Tennessee Notice of Nonpayment

Introduction

Key Things to Know

1. 1

   Tennessee names this instrument a notice of nonpayment, and Section 66-11-145 makes it the gate to a remote contractor's lien. Subsection (b) states that a remote contractor who fails to provide it in compliance with the section has no right to claim a lien under the chapter.

2. 2

   The clock is monthly and it repeats. Service is due within ninety days of the last day of each month within which work or labor was provided, or materials, services, equipment or machinery furnished, and for which the claimant intends to claim a lien, if its account is in fact unpaid.

3. 3

   Who owes it turns on a definition. Section 66-11-101(14) makes a remote contractor a person who provides work or labor or furnishes material, services, equipment or machinery in furtherance of an improvement under a contract with a person other than an owner. Land surveyors, architects and engineers are inside that definition when they contract below the owner.

4. 4

   One-family, two-family, three-family and four-family residential units are excepted from the notice duty by the opening words of Section 66-11-145(a). Section 66-11-146(a)(2) is the reason: on contracts to improve residential real property a lien or right of lien exists only in favor of a prime contractor.

5. 5

   Two recipients, named in the statute: the owner, and the prime contractor in contractual privity with the remote contractor. Section 66-11-149(a) lets you take their names, their addresses and the property description from the building permit, which is presumed correct.

6. 6

   Section 66-11-149(c) allows three delivery methods and no others: registered or certified mail with return receipt requested; hand delivery evidenced by a sworn statement, properly notarized, confirming delivery; or any other commercial delivery service that provides written confirmation of delivery.

7. 7

   Retainage survives a missed notice. Subsection (b) ends by providing that the section shall not apply to a certain amount or percentage of the contract amount retained to guarantee performance of that remote contractor.

Tennessee Requirements for Preliminary Notice

• The Trigger Is the Last Day of Each Unpaid Month

  Section 66-11-145(a) requires service within ninety days of the last day of each month within which work or labor was provided, or materials, services, equipment or machinery furnished, and for which the remote contractor intends to claim a lien, if its account is in fact unpaid. The word each makes the obligation recurring, so an unpaid run of months produces a series of notices, each with its own window.

• Missing It Forfeits the Lien, With a Retainage Carve-Out

  Section 66-11-145(b) provides that a remote contractor who fails to provide the notice of nonpayment in compliance with the section shall have no right to claim a lien under the chapter, except that the section shall not apply to a certain amount or percentage of the contract amount retained to guarantee performance of that remote contractor. The text used here is the Tennessee Secretary of State's publication of the 2007 act that enacted the section, with its currency corroborated from two independent published copies because Tennessee publishes its current code through a commercial publisher. Attorney review available on this section.

• Remote Contractors Serve It, Prime Contractors Do Not

  Section 66-11-101(14) defines a remote contractor as a person, including a land surveyor under Section 62-18-102 and a person licensed to practice architecture or engineering under Title 62 Chapter 2, who provides work or labor or furnishes material, services, equipment or machinery in furtherance of any improvement under a contract with a person other than an owner. Section 66-11-101(12) puts a person in direct privity of contract with an owner or the owner's agent on the prime contractor side, outside this notice duty.

• One to Four Family Residential Units Are Excepted

  Section 66-11-145(a) applies to every remote contractor with respect to an improvement, except one-family, two-family, three-family and four-family residential units. Section 66-11-146(a)(2) gives the reason: on contracts to improve residential real property, a lien or right of lien upon such property shall exist only in favor of a prime contractor. Section 66-11-146(b) carries a narrow exception where the owner of a one dwelling unit residential property and the prime contractor are the same person or commonly controlled.

• The Owner and the Prime Contractor in Privity With You

  Section 66-11-145(a) requires the notice to go to the owner and to the prime contractor in contractual privity with the remote contractor. Section 66-11-149(a) presumes that the names, addresses and real property description stated in a building permit authorizing the improvement are correct, and that the property description is sufficient to identify the property. Section 66-11-149(b) deems service on a listed agent to be service on all of that agent's principals, and service on a listed owner to be service on all owners including unlisted ones.

• Three Service Methods, One Needing a Notarized Sworn Statement

  Section 66-11-149(c) allows registered or certified mail with return receipt requested; hand delivery evidenced by a sworn statement, properly notarized, confirming delivery; or any other commercial delivery service providing written confirmation of delivery. Section 66-11-149(d) sets rebuttable presumptions that service is complete on receipt for hand delivery, within three business days of mailing for registered or certified mail, and one business day after commercial overnight delivery.

• Five Content Items and the Statutory NOTICE OF NONPAYMENT Form

  Section 66-11-145(a) requires the remote contractor's name and the address for communications from the owner and the prime contractor; a general description of the work, labor, materials, services, equipment or machinery provided; the amount owed as of the date of the notice; a statement of the last date the claimant performed work or provided labor, materials, services, equipment or machinery; and a description sufficient to identify the real property against which a lien may be claimed. Subsection (d) prints a form headed NOTICE OF NONPAYMENT that the notice may be substantially in.

• This Notice Is Not the Notice of Lien, and Both Are Required

  Section 66-11-145(c) provides that a notice of nonpayment given in accordance with the section shall not be considered notice required by Section 66-11-115. Section 66-11-115(a) gives the remote contractor the lien only where it satisfies all of the requirements set forth in Section 66-11-145, if applicable, and separately serves a notice of lien in writing on the owner of the property on which the improvement is being made. The two are different documents doing different work, and a stack of nonpayment notices is not a substitute for the later notice of lien.