What does a recorded notice of commencement mean?

The purpose of a notice of commencement

The primary purpose of a Notice of Commencement (NOC) is to provide public notice that work is about to begin or has begun on a property. This protects contractors, subcontractors, and material suppliers by giving them a clear start date for their lien rights.

For you as an investor, it signals that significant work is underway or recently completed. This can be a red flag or an opportunity, depending on your strategy and due diligence.

What information does an NOC contain?

An NOC typically includes the property owner's name and address, the legal description of the property, and the name and address of the contractor. It also specifies the project's scope, the estimated completion date, and sometimes the financing information.

Crucially, it will list the start date of the project. This date is important for calculating the timeframe within which a contractor or supplier can file a mechanic's lien if they are not paid. This is not legal advice.

Implications for potential mechanic's liens

When an NOC is recorded, it means that any party contributing labor or materials to that project can file a mechanic's lien against the property if they are not paid. These liens can be recorded up to a certain period after the project's completion, often 90 days, depending on state law.

If you acquire a property with an active NOC or one where the lien period has not expired, you could inherit these potential liens. This makes clear title extremely difficult without proper releases. Always factor this risk into your offer. This is not legal advice.

How to identify an NOC in public records

You will typically find a Notice of Commencement recorded with the county clerk or recorder's office, often in the same place where deeds and mortgages are recorded. He or she may find it by searching the property's address or parcel number.

Some states or counties may refer to similar documents by different names, such as a Notice of Intent to Lien. Always check with your local county recorder's office for the specific terminology and search methods used in that jurisdiction. This is not legal advice.

Due diligence with an active NOC

If you find an active NOC on a property you are considering, your due diligence needs to be thorough. You must verify that all contractors and suppliers listed, or those that should be listed, have been paid.

Request lien waivers from all parties involved in the construction project. These documents confirm that they have received payment and waive their right to place a lien on the property. Without them, you are exposed. This is not legal advice.

A title search will reveal if any mechanic's liens have already been recorded. Work with a reputable title company or real estate attorney to ensure all potential liens are identified and resolved before closing. For more on what a title search reveals, see /learn/what-a-title-search-reveals.