What is worse than not getting paid? Not getting paid after spending countless hours, and possibly legal fees, trying unsuccessfully to get paid.
Much of this frustration can be eliminated by employing technology to timely and accurately prepare, send and monitor preliminary lien and bond notices and deadlines. Because time is money, utilizing a lien service with innovative lien software tailored for subcontractors and suppliers will not only save money but also help avoid pitfalls that prevent payment and waste time and resources. There are several advantages to using a risk averse lien software.
1. Understand and Know Deadlines
Determining the precise deadline for a specific job can be tedious and frustrating. Most deadlines are missed because they are not tracked properly. For example, in Florida a subcontractor has 45 days from the first day he is on the property to file the notice-to-owner, 90 days from the last day on the property to lien the property, and one year to foreclose on the lien (i.e., take needed legal action). Texas, on the other than hand, has very different requirements. A first-tier subcontractor or supplier must send a notice to the owner and the original contractor informing them of the unpaid claim no later than the 15th day of the third calendar month following each month in which labor was performed or material delivered.
If these deadlines are missed, the subcontractor may forever forfeit lien or bond claim rights. There are many online notice services that can assist and provide decision-making capabilities based on set criteria that will help avoid missing deadlines.
2. Use the Correct Statutory Forms
Using the right form for the right situation can make the difference between preserving or losing lien rights. Each state has many statutory forms such as a preliminary notice, intent to lien, lien and satisfaction of lien. Selecting the correct form is simplified when using a system that guides subcontractors through the document-selection process, similar to a wizard.
Once the right form is selected, it needs to be filled out correctly. Who is the property owner? Is it residential or commercial? Public or private? State or federal? Does the preliminary notice require a statement vs. an invoice? Does the owner need to receive a copy of a second notice in Texas (the answer is no)? Some states, such as California, Arizona and Texas, require a dollar amount on the preliminary notice. In Texas, a statement must go out with a third month, fund trapping notice. In Florida, a dollar amount or statement of notice to owner is not required. With thousands of different legal stipulations varying by state, it is almost impossible for a subcontractor or supplier to keep track of what needs to be submitted, when and precisely to whom. Possessing the technological software that understands the needs of subcontractors and suppliers is thus essential to reduce the risk of nonpayment.
3. Software Efficiency
To combat erroneous job data and human errors, a simple technology program called an API (application program interface) can bridge two systems together. For example, if using an accounting software such as Sage, Foundation Software or Quickbooks, job information is already entered into one system. With a robust API, double data entry is eliminated. Additionally, another powerful use of the API relates to the rules that can be created when the systems speak to one another, such as triggering the correct statutory notice to be sent or not sent, creating a “do not notice” customer list, sending a notice if the project dollar value exceeds $2,500, and tracking all deadlines.
4. Deciding what lien software service to use
Before selecting lien software:
- review the Terms and Conditions of the software company;
- request a copy of the Errors and Omissions Policy;
- request information on the company’s research policies;
- check that the lien software company works with attorneys who are construction law experts; and
- make sure the lien software company is compliant with the state’s lien and bond claim laws.
Lien and bond claim laws can seem unnecessarily complicated. It is essential to find a software that ensures compliance with statutory forms, prevents missing deadlines, creates business efficiencies, has transparencies and above all has a high standard of service.