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File a South Dakota Preliminary Notice: How to Protect Your Lien Rights

File a South Dakota Preliminary Notice: How to Protect Your Lien Rights

October 28, 2020

The mechanics lien process usually begins by serving a preliminary notice. In most states, construction project participants must send a preliminary notice to the property owner to preserve their lien rights.

There are three preliminary notices to take note of in South Dakota: the Notice of Project Commencement, the Location Notice, and the Notice of Furnishing Labor or Materials. Each preliminary notice comes with different rules and requirements, and it is up to a potential lien claimant to make sure that they understand those rules.

This guide will walk you through the process for fulfilling the preliminary notice requirements in South Dakota to ensure that you can protect your mechanics lien rights.

Send a South Dakota preliminary notice in 60 seconds

Send a South Dakota preliminary notice in 60 seconds

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Who must serve the preliminary notices in South Dakota?

Notice of Project Commencement

The Notice of Project Commencement may be filed in the Register of Deeds by general or prime contractors. Filing this preliminary notice is technically not mandatory, but doing so protects a general contractor from a potential mechanics lien claim from sub-subcontractors or suppliers to subcontractors.

Location Notice

The Location Notice must be posted by any person who files the Notice of Project Commencement. General contractors who choose to file the Notice of Project Commencement must post a Location Notice on the job site.

Notice of Furnishing Labor or Materials

If a general contractor files a Notice of Project Commencement, sub-subcontractors and suppliers to subcontractors must serve a Notice of Furnishing Labor or Materials on the general contractor and the property owner.

Note that this notice will only be required if a valid Notice of Project Commencement is filed in the Register of Deeds. You will know that such a notice has been recorded if you see the associated Location Notice on the job site. If in doubt, always err on the side of caution and choose to serve this preliminary notice to protect your lien rights.

When do you serve the South Dakota preliminary notices?

Notice of Project Commencement

When do you serve the South Dakota Notice of Project Commencement

Location Notice

There is no specific deadline for posting the Location Notice on the job site. However, the Notice of Project Commencement does not take effect until the Location Notice is posted.

Notice of Furnishing Labor or Materials

When do you serve the South Dakota Notice of Furnishing Labor or Materials

What happens if you fail to serve a South Dakota preliminary notice?

If you are a general contractor and you do not record a Notice of Project Commencement and post the associated Location Notice, lower-tier parties such as sub-subcontractor and suppliers to subcontractors may make a mechanics lien claim against the property. Recording a Notice of Project Commencement removes their lien rights and protects you from payment claims by parties who have no direct contract with you.

If you are a sub-subcontractor or a supplier to a subcontractor and a Notice of Project Commencement has been filed, you need to serve a Notice of Furnishing Labor or Materials to regain your lien rights. Otherwise, you cannot record a mechanics lien to recover payment from your client if payment disputes arise.

How to serve South Dakota preliminary notices

How to serve South Dakota preliminary notices

1. Prepare the South Dakota preliminary notice form

Notice of Project Commencement

According to the South Dakota laws, the following details must be included in your Notice of Project Commencement:

(1) The name and address of the person filing the notice of project commencement;

(2) The name and address of the owner or developer;

(3) A general description of the improvement; and

(4) The location of the project, including the legal description of the property.

Note that a legal property description is required for filing the Notice of Project Commencement. Writing a simple street address for the property will not suffice.

Location Notice

The Location Notice must have the following bits of information, based on the South Dakota laws:

(1) The name and address of the contractor

(2) The following statement: The contractor on this project has filed a notice of project commencement at the county courthouse.

Notice of Furnishing Labor or Materials

The following details must be written in your Notice of Furnishing Labor or Materials, as required by the South Dakota laws:

(1) The name of the sub-subcontractor or supplier who claims payment;

(2) The name of the person who hired or contracted you for the project;

(3) A description of the labor, services, or materials furnished and their contract price or value. Materials specifically fabricated by a person other than the one giving notice shall be separately stated in the notice;

(4) A description of the project, sufficient for identification;

(5) The date when the first and last item of labor or materials was actually furnished or scheduled to be furnished; and

(6) The amount claimed to be due, if any.

Make sure all the details listed above are included; otherwise, your preliminary notice will be considered invalid.

2. File or serve the South Dakota preliminary notice

Notice of Project Commencement

This South Dakota preliminary notice must be recorded with the Register of Deeds of the county where the project is located. Note that it is not simply served on the owner.

Filing the Notice of Project Commencement may be done by visiting the Register of Deeds office and paying the associated filing fees. Also note that recording this preliminary notice should be done within 30 days of commencing your work on a project.

Most importantly, keep in mind that the Notice of Project Commencement will not take effect until you post the Location Notice on the job site.

Location Notice

This preliminary notice is a simple document that must be posted on the job site if you choose to file a Notice of Project Commencement. There is no deadline for posting this South Dakota preliminary notice, but it is best practice to post this as soon as possible in order for the Notice of Project Commencement to take effect immediately.

Notice of Furnishing Labor or Materials

The Notice of Furnishing Labor or Materials should be served on both the general contractor and the property owner via registered or certified mail with return receipt requested. If required, you must serve this within 60 days of your last day of work on a project.

Make sure to keep copies of your mailing receipts. This South Dakota preliminary notice requirement is considered fulfilled on the day the notice is sent.

Best practices for serving a South Dakota preliminary notice

1. Remember to file a Notice of Project Commencement

If you are a general contractor, filing a Notice of Project Commencement is key to protecting yourself from payment claims by lower-tier parties. Recording a Notice of Project Commencement requires sub-subcontractors and suppliers to serve you a preliminary notice before they can file a mechanics lien.

2. Include all the required details in your preliminary notice

South Dakota laws specify the details that must be included in your preliminary notices. Be sure to include all the required pieces of information if you want your preliminary notices to be valid. Also make sure that the names and addresses are spelled correctly. Double-check your documents before filing to ensure that you do not miss writing an important detail.

3. Record a mechanics lien if payment issues come up

Preliminary notices are only initial steps in ensuring that your lien rights are protected. If payment disputes arise, the next best step is still to record a mechanics lien. In South Dakota, there are rules and requirements that must be followed to record a valid mechanics lien. Make sure to familiarize yourself with those rules so you can successfully recover your payment from delinquent clients.

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