Lien & Bond Claim Masterclass: Everything They Don’t Tell You (But Should!) - Arizona Webinar by Kevin Estevez

In this blog, presented by SunRay Construction Solutions and Kevin M Estevez, Member, Holden Willits PLC, construction professionals in Arizona can learn about all these steps and leverage them to protect and preserve their payment rights and in turn get paid successfully for the work or services they provide on the construction jobs.

Why the Preliminary 20-Day Notice Is Critical in Arizona

Arizona lien and bond rights are heavily dependent on timely notice. In most circumstances, contractors and suppliers must serve a proper preliminary 20-day notice to preserve both mechanics lien rights and certain payment bond claims.

With limited exceptions for laborers seeking wages, failure to serve a 20-day notice generally results in forfeiture of lien rights altogether. While late notices are allowed, they reduce the scope of recoverable claims. A late 20-day notice only protects labor or materials furnished within the 20 days preceding service and going forward.

The purpose of the preliminary 20-day notice is to alert owners and lenders to the identities of potential unpaid claimants who may later record liens if payment issues remain unresolved.

What Must Be Included in a Valid 20-Day Notice

Arizona law strictly defines what information must appear in a preliminary 20-day notice. The notice must include a general description of the labor or materials to be furnished, an estimate of the total contract value, the name and address of the claimant, the party who hired the claimant, and a sufficient description of the job site.

Arizona statutes also provide a sample notice form that must be substantially followed. Deviations or omissions can weaken lien rights or invalidate the notice entirely.

Who Must Receive the 20-Day Notice and How It Must Be Served

The preliminary notice must be served on the property owner or reputed owner, the original contractor, the construction lender if one exists, and the party with whom the claimant contracted. Notices must be sent to known business or residential addresses and served by first-class mail with a certificate of mailing or by certified or registered mail.

Service is considered complete when the notice is deposited in the mail. Best practice is to serve the notice within 20 days of first furnishing labor or materials to ensure full protection from the start of the project.

Mechanics Lien Rules and Completion Deadlines in Arizona

A mechanics lien in Arizona creates a statutory interest in the property being improved. However, liens cannot be recorded against public property. In addition, owner-occupied residences generally cannot be liened unless the claimant has a direct contract with the owner.

In most cases, a lien must be recorded within 120 days after completion of the entire project, not the claimant’s individual scope of work. Completion usually occurs 30 days after a certificate of occupancy is issued, giving lien claimants up to 150 days after the certificate date. If no certificate of occupancy is issued, completion is measured from the last day labor or materials were furnished.

Work stoppages lasting 60 consecutive days can also trigger project completion unless caused by strikes, material shortages, or natural disasters.

Notices of Completion and Their Impact on Lien Deadlines

Arizona law allows owners to record a notice of completion, which can significantly shorten the lien recording deadline. When properly recorded and served on all parties who sent a 20-day notice, a notice of completion can reduce the lien deadline to just 60 days.

Contractors and suppliers must remain alert to these filings, as missing a shortened deadline can permanently extinguish lien rights.

Serving the Recorded Lien Properly

After recording a mechanics lien, claimants must serve a copy of the notice and claim of lien on the property owner within a reasonable time. While Arizona law does not define a specific timeframe, best practice is to serve the lien immediately using the statutorily approved methods to avoid disputes over timeliness.

Payment Bond Claims on Public Projects in Arizona

Because public property cannot be liened, payment bonds serve as the primary remedy for unpaid work on public projects. Under Arizona’s Little Miller Act, certain claimants must serve both a preliminary 20-day notice and a 90-day post-completion notice to preserve bond rights.

Claimants with direct contracts with the bonded contractor are generally not required to give notice, while lower-tier subcontractors and suppliers must strictly comply with notice requirements. Federal Miller Act claims require a 90-day post-completion notice but do not require a preliminary 20-day notice.

Deadlines to Enforce Liens and Bond Claims

Recording a lien is only one step in the enforcement process. Lien claimants must file a lawsuit to foreclose on the lien within six months of recording, or the lien expires automatically.

Bond claims follow a different timeline. Lawsuits may not be filed until 90 days after the claimant last furnished labor or materials, and the statute of limitations expires one year from that last date of work or supply.

Common Arizona Lien Law Traps to Avoid

One frequent mistake involves failing to update preliminary notices when contract values increase. Arizona limits lien rights to 130 percent of the estimated amount stated in the original 20-day notice. If project costs exceed that threshold, a supplemental notice must be served within 20 days of furnishing the additional labor or materials, reflecting the new total contract value.

Another common trap involves lien waivers. Arizona law prescribes four statutory waiver forms: conditional and unconditional waivers for progress payments and for final payments. Signing an unconditional waiver before payment is received can permanently waive lien rights, even if payment is never made.

Special caution is also required on multi-building residential projects. Each building is treated as a separate improvement, meaning lien deadlines may run separately for each structure rather than from overall project completion.

Final Takeaway

Arizona lien and bond laws are highly technical and strictly enforced. Missing a notice deadline, miscalculating completion dates, or signing the wrong waiver can eliminate otherwise valid claims. Contractors and suppliers who track notices carefully, document changes promptly, and act early when payment issues arise are best positioned to protect their right to be paid.

Common Questions Contractors Ask

Can a lien be amended if the deadline has not yet passed?

Yes. A mechanics lien may be amended as long as the amendment is recorded within the applicable statutory deadline.

When working on common areas for a homeowners association, who must receive lien notice?

This depends on the ownership structure of the development and the governing documents. In some cases, notice to the association may be sufficient, while in others, individual unit owners may need to be identified. The specific facts and recorded documents must be reviewed carefully.

On a public project, when must the Miller Act bond notice be sent?

The 90-day post-completion notice must be served within 90 days of the claimant’s last date of labor or material supply. Lawsuits cannot be filed until that 90-day period has expired.