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Help your boss understand why you need to file a lien on a job

Posted by Gretchen Lynn

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7/14/17 9:03 AM


Do you find yourself in a situation where you need to file a lien on a slow-paying job, but you have to wait for your boss’ approval before filing it?  Here at zlien, we help many folks file their liens and encounter this scenario frequently.  Waiting to file can be a risky cycle if you’re getting close to your deadline.  

In this article, we’ll provide you with helpful tips to help your boss understand why you need to file that lien so that you never miss a deadline and get your money more quickly.

What do you need to understand?

It’s very common for folks responsible for getting money in and out of the door to need approval before moving forward with a mechanics lien.  Mechanics liens are great collections tools, but the decision to file a lien can be a big one - especially if it’s your first time!  Typically, here’s what people just like you need to figure out in order to get their boss on board with the lien:

  1. Have you exhausted all other opportunities before deciding to file a lien?
  2. Can you justify the investment you would be making to pay for the lien filing?
  3. Will it be bad for business to file a lien on one of your customers/ jobs?
  4. What do you have to do after you file the lien?

have you exhausted all other opportunities before deciding to file a lien?

A mechanics lien is probably not your first stop when it comes to unpaid invoices and slow paying jobs.  Although, it’s an excellent tool to get paid quickly (Check out 17 ways a mechanics lien gets you paid) you need to show your boss all other steps you’ve taken before needing to escalate.  

If you’re using a CRM or website like zlien, you can log your interactions such as sending an invoice, filing a preliminary notice, sending late payment reminders, or making follow-up emails and phone calls.  Have this information available to show you’ve checked off all your bases before coming to the conclusion that you need to file a lien to get paid.

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Can you justify the investment you would be making to pay for the lien filing?

Depending on how your company does business, you may handle your lien filings in house, through an attorney or another company, such as zlien.  Even if you’re handling in house yourself or through in-house counsel, there is still an investment to be made to get the document filed (filing fees) and served (mail or process server fees). If you have to enlist the help of a firm or other company outside of your own, then you need to show your boss what the return on investment will be.  

The best way to do this: show them how much it’s going to cost you to file the lien compared to how much you stand to lose because you did not file the lien.  If this is a high-dollar job, then you should easily be able to show the value of the investment.  Regardless if this is a high-dollar job or not, be careful when going through an attorney as those fees can pile up quickly or you may be charged based on dollar value of your claim.  

Will it be bad for business to file a lien on one of your customers/ jobs?

Although it may seem ironic to fear that filing a lien will be ‘bad for business’ when you’re business is not getting paid the money you earned, you’d be surprised that there are companies and business owners who do not want to file a lien because of that fear.  Some folks fear that this could disrupt the relationship they have with the customer or be bad PR for their entire business to be filing liens.  

We don’t recommend filing liens haphazardly, and it should be a smart, well-thought decision to file.  Your company has a lot to gain when you file a lien and successfully secure the money you deserve.  This is why it’s important to communicate throughout a job with the companies who will be paying you.  This communication should be through Preliminary Notices to promote transparency and collaboration and by phone and email to maintain your business relationships.  

There are also other measures you can take prior to filing a lien to further exhaust all your options such as sending demand letters, notices of intent to lien or even using the zlien Lien Resolution Center.  Essentially, it’s a good idea to communicate your intentions about filing a lien to everyone before officially filing.  In some states, there is a requirement to file a notice of intent to lien prior to filing a lien, and in general, it’s good business to communicate this in advance - and frequently that alone will solicit payment.

If you do have to file the lien, once you receive payment and amicably resolve the situation, you can file a lien cancellation/ satisfaction to remove the claim from the property.

What do you need to do after you file a lien?

Sometimes, filing a lien may seem like more work, and your boss wants to know what you will be getting into if you file. Here are five steps to take:

  1. Send the mechanics lien to everyone
  2. Call the person most likely to pay, and then call the property owner
  3. Send letter warning of foreclosure
  4. Escalate to collections
  5. File foreclosure lawsuit

Read more “What to do after you file a mechanics lien”

Filing a mechanics lien is a smart and powerful tool to get paid.  By using the above tactics, you should be able to successfully show the investment and benefits of filing a lien.

Log in to zlien now to see where you stand with upcoming lien deadlines and start your conversations early! 

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Topics: Best Practices