In consulting with companies around the nation about mechanic lien compliance, you’d be surprised how many companies (big and small) try to delegate their company’s mechanic lien compliance onto a secretary or office assistant. The thought is that this mechanic lien stuff is just paperwork, and that’s what the secretary or assistant is paid to do.
After all, the same assistant or staff member may be in charge of compliance with contractor licensing rules, Davis-Bacon and prevailing wage regulations, and immigration compliance. Perhaps the staff member needed a bit of training, or attended some seminar on the topic, but they were able to pick it up and keep the company in compliance.
Despite the success or failure with having staff in charge of compliance with other regulations, this post discusses why it’s a grave mistake to rely on in-house staff to handle mechanic’s lien compliance.
Patchwork of Requirements and Forms Are Hard to Master
I’m familiar with a lot of regulatory compliance matters that construction businesses face every day, and those discussed in the introduction to this post (Davis-Bacon, immigration, licensing, etc.). You must understand, the complexity of these regulations pale in comparison to the complexity of mechanic’s lien laws.
There are two challenges your staff members will face in trying to master mechanic’s lien issues.
First, it’s the laws themselves. It’s an absolute patchwork, not only from state-to-state, but from project-to-project and scenario-to-scenario within a single state. Depending on where you’re working and what you’re doing, your preliminary notice and mechanic’s lien requirements and deadlines will differ. If you want to assign complaince to a staff member, there’s a lot of research required to keep up with these legal intracacies.
Second, it’s the forms. Once you figure out what to file and when, then you have to put the form together, and there’s a thousand things that can go wrong with preparing, sending and tracking these forms. Take a look at a post I wrote previously about the perils of using Do-It-Yourself Mechanic’s Lien forms.
Paperwork Burden is High For Part-Time Dedication to Lien and Notice Compliance
Sending out a notice or filing a lien can be logistically demanding.
On the preliminary notice front, most notices must be sent to multiple parties, and must be sent in a particular way. After a preliminary notice is sent, you must draft and save a document to prove the notice was mailed, and you must track the mailing to ensure delivery. The result of these requirements is that each notice must be copied multiple times, collated, and then delivered to different parties, and each mailing must be tracked to verify delivery.
On the mechanic’s lien front, things can get stickier. The mechanic’s lien – like the preliminary notice – must usually be mailed to multiple parties and tracked. This, however, is besides the real task, which is getting the lien recorded in the correct recording office in the correct county, which involves verifying margin and font-size requirements, getting a filing fee quote, arranging for courier to deliver the lien, and more.
The point here being that there is a heavy paperwork burden in sending notices or filing mechanic liens, and the use of a staff member to handle these monotonous tasks can be a weight on their other duties.
Property Records and Ownership Records Needed, and Not Available
When you prepare a preliminary notice or a mechanics lien, you often (always) need information you may not have. For example, how do you send a preliminary notice to an owner if you don’t know who the exact owner is? Or, how do you identify a property with a legal property description if you don’t know the legal property description?
Your staff members will not have access to updated property records to check the information available to your company, or to find information you don’t have. Plus, researching into this information is another drain on your staff member’s time.
It Costs You More In The Long Run
The last reason why you don’t want to offload mechanic’s lien complaince on your secretary or staff member is…why would you? It just doesn’t make any fiscal sense to do so.
You can outsource this work for much less than you think, and really, when you factor in postage rates, the time spent doing the work, and the time not spent on other more profitable work, you can outsource this work for less than it will cost you to do it yourself.