Serving a valid twenty-day preliminary notice in Arizona is an absolute requirement – failing to serve a valid one could effectively nullify your lien rights for a project.
Sometimes, however, the contents of a preliminary notice may have to change throughout the course of a project. The original contract amount may increase, for example, and you, as the contractor, subcontractor, or material supplier, may have to do more work and therefore expect a higher payment than what is stated in your original preliminary notice.
In Arizona, if the total price of your services increases from what is reported in your original preliminary notice, you are required to update the original notice and serve an Amended Twenty-Day Preliminary Notice. This guide details everything you need to know about updating your Arizona preliminary notice.
What is an Amended Arizona Preliminary Notice?
The Amended Arizona Preliminary Notice is an updated version of your original Arizona Twenty-Day Preliminary Notice. This notice requirement applies when the expected total price of your services increases during the course of the project, and the amount that you wrote in your original Arizona preliminary notice is no longer accurate.
When to update your preliminary notice
Arizona recently passed SB 1304, which requires all relevant construction parties to update their preliminary notices if the total price of the services increases by 30%. Prior to this amendment, the minimum increase in the total price for an amended preliminary notice to be required was 20%.
This law took effect on December 31, 2019, which means that starting in 2020, all parties who are required to serve an Arizona preliminary notice must be mindful of a relevant change in the total price of their services. Once you realize that your expected payment from a project will grow by 30% from the price that you initially wrote in your original preliminary notice, you must work on serving an Amended Arizona Preliminary Notice.
When to serve an Amended Preliminary Notice in Arizona
You must serve an Amended Preliminary Notice in Arizona as soon as your total expected payment increases by 30%. If, for example, your original preliminary notice had $20,000 as the expected amount, you must serve an amended preliminary notice as soon as your total project price reaches $26,000, or 30% higher the original $20,000.
Note that updating your Arizona preliminary notice does not invalidate the original preliminary notice that you sent. The amended preliminary notice is considered served on the same date that you served the original preliminary notice.
However, note that like a regular Arizona preliminary notice, the amended Arizona preliminary notice only covers your work from the previous 20 days prior to the day the notice was served. Your potential mechanics lien can, therefore, cover the 20 days prior to the day you served the original preliminary notice.
Consequences of not updating your Preliminary Notice in Arizona?
Failing to update your preliminary notice once the total price difference reaches a minimum of 30% will limit the amount that you can claim with your Arizona mechanics lien. This implies that you can only recover payment from the original contract amount and the services described pertaining to that amount.
It is, therefore, very important that you update your preliminary notice in Arizona once you hit the 30% increase. Otherwise, you will limit the coverage of your potential mechanics lien, which could cause you to lose the money that you worked hard to earn.
How to serve an Amended Arizona Preliminary Notice
1. Prepare the Amended Arizona Preliminary Notice form
2. Send the Amended Arizona Preliminary Notice to the right parties
1. Prepare the Amended Arizona Preliminary Notice form
The Amended Arizona Preliminary Notice form is the same as your original preliminary notice. The following pieces of information are required:
1. A general description of the labor, professional services, materials furnished or to be furnished to the project
This is a brief statement on the type of service, labor, or materials that you have furnished or that you will furnish to the project. This should be updated to reflect the services that caused the increase in price.
2. An estimated total price of the labor, professional services, materials furnished or to be furnished to the project
This is the reasonable estimated price of your services for the project, which must reflect the updated amount. As required by law, this should be at least 30% higher than the amount written in your original preliminary notice.
3. The name and address of the person furnishing labor, professional services, materials, machinery, fixtures or tools
This is your identification as the potential lien claimant.
4. The name of the person who contracted for the purchase of labor, professional services, materials, machinery, fixtures or tools
This is the name of the person who hired you to work on the project.
5. A legal description, street address, location with respect to commonly known roads or other landmarks in the area or any other description of the jobsite sufficient for identification
This is the property description of the project location that should be sufficient for identification.
The Amended Arizona Preliminary Notice must substantially be in the following form:
2. Send the Amended Arizona Preliminary Notice to the right parties
The amended preliminary notice in Arizona must be sent to the parties to whom you sent your original Arizona preliminary notice. These parties include:
- Property owner, or the reputed owner
- General contractor, or reputed contractor
- Construction lender, if any
- Person with whom the claimant has a direct contract
Like the original Arizona preliminary notice, you are expected to serve the preliminary notice on all the parties higher than you in the contracting chain. If you’re a material supplier to a subcontractor, for example, you must send the notice to the subcontractor, the general contractor, the property owner, and the lender, if any.
It is best practice to serve the updated Arizona preliminary notice as soon as you find out that the project amount will increase by 30%. Note, however, that the amended Arizona preliminary notice is considered sent on the same day that you served the original Arizona preliminary notice.
The amended preliminary notice must be served by first-class mail with certificate of mailing or by registered or certified mail with return receipt requested. As always, you are encouraged to keep copies of all the postage receipts to make sure that you have documented proof of compliance with this specific preliminary notice requirement.
Best practices when serving an Amended Arizona Preliminary Notice
1. Serve the amended preliminary notice as soon as possible
You must serve the amended preliminary notice as soon as you find out that your total project price will increase by over 30%. You should always be mindful of this threshold when working in Arizona to avoid potential complications. Work on updating your Arizona preliminary notice as soon as you realize that your services will be at least 30% higher than what was originally claimed.
2. Use your original Arizona preliminary notice as template
The assumption for an updated Arizona preliminary notice is that you have already sent an original Arizona twenty-day preliminary notice earlier on in the project. Since you have already submitted an Arizona preliminary notice, you should have all the required information needed for the Amended Arizona Preliminary Notice form. Work on the same template and make sure that the description of services and amounts are duly reflected.
3. Keep copies of mailing receipts
As with any lien-related document, it is best practice to keep all mailing and postage receipts to make sure that you have documented proof of compliance with Arizona’s preliminary notice requirements. Always choose the return receipt option when mailing, and keep all records in case your compliance with the rules gets questioned.
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