As a construction contractor, non-payment for a job is a big risk. It could mean a massive loss in income–from labor and materials to your own wages. That’s why it’s important to take proactive steps to protect yourself. In fact, some states require it.
The simplest, most effective way to legally avoid non-payment issues is by filing a prelien (aka Preliminary Construction Notice) for each of your projects.
Why Preliens?
On any construction project, submitting a prelien isn’t just a smart thing to do–it’s one of the very first steps you need to take. There are several reasons why that’s the case, but the most obvious benefit of preliens is the legal protection they offer.
To explain this in greater detail, let’s consider general contractor fees. The average cost for these services is about $4,000, but they can get as expensive as $58,000 or more. Filing a prelien can be as minimal as $25 and save you tens of thousands in the long run.
Benefits of a Prelien
Other benefits of preliens include:
- Alert clients to the value of your work. Keeping track of expenses can be challenging for anyone, and preliens often state the estimated contract amount of your work and helps clients track all those contracted, the anticipated expenses and their scope of work.
- Make it easier to communicate with other parties involved in a project. A prelien can create lines of communication between your business, other general contractors, and clients.
- Speed up the payment process. Preliens improve the chances that clients will pay you promptly, potentially allowing you to fund new projects more quickly.
Tips For Creating a Prelien
When it’s time to submit a prelien, here are a few simple steps to follow:
- Don’t wait too long to submit a prelien. Every state has specific prelien deadline requirements or no requirements at all. Instead of trying to keep track of each all 50 states requirements, it is a good practice to send a prelien on every job within the first week of your job or right after you have a signed agreement. There’s a good chance you’ll need to submit your prelien before a predetermined deadline–do your research to ensure you don’t miss that date.
- Make sure you’re following the legal requirements in your area. There are many factors that go into each state’s lien law requirements. Make sure you are familiar with your state’s rules and any state where you are conducting business. Construction attorneys can help you with this if you need clarificaiton.
- Send your prelien to everyone up the payment chain. This may not be a requirement in all states, but it is a good practice to create transparency and let everyone know that has an interest in the project, what your role is. Make sure you include, your client, your client’s client, the Prime Contractor, Owner(s), and Lender(s).
- Finally, make sure you mail the prelien based on that state’s requirements. Some states require that the prelien be sent via USPS Certified Mail with Return Receipt, USPS Certificate of Mailing, or no requirement.
What To Look For In A Lien Service Provider
If you’re like most general contractors, you don’t have time to handle your own preliens on top of everything else. When that’s the case, you’ll need to work with a lien service provider–but not all companies in this industry are equally reliable. To find a lien service business that stands out from the crowd, look for companies that offer:
- Reasonable prices. The whole point of filing a prelien is to save money, so you shouldn’t pass this task on to a company where the cost in unreasonable. Instead, search for businesses that deliver fair pricing and bulk discounts.
- Simple billing. Paying your bills for lien services shouldn’t be as complicated as submitting the preliens in the first place. Ideally, your lien service provider will offer detailed monthly invoices with itemized charges, and autopay services.
- A robust digital presence. Nowadays, doing business online isn’t just a convenience– it’s a way of life. Look for lien services providers that let you submit and track your documents through their website.
- Educational benefits. Preliens can get complicated, but you shouldn’t let that stop you from learning more about them. Some of the most significant benefits a lien company can offer are educational resources like seminars on lien law or best practices for navigating the process.
Secure Your Payment
Finding a lien service that delivers all these benefits and more was challenging–until now. Titan Lien Services specializes in preparing construction preliens and mailing them for you based on project state requirements. Their enrollment process is free and takes less than 5 minutes to complete. Sign up as a new Titan Lien Customer today. [https://titanlien.com/sign-up/] Then you will be ready to submit your prelien requests for all your open jobs.
With Titan Lien Services as your partner, you are taking the first step in preserving any lien rights you may have. Worry less about collecting and more about building.