Many small to medium sized businesses get into the habit of sending their own preliminary notices. What starts out as a manageable task 3 – 5 times per month quickly turns into a full-time position as the company grows. In many states, preliminary notices are vital to protecting your mechanics lien rights and sending them the right way could mean the difference between getting paid and getting stiffed.
If your company is currently sending in-house preliminary notices, it could be spending too much money and subjecting itself to a considerable amount of risk. With this risk comes the potential for losing lien rights for your projects. Here are 3 reasons why sending in-house preliminary notices can be risky and expensive.
1. Time Spent on Preliminary Notices is Time Wasted For Your Company.
Your company is in the construction or construction supply business, it is not in the document filing business. When your company has smart and capable employees focusing on printing and sending notices, it is missing the opportunity to receive valuable contributions from those employees.
In a previous article, we outlined 4 Reasons Why It’s Smart To Outsource Your Preliminary Notice Work that beautifully explains the economic cost of having a full-time (or even part-time) employee spend time on sending preliminary notices.
2. Sending Non-Required Notices.
When a state requires a sub-contractor or a material supplier to send preliminary notices to certain parties involved in a project, the statute will also specify which parties must receive the notice. When a company has a blanket notice policy that requires all parties receive a preliminary notice, it is possibly sending notice to parties that do not need them.
For example, if a sub-contractor is required to send preliminary notice via certified mail, each mail piece will cost over $4. If your company is sending certified mail to parties who do not require a notice, your company could be over-spending on postage.
3. Risk of Invalid Notice
Mechanics Liens and lien laws are complicated, and they are constantly changing. If your company is not staying on top of the latest changes in lien law, it is possible that the notices you are sending are out-dated.
Further, mechanics lien rights have many deadlines associated with them, and when your in-house team is not tracking these deadlines properly, you run the risk of sending notices and filing liens past their deadlines. Missing deadlines can lead to losing your lien rights, which the why your company sends notice in the first place.
The Solution
There are a number of risks and expenses associated with sending your preliminary notices in-house, as we have discussed in this article. If your company is currently sending in-house preliminary notices, there is a way to eliminate these risks: use a lien service provider.
When looking for a lien service provider, you want to make sure that you pay by the project, that your lien and notice deadlines are tracked in a way that is actionable, and that the company cares about your lien rights as much as you do.
Together with your lien service provider, you can reduce the cost and risk of sending in-house preliminary notices, secure your invoices, and eliminate your company’s bad debt.
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