If you are a subcontractor, planning on or doing business with contractors on property they don't own, a "Notice to the Owner" is your best bet in protecting your right to payment. You've heard the name but what is it?
A Notice to the Owner (NTO) is a court filing that advises the owner of an improvement that the sender, usually a subcontractor or supplier not dealing directly with the owner, is holding the owner responsible to ensure that the sender is paid before payment is made to the general contractor on the job. It typically provides a timeline that states the sender shall be paid for their work within 30-60 (varies by state) days of completion, or the sender reserves the right to file a lien.
Drafting and serving a "Notice to Owner" for every job is considered by some a best practice. Viewed as a basic "cost of doing business", the "Notice to Owner can:
- Improve cash flow by helping to be sure you get paid,
- Establish good communication between your business and those making the payments
- Protect your right to payment by securing your right to lien a property should the need arise.
The most important thing to consider is that in most states if this "Notice to the Owner" is not served to the owner, the right to later claim a construction lien against the property can be gone. So, it's important to check with your local courthouse on which laws apply to your situation.
What Does "Served" Mean?
Most states have specific laws and statutes that instruct the method for delivery of "the Notice to Owner" to the other party. The statutes use the terms “serve" and “service," to describe the delivery of this document in a particular way. It's typical to expect the following options:
- In-person Delivery: This is done by a private process server, law enforcement official, or another person. The document is given to the person to be served. It may also be provided to a corporation or business via a registered agent.
- Certified or Registered Mail: By sending the documents by registered or certified mail which provides evidence of delivery. Some states even accept this in electronic format.
- Posting at the Jobsite: Usually, if the above-specified methods aren't available, the notice can be posted on the job site for all to see.
How can I file one today?
It takes a few steps to generate, file, and serve a "Notice to Owner". This is what you'll need to do:
- Google the county recorder's office to see if they list their forms digitally online.
- You may want to call ahead and discuss which forms will be necessary (all courthouses vary) with the local clerk.
- Download the "Notice to Owner form(s)" and print them out.
- Read, understand and fill out the forms appropriately.
- Find a local notary, arrange a meeting, and have your form notarized.
- Head to the county recorder's office and pay to file your document.
- Wait to hear back on the status of your filing
- Read and review local statutes on serving your accepted filing
- Pay to have your documents served, and keep a copy of the receipt for your records
Wow, that's a lot of steps. You could save some time by generating a "Notice to the Owner" online in minutes with our help.
If you have any questions, please don't hesitate to reach out.