If you work in the construction industry, chances are you’re aware of the boatload of documents that come with the territory. Some states and counties require more project-related documentation than others. But what’s most important is that you comply with the regulations to avoid severe consequences.
One of those documents is the Notice of Completion. It helps subcontractors get paid on time and may or may not be required in your state.
Regulations aside, other tools can help protect your business finances as a general contractor or commercial construction business owner.
Now, let’s review what a notice of completion is and how and when you should be filing one.
What Is a Notice of Completion?
A Notice of Completion is a formal document that informs subcontractors and parties with mechanics lien rights of the official end date of a private construction project. Mechanics liens help shield subcontractors and others who provide labor supplies to the job from improper payments.
In essence, this document shortens the timeline for which parties who have mechanics liens rights can file claims.
What is the Purpose of a Notice of Completion?
Notices of Completion can impact the payment rights of subcontractors if lien deadlines are tied to the date of filing. This is the case in four states: Arizona, California, Nevada, and Utah:
- Arizona: Notice of Completion filing shortens mechanics lien deadline from 90 to 60 or 30 days, depending on your level of involvement in the construction project
- California: Notice of Completion filing shortens mechanics lien deadline from 90 to 40 days
- Nevada: Notice of Completion filing shortens mechanics lien deadline from 120 to 60 days
- Utah: Notice of Completion filing shortens mechanics lien deadline from 180 to 90 days
- Notices of completion can also be filed in Alaska, Massachusetts, and Tennessee
Subcontractors could waive their rights if payment issues arise, but they miss the deadline to exercise their rights. But if the construction project owner or general contractor in charge fails to file a notice of completion in a timely manner, as mandated by state regulations, property owners and general contractors could be held liable for an extended period.
Assuming your state does not tie mechanics lien rights deadlines to the official date of completion, the date of substantial completion is used. It is determined by the last day a subcontractor or supplier worked or provided materials to the construction project.
When Do You Need to File a Notice of Completion?
States do not mandate the filing of Notices of Completion. However, if you file the document in Alaska, Arizona, California, Massachusetts, Nevada, Tennessee, Texas, or Utah, lien rights and payments for subcontractors and supplies could be affected.
Who Files a Notice of Completion?
The general contractor or construction project owner of a private project files the Notice of Completion with the county recorder or clerk’s office. Generally, Notices of Completion are sent to all parties that provide preliminary notices before the official filing.
How to File a Notice of Completion
Here’s a step-by-step breakdown of how to file a notice of completion:
- Obtain the necessary form online or from the county recorder or clerk’s office.
- Complete the form in its entirety. Be prepared to provide a statement detailing the type of work provided, a legal description of the site, the street address of the site, and the completion date of the construction project. You will also note the names and addresses of the owner, general contractor, and construction lender (if applicable).
- Review the form to ensure the contents are accurate.
- File the form within 10 to 15 days of the date you expect the project to be completed. Refer to the anticipated date of the inspection signoff or issuance of the certificate of occupancy to determine the date of completion. Or you can use the date immediately following 60 consecutive days where no labor is done on the project.
