The cost to research, prepare, and serve a preliminary notice (also referred to as a “prelim”) is based upon some very simple principles.
- Time to conduct research and verify the information so the prelim will in fact be valid once it is served.
- Time to enter this information into the most current prelim form, which complies with the current state statute.
- The cost of the method you choose for the actual serving of the prelim. This is based on many variables. Example:
a.) Do you want to secure “Proof of Receipt” by the entity being served at the time of service? Or
b.) Do you want to lessen your cost and serve the notice by securing “Proof of Service”? (both methods satisfy the requirements of the state statute for serving a prelim)
So, how much should this cost?
Let’s break it down:
- Time to research and verify. As this is usually the most time consuming part of prelim process. It is safe to use an estimate of 30 minutes on average to complete the research and verification.
- Assuming that the data entry is completed using some pre existing template inside of a Word Processing or Database program. The data entry, printing, and proofing, should not take much more the 15 minutes.
- The method most will choose to serve a prelim is: “First Class Certified Mail”. This is the same for everyone who must serve a prelim. This cost is only $3.92 per service.
So if you have an employee who may earn $14.00 per hour, perform this service. And the prelim you serve needs to be served on only one entity (the property owner). Then your hard cost to have a prelim served may be only $17.92.
So now you should ask two questions:
First Question is: Why should I be charged $30.00 or $40.00 to have a service, serve a prelim for me?
The answer is: Almost every prelim served is served upon:
- The Property Owner
- The General Contractor
- The Construction Lender
That’s right (3) separate services and (3) different locations with (3) different proof of service.
So the base cost is more like: $14.00 + $11.76 (3 x $3.92) or $25.76
Keep in mind, we have not considered paper, printing, the trip to the post office, payroll taxes, etc., etc. Therefore the real cost could be somewhere around $28 – $33 per average prelim.
Second Question is: How can a Preliminary Notice Service offer to do the process for only $15.00?
Good question. Think about it. The answer is: They cannot. Even when you only have one entity to serve. The cost should exceed $15.00.
So how can anyone advertise a served prelim for $15.00?
One way is to skip the research and just serve the owner and hope that it works to protect your lien rights. The other may be to let you know after the fact that they will be charging you $15.00 each for everyone served. That could end up costing you $45.00 for one completed prelim.
Bottom line is: Use someone you can trust. Anyone offering a “Too good to be true price” is the type of document processing partner you may want to think about before exposing your customers. Once you have done the math, the true cost is easy to estimate. Anyone offering price below realistic cost must be cutting corners someplace. Is that the company you want calling your customers and serving your prelims?