What Is a Notice of Completion?
A notice of completion is a formal legal statement a contractor or representative files to alert interested parties that construction work on a project is finished. This triggers a filing deadline for any liens that subcontractors and other individuals may want to file in regards to the project. If they do not exercise their rights within the time period allowed by law, they lose the opportunity to do so. Notices of completion are not required in all cases, but they can be advisable even when the law does not mandate their use, as they can provide protection for the contractor and project owner.
To file a notice of completion, the contractor will need to get the correct form from a clerk's office. Usually the clerk who supervises declarations related to building permits is the source of this form, although this may vary by jurisdiction. It is also possible to access the form online in many regions through a website maintained by the building office. Generic forms may be permissible, but this is not always the case, and it is a good idea to check first.
The notice of completion includes information about the project, such as the nature of the construction and the location so there can be no confusion about which project is under discussion. The contractor lists her name and contact information and provides information about the owner, if the owner is a different person. The clerk will publish the notice of completion after receiving it and verifying the information. In some regions the newspapers publicize this information for the benefit of members of the public. In other regions, interested parties may need to contact the clerk to see if a notice of completion has been filed.
On the effective completion date, the deadline starts ticking. Anyone who wants to place a lien on the project must do so within a set time period, such as 30 days. A subcontractor who was not paid, for example, would file a lien against the project. Until he is paid, the lien will remain in effect. It will be impossible to transfer the title, which can be a significant problem if the owner plans to sell the finished project.
Without a notice of completion, interested parties have a much longer deadline for filing liens. It can be three months or longer, and may add a note of uncertainty to the project. For owners who intend to sell, it is critical to ask the contractor to file a notice of completion so any clouds on the title will surface immediately, rather than in the middle of sensitive financial negotiations.
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