Running a construction business is a complex enterprise and just one part of what you have to monitor is your outstanding liens, waivers, notices, and timelines. The credit manager in your office responsible for tracking this information is also likely handling a number of other equally complex tasks from setting up the details for each job, tracking payments and time sheets, and managing the finances. Handling the lien process can get even more complex if you’re working on different types of projects or in multiple states as the notice and filing deadlines can change from state to state and sometimes differ between types of projects. To help handle this, you can set up and automate a few basic processes to make the life of your credit manager a little easier.
Preliminary Notices
Start by having a standard form on which you collect your job information and input that into a database or software program. With this information, you can then set your software to trigger reminders for you when you need to file a notice in different jurisdictions. While this will take a little work to set up, it will save you having to check and see whether you’ve missed a deadline in the future. Every time you get a project in a new state, make sure to add a set of reminders that match the state’s notice deadlines.
You can also have a standard form you use to provide notice. Though state guidelines vary on what information a notice should include, you can get most of it on a standard letter. The software reminder can also tell you whether it needs to be notarized and give you the addresses of the people who need to receive the notice. Once you confirm the notice is sent, your software should begin tracking the lien filing deadline automatically.
This process can be handled manually, but there are now many software options that can track these deadlines alongside invoices and payments received. Someone particularly technologically savvy in your office can set this system up for you or you can purchase a software package.
Tracking Lien Deadlines
Once you’ve sent your notice, you want your system to track the filing deadlines for your lien. You want to get the notification with enough time to properly prepare and serve the lien. Each project should have its own account and associated information and you should be able to pull up that account and track the deadlines and steps taken already towards collections. If you get payment before the filing deadline, that’s great, but if you don’t, you want to make sure to file your lien on time to preserve your rights. You can get a lawyer to help you file your lien, but you still need to keep the project open in case payment comes in or the lien is getting close to expiring and you need to start a claims action.
Track Legal Compliance
In addition to tracking the dates these actions took place, you file should also contain a copy of the preliminary notice and any information about how it was mailed (for example, the return receipts), a copy of the filed lien, and details on how the lien was served (again, the return receipts from the post office if applicable).
Protect the Project Record
Do you keep all emails, schedules, and shop drawings in a project drop-Box? How do you maintain your records? What is the best software program? We will be exploring these topics in June 2017.
Obtaining written confirmation from the debtor of the existence of the debt and the exact amount the debtor believes it owes you is powerful evidence in support of your later claim.
While this may seem like a lot of details to keep track of, if the process is automated and clear, then your credit manager should have no problem following the steps, taking timely action, and giving you reports on project status. Since one project may have several rounds of payments, lien releases, filings, and deadlines, automatic tracking can be incredibly important to make sure you don’t miss any details.
The legal team at National Lien & Bond has helped many different construction firms set up appropriate systems, make sure their standard notice and lien filing paperwork is correct, and handle any issues that arise. If you’d like some experienced assistance, reach out and we will help.
