Construction projects are very cumbersome. GCs and subcontractors who manage construction payment applications would know this by heart. On top of providing sufficient evidence so the payment can move up the chain, contractors are often burdened with the question of when and when not to notarize. All these and more as they satisfy schedule and quality constraints, it’s no wonder why things can often quite get lost in transit.
Join us here in Levelset as we deconstruct this controversial topic on notarizing your common construction payment documents — you might just be putting more unnecessary strain on your shoulders than what should ever be accounted for.
What are some common payment documents in construction?
It’s only logical that you’re paid for the materials or services you provided. In almost any industry, an invoice would suffice.
However, in the construction industry, a payment application requires a bit more effort to justify why you deserve to be paid. Enter schedule of values, continuation sheets, payrolls, daily construction reports and more. The list can go on and on, but here are some of the common payment documents that we'll tackle below:
Contract
Answer: Maybe, depending on your state and project requirements.
Scanning over the contract documents should be the first item you should tick off the list when deciding whether to notarize your construction payment documents. Look out for clauses which explicitly state the need for notarization.
Just when is notarization ever required by law? Legally speaking, notarization is required in some cases, which is why you need to check with your state and project requirements. Apart from that, it has only become a norm for construction participants to deem notarization as a seal of approval. Notarizing does nothing to make your payment documents more "official" than they actually are.
However, it’s very risky to assume it’s not needed especially when the GCs or higher-ups would demand notarization as a pre-requisite for approval of your payment application. Unless you like delays on your payment apps, there's no choice but to comply with the time-consuming process.
AIA G-702 and Consensus Docs
Answer: Yes or no. Pay applications require notarization formally, but can be dismissed by architects or GCs in agreement.
Notarization requirements might come last on your mind especially when you need to file payment applications on schedule for simultaneous construction projects. However, the American Institute of Architects (AIA) attempts to simplify this tedious process with standardized AIA contract document forms, specifically listed below:
Some people argue that AIA documents are looking out for architects at the expense of everyone else. After all, their payment application (AIA G702) contains a section for notarization, which just adds more work to the contractor's plate. But in reality, there are no laws requiring a contractor to notarize a payment application. Ultimately, it comes down to communication. If you and the architect or project owner agree, you don't need to notarize the pay app. This begs the question of why there should ever be a need for notarization in the first place if it’s non-binding, anyway.
However, if the higher-ups definitely require notarization, you should sign AIA G-702 in front of a notary public. Keep in mind that each construction project is unique, with project-specific notarization requirements: where one demands, others might not. ConsensusDocs is another great alternative for the AIA forms as a standardized pay application construction template. Notarization could be just as required since both pay-apps have notary blocks on the forms.
Change Order
Answer: Maybe, depending on your contract.
Construction projects rarely ever go as they were planned, which is why it’s common to see additions and deductions on the scope of work. That’s the premise of change orders. Often, clients would request contractors to include a line item as a deliverable without thinking of the cost and schedule implications. The best practice and common mistake to avoid would be to document everything in writing so you can set up everything neatly for your lien rights should non-payments arise.
Lien Waiver
Answer: No, notarization is not required with the exception of three states.
Notarizing lien waivers actually defeats the purpose of legal verification because it can actually do more harm than good, especially when it’s not explicitly called for. Apart from the three states of Texas, Wyoming and Mississippi, you should not notarize a lien waiver since alterations from its original form can invalidate it. In fact, only Texas provides a clear statutory requirement on notarizing lien waivers to effectively release the owner from filed lien claims. Despite the vague requirements of the other two states, it’s still a best practice to notarize lien waivers due to the notary blocks on the forms.
Preliminary Notice and Notice of Intent
Answer: Maybe, notarization can be optional.
No, these two are not interchangeable. Preliminary notices, the ones you send to key project stakeholders at the onset of the project, rarely need to be notarized. Oppositely, notice of intent to lien (NOI) occasionally needs to be notarized as represented by the 90-day NOI in Illinois. Other states won’t require notarization on NOI, but would require affidavit which is made under oath, so it pays to be vigilant.
Mechanics Lien
Answer: Yes and no, depending on your state requirements.
Every unpaid contractor has mechanics lien right in their arsenal, but protecting their lien rights means complying first with sending preliminary notices and different statutory requirements needed in each state. Yes, notarization on mechanics lien is required on all states except for these twelve below:
- California
- Georgia
- Hawaii
- Illinois
- Louisiana
- Mississippi
- Montana
- New Hampshire
- North Carolina
- North Dakota
- Pennsylvania
- Wisconsin
If you live in Delaware, Massachusetts or Texas, you need to show another form of evidence. As if this could not be tricky enough, expect that you’d go through the hoops to get paid as states of Connecticut, Indiana, Iowa, New Jersey and Oklahoma require additional steps apart from notarization of mechanics lien.
Bottom line
Notarization of construction payment documents can vary from project-to-project or state-to-state, so it’s best to tread carefully. Follow the contract, communicate with your GC, and protect your lien rights by staying informed. Take charge and know when or when not to notarize so you can speed up the efficiency of your payment applications.
