How To Prepare For A Non-Paying Project
On September 29, 2010
By Scott Wolfe Jr
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September is National Preparedness Month, and since we’re now in the middle of the month, I thought it would be appropriate to post about what steps you can take to prepare for a non-paying project.
Payment problems and construction projects can go together like peas and carrots. Companies that do a great job of preparing for non-paying situations get paid more frequently, and avoid the consequences of a project gone wrong.
How can you prepare for a non-paying construction project? Here goes.
Send Your Notices To Protect Your Lien Rights
Every state has different preliminary notice requirements, and some states don’t require any notice. It’s very important to understand the notice requirements in your project’s state. If you don’t deliver the proper notices, you may forfeit your lien rights…and filing a lien is one of the most important things you can do to get paid.
If I’ve said it once, I’ve said it 1000 times. Send Your Preliminary Notices!
One terrific way to send your preliminary notices and manage the preliminary notice requirements of each state is to use a construction notice service like Zlien. Zlien is in the business of preparing and sending these notices, allowing you to outsource this tedious and very technical job to folks that do it everyday.
Don’t know which notices to send? You can use a construction notice and lien compliance manager like the LienPilot. You simply input the projects information (or upload them in bulk), and the LienPilot will display relevant notices required and their deadlines.
File Your Lien On Time
This is a no-brainer. You only have lien rights if you protect them (send your notices) and then timely file your claim. Every state has different lien deadlines, so get to know the deadlines related to your project.
It can be as short as 15-20 days, as long as 2 years and everything in-between. There’s really no rhyme or reason to the timelines, and if you’re working in multiple states (like material suppliers frequently do), the LienPilot may be an excellent tool for you. The LienPilot calculates the mechanic lien deadlines for your project.
Insure Against It
Finally, we mentioned “Payment Insurance” in past blog posts. This is a great product for folks who do a large number of projects each year with the value of each contract being fairly small (<$100k-$200k). The policy provides your company with coverage in the event you’re unpaid.
So, instead of spending thousands of dollars in legal fees chasing bad debt, you get paid by the insurer and go on your merry way. It may be a great fit for your company. Check out the providers of this product: Construction Indemnity Group.
This article was originally posted on Zlien’s topic-specific Construction Lien Blog.
About the Author: Scott Wolfe Jr
Scott Wolfe, Jr. obtained his J.D. degree from Loyola University of New Orleans, and his B.A. from Southern Methodist University in Dallas, TX. In 2006, 2007, 2008 and 2009, Scott was recognized as a Leader in Law by CityBusiness Magazine. The son and grandson of general contractors, Scott is a construction litigator in the Pacific Northwest, and the founding member of the bi-coastal law firm, Wolfe Law Group. Scott is also the founder and CEO of Express Lien, Inc., a legal document preparation service for contractors. In 2008, City Business Magazine recognized Scott as one of its Innovators of the Year for the Express Lien concept. As an entrepreneur himself, Scott has a strong background in business and commercial transactions and laws. He focuses his practice on the legal issues facing the construction industry, and has represented clients in multi-million dollar construction disputes in litigation and alternative dispute resolution proceedings. Scott is a LEED AP.
