What Is a Right to Lien Notice?

You want to get paid for your work, right? Everybody does! Whether you’re swinging sledgehammers, writing novels, or directing movies, everyone wants to make sure that a hard day’s work comes with a good day’s wages. In the construction industry, when different projects can have multiple contractors and subcontractors working simultaneously, it’s vital that everyone involved be properly compensated for their work. One of the critical steps to accomplishing that in some states, such as Oregon, is a “right to lien” notice.

But what is a right to lien notice and how can—and should—you file one? What should you do if you receive one? Let’s examine these topics and more.

What Is a Lien?

In the simplest of terms: a lien is the ability to possess and withhold property pending the payment of a debt. As many English words do, it comes from Middle French, which itself comes from the Latin ligament, meaning “bond” or “tie.” In other words, for centuries, English common law, and therefore United States common law, has recognized a lien as a way to ensure debts are paid.

In other words, a lien means that if you can’t pay a debt, the entity that holds your debt can hold some of your possessions until you do.

Liens are typically divided into “consensual” and “nonconsensual” forms, also called “voluntary” and “involuntary” liens. This depends on whether a contract between the lienee and the lienor exists. One of the most common forms of lien in the United States, the mortgage, is a consensual lien. When you sign your mortgage, you do so with the full understanding that the lending institution may repossess your house if you can’t pay.

Nonconsensual liens, on the other hand, tend to be the results of legal judgments or statute. For instance, tax liens against delinquent taxpayers or movers’ liens, where a moving company has the right to not return a customer’s items until they have paid their fee.

Nonconsensual liens are the ones that are most relevant when discussing right to lien notices.

So, What Is a Right to Lien Notice?

A right to lien notice, also known as a preliminary notice, is a notification of services, equipment, or other labor that you’re providing to a property without having a direct contract with the property’s owner (i.e., being a subcontractor). If you do have a direct contract with the owner (i.e., you are a primary contractor), then you typically have to send a different type of notice, usually called an Information Notice.

In plain English: the right to lien notice tells the property owner what services and equipment you plan to use on their property. This may seem like an unnecessary hoop to jump through—some pointless red tape to cut—but there are several key benefits to serving this kind of notice, for all parties involved.

• Owners know exactly what services are being provided and can calculate their budget appropriately. There is no risk of paying twice for the same services rendered.

• Contractors ensure projects progress smoothly and are saved the headache of tracking subcontractor labor all on their own.

• Subcontractors can ensure that they have a legal right to be paid for all the work they do.

In other words, even if you don’t live in a state that requires you to serve a right to lien notice for subcontracting work, it’s almost always a good idea to get in the habit of using.

When you serve a preliminary notice/right to lien notice, you’re notifying an owner that, should they not make payment in full, you will have the legal right to claim some or all of the property in question.

How Should You Serve a Right to Lien Notice?

Before you start sending preliminary notices, make sure to check your state law so that you know what is required of you and when you need to send the notice before beginning services rendered.

For instance, in Oregon, according to Section 87.021(1), your right to lien notice is valid for all labor provided from eight days before the notice was sent. So if you remember halfway through a month-long process that you need to send the notice, you won’t have any legal claim to all the work you did that first week. In Oregon, therefore, you need to ensure that you send this notice within eight days of beginning your work.

When it comes to serving this notice, you can either do so in-person (yourself or through an intermediary) or send it through certified mail. In the case of delivery in-person, the notice is considered served on the date it is received by the owner. In the case of using the mail, the notice is considered served on the date it is postmarked.Be very sure that you keep your own copy of your right to lien notice so that there is never any doubt about what you included in it.

Where to Find the Notice

You can typically find your state’s legal right to lien notice online. For example, here is Oregon’s.

Be very careful when you fill out your notice. Any inaccuracies may make it difficult to enforce in the eventuality that you need to lay claim to the lien in question.

Important note: The “right to lien” notice should not be confused with a notice of “intent to lien,” though they have very similar names. The former, which we’ve been discussing, should be submitted by any subcontractor as a precaution—not necessarily for legal reasons, but just because it’s good business sense. It’s sent at the beginning of work. A notice of “intent to lien,” however, is what you send when it comes time to collect (i.e., when the payment is outstanding). In other words, the right to lien tells the payor, “Here is what we’ve provided and what you owe us,” while the intent to lien notice tells the payor, “You have not paid us and we intend to collect.” You can learn more about a notice of intent (aka NOI) here.

If you’re having contracting work done on your property and get a right to lean notice, don’t worry. It’s just letting you know what work is being done to your property.Questions? Contact us at Robert Hakes Construction for a consultation.