt signed by the property owner or their agent.
Serving a preliminary notice directly on the owner must be done as soon as you begin working on a project. When working on owner-occupied projects, you must do it before the general contractor receives full payment from the owner. Otherwise, the owner is considered to be free of any liability.
Best practices for serving a Maine preliminary notice
1. Serve the preliminary notice even if it is not required
Even though Maine does not require its construction participants to serve a preliminary notice, doing so has benefits and can even protect your lien rights. Preparing and serving a preliminary notice on the owner is relatively simple, so if you are unsure whether you should serve one or not, it is best practice to err on the side of caution and serve one anyway.
2. Keep documented proof of serving the preliminary notice
In Maine, a property owner must be aware of or consent to your participation in a project before you can record a valid mechanics lien against their property. Serving a preliminary notice ensures that you can prove that the owner has been made aware of your contribution to the project, so make sure that you keep copies of mailing documents or signed receipts.
3. File a Maine mechanics lien if payment issues come up
A preliminary notice is not the same as a mechanics lien. If you want to recover your payment from a delinquent client, your best course of action is to record a mechanics lien. This will increase your leverage in payment negotiations and has the highest chance of getting the property owner to finally settle the outstanding debt.