What is a Notice to Owner?

A Notice to Owner (NTO) is a written notice that officially informs the owner of a progress that the senders, typically a vendor or contractor not negotiating directly with the owner, is looking to the owner to make sure the senders is paid prior to payment being made to the contractor on the project.

Some state statutes require that a NTO be served on the progress owner no later than forty-five days from the date of initial labor, services rendered, or materials supplied to the project site as a precondition to ensure the sender’s right to lien the property should the sender not being properly paid for work carried out at the property.

These notices provide the owner the chance to confirm that the sender has been paid, usually by acquiring a “release of lien” by the notice sender when a payment is made to the contractor, so that the owner oversees downstream payments and is not later caught off guard with a lien against the property from someone with who the owner doesn’t have a contract.

Face-to-face/verbal notice to owner by the non-private party carrying out the project is NOT an alternative for a written notice to owner.

Serving Notices to Owner on each project is just a good business practice. Seen as a simple “price of doing business”, a NTO is going to better revenue by helping to make sure you get your money, create good contact between your business and those securing the payments, and safeguard your right to payment by protecting your right to lien a property if the need come up.

Who Should Serve the NTO?

Any possible lienor that is not negotiating directly with the property owner, like a subcontractor or vendor, is required to serve a notice to owner with three stipulations. A laborer, a professional lienor, and an individual that is working only on subdivision projects does not need to serve a Notice to Owner to ensure the right to lien. All other possible lienors that are not dealing directly with the owner is required to timely serve a Notice to Owner as a preluding step to acquiring lien rights. This notice must be served timely, as a preemptive measure, even where no issue has yet come up, if one wants to be able to later affirm lien rights. If this preluding step is not taken, the right to later affirm a construction lien against the property is lost.

What Does “Served” Mean?

Some state statutes provide specific methods for serving the Notice to Owner. These statutes use the words “serve” and “service,” described as “delivery in a specific way” and provides the below options:

(a) Physical Delivery: By physical delivery to the individual to be served; when an association, to one of the associates; when a business, to a supervisor, director, manager, or business agent; or, if an LLC, to an administrator or manager.

(b) Registered or Certified Mail: By sending the notice by certified or registered mail, with prepaid postage, or by overnight or second-day delivery with confirmation of delivery, which could be via text or email.

What is a Release of Lien?

A possible lienor is going to be required to give releases on almost all, if not every, project. Generally, a Release of Lien is a discharge of the lienor’s right for liening the property according to the conditions of the release. These releases might be for a particular amount of money, for all lien rights through a particular period, or for both. Comprehending the terms and details inside releases is VERY vital.