A Notice of Commencement is a recorded statement executed by the owner. This Notice identifies the name and address of the owner and requires that all persons that furnish labor and materials send a Notice to Owner. By recording a Notice of Commencement, the owner can then require the general contractor to supply releases of lien from all persons that have served a Notice to Owner. Construction must be commenced within ninety (90) days of the Notice of Commencement being recorded and is effective for one (1) year after it is recorded unless otherwise provided in the Notice.
If a recorded Notice of Commencement is not posted on the job site by the owner, the municipal building department that issued a building permit, may not approve the first inspection which occurs seven (7) days after the building permit is issued. In the event that a construction loan does exist, a lender must, prior to disbursement of any funds to the contractor, record a Notice of Commencement with the clerk’s office. The Failure to do so renders the lender liable to the owner for all damages sustained by the owner as a result of the failure to record it. Liability shifts to the owner if construction funds are disbursed and a subcontractor is owed money. If a Notice of Commencement was recorded, the lender and owner would have received a Notice to Owner from that subcontractor. Consequently, the lender would not have disbursed funds to the contractor without first acquiring a release of lien from the subcontractor. Without a Notice of Commencement, the owner may end up paying twice for the same work.