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What is an Escalation Doc and Why Should I Send One?

Send Escalation Docs

Many companies come to Levelset because they’re getting burned on a project and want help getting paid. Escalation Docs are effective tools for speeding up payment because they open up communication between you, the property owner and the GC who control money on the project.

The purpose of an Escalation Doc is to alert top-of-chain parties like the owner and GC that you have not been paid and give them a chance to resolve the payment dispute to avoid having a lien filed on their property.

Even if you missed your deadline to secure lien rights (look up deadlines here), you can still send an Escalation Doc to open up communication on the project and try to collect payment.

There are different types of Escalation Docs available depending on the state that you’re working in. The most common Escalation Doc is called a Notice of Intent to Lien. The Notice of Intent to Lien is a lot like a demand letter.  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. While it is only required in 10 states, it’s best practice in all states to send warning before you file a lien. Levelset customers working in all 50 states send these documents frequently whenever they have invoices that are past due.

Another type of Escalation Doc is called a Monthly Notice. These documents go by many names (such as “Fund Trapping Notices” and “Notices of Nonpayment”) and are required in  Texas, Louisiana, Tennessee, and New Hampshire to preserve lien rights. In these four states, contractors and suppliers must send a monthly notice for each month where they furnished labor or material to a construction project and remain unpaid. The notices are required for the benefit of the property owner and GC so they’re aware of any lien risk on their project.