A subcontractor completes electrical work valued at $12,000 on a commercial project. The general contractor fails to pay. Under Arizona lien law, who can the subcontractor serve with a preliminary 20-day notice?
Correct Answer
C) Both the property owner and general contractor
Under A.R.S. 33-981, subcontractors must serve preliminary 20-day notices to both the property owner and the general contractor to preserve lien rights.
Why This Is the Correct Answer
Under A.R.S. § 33-981, any person other than an original contractor who furnishes labor, materials, or services must serve a preliminary 20-day notice on BOTH the property owner and the general contractor (original contractor) to preserve their right to file a mechanics lien. Serving both parties ensures that the owner is aware of the subcontractor's involvement and potential lien exposure, and gives the GC an opportunity to remit payment.
Why the Other Options Are Wrong
Option A: Only the general contractor
Serving only the general contractor is insufficient. Arizona law requires the notice to reach the property owner as well, because the owner must be informed of lien exposure on their property. Without notifying the owner, the subcontractor loses lien rights against the property itself.
Option B: Only the property owner
Serving only the property owner is also insufficient. The general contractor must also receive the notice so they are formally put on notice of the subcontractor's claim and can address payment. Omitting the GC does not satisfy the statutory requirement.
Option D: The construction lender only
The construction lender is a separate party and is not the primary recipient required by A.R.S. § 33-981. While notice to the lender can be important in some financing contexts, it does not replace the mandatory notice to the property owner and general contractor.
Memory Technique
Think of the acronym 'OG' — Owner + General contractor. A sub always notifies the 'OG' duo within 20 days. If you skip either half of the OG, you lose your lien rights.
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A contractor's workers compensation policy lapses for 15 days due to non-payment of premiums. Three employees are injured during this period, resulting in $85,000 in medical costs. Under Arizona law, what is the contractor's potential liability?
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