Serving a valid preliminary notice is a requirement before you can file a valid mechanics lien — this rule applies in most states, including Oregon.
In Oregon, a mechanics lien may be declared null and void unless the party filing the lien has complied with the appropriate preliminary notice requirements. One of these important Oregon preliminary notices is the Notice of Right to Lien. Not only is this preliminary notice a requirement before certain parties can file a mechanics lien – the Notice of Right to Lien also determines the coverage of your potential mechanics lien claim.
Who must serve a Notice of Right to Lien in Oregon?
In Oregon, parties who have no direct contract with a property owner are required to serve a Notice of Right to Lien. This means that subcontractors and material suppliers who do not supply directly to the owner are obligated by law to comply with Oregon’s Notice of Right to Lien requirements.
When to serve a Notice of Right to Lien in Oregon
There is no specific deadline for serving your Oregon Notice of Right to Lien. Technically, you may serve this preliminary notice at any time during the course of the project.
However, do note that the date you serve the Notice of Right to Lien has a significant effect on the coverage of your potential mechanics lien. According to Oregon Revised Statutes Section 87.021(1), the Notice of Right to Lien will only protect your lien rights starting from the previous 8 days prior to the day the notice was mailed or delivered.
You are, therefore, prescribed to serve the Notice of Right to Lien within 8 days of your first day of work to ensure that you can fully exercise your lien rights. Even if you don’t think a payment dispute will arise and you feel that a mechanics lien may not be necessary, you are highly advised to serve this Oregon preliminary notice within the 8-day period.
It may be helpful to know that the 8-day count does not include weekends and statutory holidays.
What happens if you fail to serve an Oregon Notice of Right to Lien?
Serving a preliminary notice is required before you can file a valid mechanics lien in Oregon. If you do not deliver a Notice of Right to Lien as required, your mechanics lien will, unfortunately, be declared null and void.
Be aware that while there is no hard-and-fast deadline for serving the Oregon Notice of Right to Lien, you are encouraged to serve this preliminary notice within 8 days of the day when you first furnish labor or materials to a project. Serving the preliminary notice within the first 8 days ensures that your full lien rights are protected.
If you serve a preliminary notice beyond the 8-day period, your lien rights will be limited and will only be enforceable from the 8 days prior to the date when you serve the Notice of Right to Lien.
If, say, you start working on a project on August 1 and you serve your Notice of Right to Lien on August 31, you may only file a mechanics lien for the amount of work that you performed 8 business days prior to August 31. This means that you may not include in your lien claim the work that you did on your first few weeks of work.
Regardless, if you think a mechanics lien will be necessary or not, it’s better to err on the side of caution and serve a Notice of Right to Lien early.
How to serve an Oregon Notice of Right to Lien
1. Prepare the Oregon Notice of Right to Lien form
When preparing your Oregon Notice of Right to Lien form, you must gather the following information:
- Your name and address
- The name and address of the property owner
- The name of the party who hired you
- A brief description of services, materials, or equipment that you provide to the project
- A description of the property location (street address would suffice)
Oregon laws state that your Notice of Right to Lien must substantially be in the following form:
Make sure that you fill in all the blanks above and you verify the accuracy of the information that you write. Also ensure that you include all the statements as recommended by the law in order for your preliminary notice to be considered valid.
2. Deliver the Oregon Notice of Right to Lien
Once your Notice of Right to Lien is all ready to be delivered, you must serve it on the property owner via personal delivery or certified mail with return receipt requested. Note that if you are personally handing in your preliminary notice, make sure that you secure a signed acknowledgment of receipt.
In Oregon, a preliminary notice is considered served on the day it was received by the property owner (if served via personal delivery) or on the day it was mailed out (if served by certified mail).
In any case, it is very important that you keep a copy of all your service documents, including mailing certificates and postal receipts, just in case your compliance with Oregon’s notice requirements is questioned.
Best practices when serving a Notice of Right to Lien in Oregon
1. Serve the Notice of Right to Lien on the first day of work
Oregon has one of the shortest “deadlines” when it comes to serving preliminary notices. In order for you to ensure full protection of your lien rights, you are highly encouraged to serve your preliminary notice right on the first day of work.
You can collect the information required to prepare a Notice of Right to Lien even before you start working on a project. It will also help if you already have a template that you only need to fill. Having a streamlined process in preparing all types of paperwork is generally considered to be good business practice.
2. Ensure that the information in your Notice of Right to Lien is accurate
When preparing your Notice of Right to Lien, make sure that the information that you write is accurate. Minor errors such as spelling mistakes and typographical lapses should be avoided – in some cases, small formatting errors can invalidate a preliminary notice.
Paying attention to detail is very important. If a payment delay or dispute comes up and you have to record a mechanics lien, verifying the accuracy of all of your information – from the business names to the claimed amount – can make or break your lien claim. Start early and develop the habit of making your preliminary notice error-free.
3. Make sure to file a mechanics lien if payment issues arise
The Notice of Right to Lien is not a mechanics lien – it is a preliminary notice that you serve to notify a property owner of your involvement in a project. This implies that if payment concerns come up and your client ends up withholding your compensation, you still have to file a separate mechanics lien document.
Keep this in mind as some contractors, subcontractors and material suppliers often make the mistake of assuming that the Notice of Right to Lien is enough. If you want a stronger claim to recover your payment, make sure that you exercise your lien rights and record a mechanics lien.
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