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3 Construction Notice Policies That Work

Posted by Sarah Toulmin

8/15/17 10:43 AM

Being reactive about securing lien rights is not a policy, but it is an excellent way to ensure you continue to run into payment problems. 

Instead of scrambling to secure lien rights after you don't get paid, we recommend having a proactive notice policy in place from the start of the job. A good policy will give you peace of mind that you're in compliance with the law and doing everything in your power to ensure you get paid, no matter what the circumstances on the project.

So, how do you create a good notice policy? See below for three types of notice policies that are proven to work: "Notice Every Job," "State-Specific Notice Policy," and "Notice by Custom Criteria."

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1. NOTICe EVERY JOB

This notice policy is for you if you:

  • Are risk averse
  • Want to avoid headaches and errors associated with tracking different state requirements and deadlines
  • Want to get paid faster and maintain open communication on every job
  • Don't mind sending non-required notices, because you recognize the benefits regardless of legal requirements

Example:

  • As a general contractor working in Alabama, North Carolina, and Louisiana, I don't always have to send notices by law, but in many cases I do. I don't have time to keep track of when I'm required to send a notice and my customers can be slow to pay in all three states, so I like to send notices on every job to help me get paid faster.

Risks:

Tips for implementing this policy in your zlien account:

  • Enter all your jobs into zlien as soon as you know you're going to be on the job and order a preliminary notice.
    • If the Deadlines section of the project page prompts you to enter a first furnishing date, you probably have a required preliminary notice deadline. Be sure to enter that date and order the required document before the deadline. If no preliminary notice is required, you can order a voluntary preliminary notice.
  • Time Saving Tip: Set a custom notice workflow to automate the ordering of  preliminary notices on every job! These workflows can automatically order both required and voluntary documents for you.

2. STATE-SPECIFIC NOTICE POLICY

This policy will take into account the specific notice requirements in the states where you operate and make sure a notice is always sent in strict compliance with those requirements.

This notice policy is for you if:

  • You operate in 1-4 state(s) that have preliminary notice requirements and you want to comply with the law
  • You usually want to avoid sending notices when they aren't required by law
  • You have the bandwidth to manage different state deadlines and notice workflows if you work in multiple states

Example:

  • I'm a subcontractor that works up and down the West Coast. I send notice within my first 20 days on the job in California, within my first 8 days on the job in Oregon, and within my first 60 days on the job in Washington.
  • I want to comply with the lien law but I don't want to send any more notices than I have to, so I only send notice to statutorily required recipients.

Risks:

  • Unless you have a way to guarentee that a notice is always sent before the deadline (for example, by setting up an automatic zlien workflow) you may struggle to manage multiple state workflows
  • You also may run into payment problems on a job where a notice was not required but would have been helpful regardless

Tips for implementing this policy in your zlien account:

  • Enter all jobs into zlien and don't forget to add your first and last furnishing dates! Based on this info we'll tell you what notice to send, when you need to send it by, and who you're required to send it to based on the state where you're working
  • Set up state-specific custom workflows to automate the sending of notices through the Action Center Queue

3. notice based on custom criteria

This notice policy is for you if:

  • You want to send a preliminary notice on all jobs that meet certain risk criteria. Common criteria:
    • Notice all jobs above a certain contract dollar threshold
    • Notice all jobs with a particular group of customers - for example, if you're extending credit to new or risky customers
    • Notice all jobs associated with a particular line of our business
    • Notice all jobs with invoices outstanding a specific # of days

Example:

  • I have two arms of my business - one handles larger contracts and the other handles service jobs with small dollar values. I only want to protect lien rights on jobs with higher dollar value, so I only send notices on the large contract portion of my business. I don't send notices on daily service jobs.

Risks:

  • Tracking when to send a notice is harder if you have to double check the dollar amounts, customers involved, etc. on every job
  • You might be losing lien rights on some or most of your jobs
  • Over time you may be losing a lot of money on projects that don't meet your notice criteria - just because they are low value jobs or jobs with your best customers doesn't mean that aging invoices can't add up over time! So it's important to continue to monitor the success of this policy and update when needed.

Tips for implementing this policy in your zlien account:

  • If you use zlien custom workflows/the Action Center Queue,  set specific conditions for when to pull a notice into the Queue to be ordered
  • If you automate the sending of your notices, we can also upload a "Never Send Notice" list of customers [or you can update the Sensitivity Setting on their zlien Contact Page to "Never Protect"] to ensure that no notices will be sent to them through the Action Center Queue