Video: Secure Construction Payment with the PIM Method

Video: Secure Construction Payment with the PIM Method

At Levelset, we’ve been helping thousands of contractors secure their payment on every job by implementing the PIM method: P for Preliminary Notice, I for a Notice of Intent to Lien, and M for Mechanics Lien. The PIM method is a really good way of not only speeding up time to payment, but also eliminating the number of jobs that become a payment issue. We describe it a lot of times as a funnel. The more often you put jobs into the PIM approach, the less frequently we’re going to need a Mechanics Lien or run into a slow payment issue.

The first step of the PIM method is sending a Preliminary Notice. Preliminary Notices are also called also called pre-lien, notice to owner, 20-day notice or monthly notice, depending on which state you’re in. They are a document usually sent at the beginning of a construction project to promote visibility and let everyone else on the job know who you are and what you do on the project. When parties receive a Preliminary Notice on a project, they’re most often going to be the general contractor and the property owner or the lender on the job. What that allows those parties to do is to understand who’s working on the project with them and who they need to make sure is paid fairly. When we have a complicated construction project, sometimes it’s not that easy to know who’s there and who’s doing what. And a Preliminary Notice allows the people who will be making payment down the road to know who needs to get paid.

The second step in the PIM method, the I, stands for a Notice of Intent to Lien. It is a document sent to certain parties on a construction project warning that if payment isn’t made, the claimant intends to file a Mechanics Lien. A Notice of Intent to Lien is required less frequently than a Preliminary Notice in the different states, but what it’s designed to do is to act as a warning shot on a job. Naturally, nobody wants a Mechanics Lien to be filed and what we find is that escalating a slow payment issue is a really good way of getting it resolved before a Mechanics Lien needs to be filed.

The third step of the PIM method is to file a Mechanics Lien. When a party does have to file a Mechanics Lien, what they’re generally doing is taking that claim and making it public by filing a Mechanics Lien or a claim at the county or state level. You can think of a homeowner who’s just remodeled their kitchen. If a party is not paid there by filing a Mechanics Lien, the subcontractor or supplier who’s waiting on payment has a real claim against that new home.

If somebody was looking to start utilizing the PIM method on their jobs, the easiest thing that they can start doing is communicating with the stakeholders on that project every time they begin work. What we found is that the easiest way to do that is providing a Preliminary Notice to, again, let them know that you’re there and you’re furnishing a certain type of work on the job.