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It’s unfortunate, but getting paid in the construction industry is almost more of a challenge than the work itself. This widespread problem affects just about every industry participant, from the biggest general contractor down to the smallest supplier. But often, subcontractors have the most problems when it comes time for payment.
Fortunately, there are powerful, legal tools called lien rights that, when applied effectively, will significantly help construction companies get paid the money they’ve earned on their projects, in full and on time. We’ve broken down the overall system of lien rights into 4 concrete steps that should be a part of every contractor’s payments tool kit – read on to find out more.
Step 1: Send Preliminary Notice on All Projects
Some states require preliminary notices, and some states do not. However, this should not matter – the indisputable industry best practice is to send preliminary notice on all of your projects, even if it’s not required. Construction companies that send preliminary notices get paid faster and avoid payment issues, which results in having to file fewer liens. That includes both Levelset customers and non-customers alike.
Step 2: Set a Deadline to Send a Notice of Intent to Lien, and Stick to It!
There isn’t an owner or general contractor on the planet that wants to have a lien filed against them. Just the threat of a lien is often enough to prompt payment and bring an end to almost any payment issues. That’s why the Notice of Intent to Lien is such an effective document. At Levelset, we call it the “demand letter that actually works.”
Essential Reading: Preliminary Notice vs. Notice of Intent to Lien
Step 3: File a Mechanics Lien
It’s kind of funny, but for our customers, using Levelset is not just about filing liens. What Levelset really does is help you get paid. And if anything, folks in the industry who actively and effectively manage their lien rights rarely have to actually file a lien. That’s because companies that secure their payments end up getting paid long before filing a lien is necessary.
But that being said, sometimes, when all other collections efforts have failed, when an overdue customer ignores your preliminary notices and acts like they never received a Notice of Intent to Lien, it just may be that filing a lien is necessary. We have seen too many construction firms that do everything they can to secure their payments and protect their lien rights but then don’t actually follow through with filing a lien in cases where their customer ignores all of their other efforts. Look, filing a lien is a big deal, and it really swings the balance of power in the dispute over to the lien claimant’s side.
Step 4: Use Technology to Make Lien Rights Easy and Effective
We talk to folks in the construction industry just like you every single day. Many of them get in touch with us with an immediate problem – that is, they’re having trouble getting paid, and it’s happening to them right now. Other times, we’ll talk to people who maybe aren’t experiencing a payment issue at this very moment but still have a bad taste in their mouth from the last time they had a problem getting paid on one of their projects.
We always ask the folks we talk to how they’re managing their lien rights currently. The answers we get to this question run the gamut – some are hilarious, and some are just sad.
But a universal theme that runs through all of these conversations is that, when it comes to managing lien rights, there’s almost always a better way that’s a significant improvement over whatever efforts they’re doing now.
Discover how a growing electrical contractor in California uses lien rights software to send notices more efficiently.
Of course, we believe (no, we know) that the best solution out there for this very complicated problem is to use the Levelset platform to secure your project payments. But, even if you have no interest in becoming a Levelset customer, you should still make use of our extensive resources that are freely available to anyone in the industry who wants to make getting paid (and making payments, too!) easier than it is now.
And you can always get in touch with us – we’re here to help you get paid.