When to Use Preliminary Notices and the Like
When Should You Use Preliminary Notices and the like?
In most states there is not legal requirement to use the Mechanic’s Lien process to protect yourself (California for subcontractors is one exception since a subcontractor can face disciplinary action for not serving a preliminary notice). In this light some contractors and suppliers consider the mechanic’s lien process merely as an option for protection provided by the various states but not really important to use. Invariably the question arises, "When should I bother to use Mechanic’s Liens to protect myself?"
In many states, suppliers, contractors and subcontractors are afraid to file Preliminary Notices (aka Notice to Owner, Notice of Furnishing, etc.) or Lien Warning Notices on certain customers because of some rather outdated concerns of ‘offending’ their customer, i.e., the filing of these documents somehow denotes a lack of trust or personal insult to the customer. In return, we would argue that the days of the handshake as a binding legal and moral contract are gone.
In the states that require preliminary notice to owners, who should you file Preliminary Notices on? Everyone! Make it a new company policy that if you supply goods or services over, say, $500.00, you are going to send a Preliminary Notice. To your customers you policy should be, "Sorry, but no offense was intended. This is a company policy. We do it to everyone”. The Lien Programs® makes this process a snap, so why not use them? You will find that the slight inconvenience of filing notices negligible compared to the loss of one large account. And such losses can occur with the best of customers.
As a matter of fact, the Lien Programs® were designed to generate generic Preliminary Notices and Lien Warning Notices for those states that do not require (or forbid) such notification. It hurts nothing to keep the owner advised of potential liens on his property no matter how much your customer protests. Consider using them as needed.
Created with the Personal Edition of HelpNDoc: Easily create PDF Help documents