Category Archives: Construction Industry

Making sense of Texas Retainage Notices

So the law reads that your “Notice of Retainage Agreement” must be served not later than the earlier of:

The 30th day after the claimant’s agreement providing for retainage is completed, abandoned or terminated. or the 30th day after the date the original contract is terminated or abandoned.

So what is being implied:

  1. The owner of the property will comply with the law and retain 10% of the monies as proposed in the General Contractor’s Contract.
  2. If you are the original contractor and possible a first or second tier subcontractor or materials supplier, you are automatically subject to this retainage condition.
    1. To further protect your earnings, it may be wise to have your client sign a contract which includes a retainage agreement which stipulates the exact amount you are agreeing to have withheld until retainage is due and payable.
  3. To be in compliance with the time allowed for you to serve a “Notice of Contractual Retainage” you must be aware of when you finish on the job and also when the general contractor finishes on the job. If you finish before the general, then you have 30 days from the date you finish to serve your notice. However, should the general contractor complete the project before you. (This may be theoretically impossible. But there could be a situation where your work may include some punch list items being addressed after the general has already signed off on the job.)

In either case the best strategy is to serve your “Notice of Contractual Retainage” as soon as you start. In Texas, the amount to be retained is 10% and you should be able to determine this amount on the day you start. So why wait, and run the risk of missing the opportunity to protect your Retainage? This could be your whole profit or a large part of it. To have it victimized by missing a due date is ridiculous. Keep in mind, the timelines listed above are deadlines. There is nothing to prevent you from serving earlier.

Keep in mind! The unpaid balance due you for the 90% of the work is separate from the 10% withheld retainage amount. You may NOT include retainage in a mechanics lien for the unpaid balances earned through the base contract, unless you are able to file a mechanics lien after all terms have been satisfied and all or part of your contract remains unpaid. However, should the terms for the retainage be unsatisfied at the time to bring your mechanics lien forward, you will need to file a mechanics lien for the unpaid contract and upon satisfaction of the terms for the retainage agreement, perhaps a second mechanics lien for the unpaid retainage

Don’t let your Retainage be compromised. You will need to serve this notice to protect your Retainage. So better to act sooner than later.

Order Notice

 

Understanding Retainage

While the concept is no mystery to those who participate in the construction industry. The means by which you protect these job related accounts receivables can be a little tricky.

Lets take a look at Texas.

Texas statutes actually require that the property owner hold 10% retainage from the total due the Original Contractor until the project has completed, and 30 days have elapsed. Why? Why does the State make this requirement upon the Property Owner? There may be several answers to this question. But the one that jumps out is: “To help defend against mechanics liens which those, other then the original contractor, are preparing to bring against the project due to unpaid contracts”.

By requiring the Property Owner to hold back (RETAIN) 10% of the amount due the Original Contractor for up to 30 days after the job is completed. Those with unpaid contracts can properly notice the property owner while funds are still available to satisfy these claims and protect the property owner from possibly paying twice for the materials, supplies or labor which was provided to the project under subcontracts.

Now the key to protecting all of your unpaid balances for this project is to have a crystal clear understanding as to what is retainage and what is not!

Best way to explain is by illustration:

Lets say that you are the Plumbing Contractor for an improvement being made to Texas Corporate Park. You have subcontracted with the Original Contractor to install all of the plumbing fixtures for a total price of $650,000.00. You agree to a Retainage Agreement of 10%.

So from the very beginning of the project you know that $65,000.00 of the total due to you are not collectable until the TERMS of the RETAINAGE AGREEMENT has been satisfied. Lets also say that your work of this job will last 5 months and that you actually finish on time. To sweeten this illustration, you have 100% approval of your work by the Original Contractor and the Owner. I know, sounds like utopia. Bear with me for this illustration. Your contract of $650,000.00 should be paid in full. However, you agreed to allow 10% ($65,000.00) be subject to the retainage agreement. Your subcontract also most likely included terms for you to submit invoices as you completed select portions of your contract. Those invoices cannot total more than $585,000.00 and are due and payable to you during the course of the contract in accordance with your agreed terms.

To protect the $585,000.00 (amount of subcontract less retainage) you must submit all first and second notices of unpaid balances as they become due during the 5 month project, in order to secure your right to file a mechanics lien for unpaid balances. If you were 100% in compliance with the Texas notice of unpaid balances requirements, and unpaid balances which represent $75,000.00 of the $585,000.00 are owed to you.   An affidavit of lien for $75,000.00 may be claimed. If your affidavit of lien is being claimed at a time which is also in agreement with the terms for retainage, and the retainage of $65,000.00 is also unpaid,  you may file a single affidavit of lien for $140,000.00.

However, should the terms of the retainage agreement allow additional time for disbursement of the $65,000.00 you allowed to be withheld as retainage, you must limit your affidavit of lien to the $75,000.00 unpaid balances portion and consider an additional affivdait of lien for the retainage portion once the retainage agreement has matured and you have not been paid the $65,000.00 Retainage.

So the lessons to consider from this illustration are:

  1. Avoid mixing unpaid balances with retainage (Unless all amounts are due or past due)
  2. Make sure that you have complied with ALL Texas notices for retainage and unpaid balances. (Most will get the unpaid balance portion under control. It is the retainage protection which tends to get lost in the paperwork)
  3. Using a professional lien service, with years of experience with Texas notices, should greatly reduce the worry and keep all of your unpaid job related accounts receivable in compliance with the requirements that allow you to seek protection under the statutes.

Contact CRM for all of your notices in all 50 states.

Are you protected by the Lien Laws? – part three

 

 

 

So we have covered: Real Property, Work of Improvement, and Eligibility in the first two parts of this series. These are all critical to understanding mechanics liens in almost every state. Now we will dive into the next critical area.

Time

 

Every state has specific requirements with regards to the time allowed to seek protection under the mechanics lien law. One hard fact to embrace from the start is: Forget the concept of holidays, weekends, snow days, closed due to construction, all of these normal and natural periods are completely ignored when it comes to complying with the lien laws.

So, if the lien law allows 20 days from the day you begin to work on the project and you start to work on December 23, 2016 You have until January 11, 2017 to have your notice served. 20 calendar days. Of course you could always have your notice served on day one (December 23, 2016 in this example) but you cannot wait until January 12, 2017 and receive total protection. Now this example is based on California Lien Law and it applies to those who must, by law, serve a preliminary notice in order to secure their rights to claim a mechanics lien. Other states have different time requirements; Florida allows 45 days, Oregon 8 days, some allow -0- ( you must serve notice before you start). Best tool for keeping up with these timelines is the CRM 50 State Guide.

 

 

 

This guide is complementary and can assist you with determining the action required to secure and protect your rights to claim a lien. When you need to seek protection under the lien laws you must respect the scope of the timelines.

Using the above example; 20 days to serve your preliminary notice, then what? If you have been paid, you will need to Release your Right to Claim a Mechanics Lien. If you have not been paid, you MAY serve and record a mechanics lien. This will protect the Lien Rights granted to you by the serving of a preliminary notice. Most states allow 90 days from the day you stopped working on the project. However, our California example allows 90 days from the completion of the project or 30 days from the filing of a “Notice of Completion” providing you are served an advisement which informs you of the Notice of Completion being filed. In either case 30 days, 90 days from completion, or 90 days from last working on the job. These days are HARD Calendar Days. Forget any weekends or other “reasons to delay”. The courts do not care why you filed late. You and everyone else who are eligible and secured their right to claim a lien, are subject to the same timeframe.

Here’s a small tip: Allow at least 50% of the timeframe listed within the state statute to begin your claim of lien process. Example: if the statute allows you 90 days from the completion of the project, then by day 46 begin the process of claiming your lien. Reason; some of the process is left to Public Agencies to facilitate your claim. This could be something as simple as submitting your lien for recordation in the County Recorders Office or having your lien served by a Sheriff. These processes are subject to unforeseen delays. Any of which may cause your lien to be delayed to a point where it is no longer eligible for serving as a valid claim.

Once again, the scope of this article has not included all that should be understood so keep an eye out for: Are you protected by the Lien Laws? – part four “How much can I claim?”

 

Are you protected by the Lien Laws? – part one

First answer this question:

 

Did I provide materials, services, equipment or labor to a “Work of Improvement” on REAL PROPERTY? This questions begs for a basic understanding as to why the mechanics lien laws exist. The keywords in this sentence are #1 REAL PROPERTY and #2 WORK OF IMPROVEMENT

#1 Real Property is the same as saying Real Estate. i.e.: Land, Building, House, Road, Physical Structure. Many ways to say the same thing. It must be Real Property to be eligible for protection under the Lien Laws.

#2 Work of Improvement. Not work to maintain the condition of Real Property. But work that will actually add value to the Real Property.

  • Examples: A Concrete Patio with a Wood Shade Structure which is “Built On” to the House or Building.
  • Another Example: Converting an unimproved lot by adding plants, grass, underground sprinkler systems, etc. These examples convey improving the value of the Real Property by adding physical improvements which did not previously exist.

So what about replacing a damaged or worn roof? Does this add value? The answer is: Yes. The worn or damaged items diminish the value of the Real Property. So replacing them with new products not only maintains the value but may also increase the value of Real Property.

An example of this is as follows: Suppose that you are considering the purchase of a 25 year old house and you can choose from two identical or similarly priced houses. Only one has the original roof which is now 25 years old and the other has a recently replaced roof that is only three years old. Which house may have greater value? While both may have functioning roofs, the house with the newer roof will most likely last longer than the house with the aging roof. Therefore, this replacement roof both maintains and adds value to the Real Property.

So the key here is to understand what improves or adds value to a real property and also what may simply maintain the value of real property.

Example: Lawn Maintenance, Window Cleaning, Replacing Lightbulbs, These examples and many like them fall under a category known as maintenance. There are NO LIEN LAWS which will allow you to claim a mechanics lien for providing maintenance to real property.

Now it is also easy to add onto any of these examples and create a right to claim a lien.

You may plant some new shrubs on the same day you maintain the lawn. Naturally you will charge more for the shrubs and the labor to plant them. So now you may be able to protect the part of the invoice which identifies the shrubs as eligible for protection under the lien laws. Same for window cleaning if you should replace some damaged glass or provide tinting for the windows. Perhaps the light bulb replacement may include upgrading to low energy bulbs or adding new or replacement fixtures. The key is to understand what can be protected under the lien laws and what cannot.

There is a lot more to this discussion. However, it is to much to cover in this blog article. If you want to learn more. Watch for “Are you protected by the Lien Laws – Part Two”

One Job, One Client, One Preliminary Notice

Seems like a pretty straight forward concept. However, the “One Client” piece is often the cause for oversight when attempting to protect your lien rights on a very large project with lots of construction activity.

So let’s break it down by displaying a few possibilities that can exist which will require that you serve multiple preliminary notices on the same construction project.

First and foremost is the fact that by protecting your job related accounts receivables for a client who is working on a specific project, you must uncover “ALL” of the entities between your client and the owner of the project. This could be as simple as:

Situation A: Your Client is contracted by the General Contractor who is contracted by the Property Owner A single preliminary notice will handle this situation very nicely and be in complete compliance with the laws.

However, what if;

Situation B: Your Client is contracted by a Subcontractor who is contracted by the General Contractor who is contracted by the Property Owner? Again, the answer is the same; A single preliminary notice which list these entities and is served on the those who are required by statute, will be all that is needed to protect you.

But what if;

Situation C: Your client is contracted by TWO Sub Contractors, each having contracts with the SAME General Contractor who has a contract with the Property Owner? This is where it can get a little dicey. Reason the Two Subcontractors named in preliminary notices will make request of your client for Releases of Lien Rights in order for them to receive their payments on this project. Now your client will come to you asking for

TWO releases: One for Subcontractor A and One for Subcontractor B.

 

If you had served separate preliminary notices at the start, this presents no problem. If you did not, then you can only provide a release for the Subcontractor named on the preliminary notice you served. The dicey part is when you are trying to file a lien on this project and the amount you want to protect includes the amount provided to Subcontractor B. As this Subcontractor was never served a preliminary notice, you have now negated your right to bring a mechanics lien against this property for the value of the materials or services that your customer provided to Subcontractor B.

So now the question becomes: “How do I avoid this situation?”

The best answer is to have your client disclose their customer on the project. This will trigger you to always request a new preliminary notice every time your customer’s customer changes on the same project.

Another solution is to request that your prelim be “Amended”. This will force your preliminary notice service to execute new research for the job. If no new Subcontractors are uncovered, your Amended Prelim will be served on the same entities only it will now have a revised “Estimated Value”. If NEW SUBCONTRACTORS are discovered during the research process. Your preliminary notice service should alert you that a new Preliminary Notice will be required to protect your lien rights for the services or materials provided to your one client for both subcontractors who are contracted by the same General Contractor who is working for the Property Owner.

YES – IT CAN GET COMPLICATED. But your lien rights may also be lost in the shuffle if your preliminary notice service does not properly research the preliminary notice request.

It can even get more dicey when more than ONE GENERAL CONTRACTOR is discovered on the same project. Think this doesn’t happen? Think again. Large jobs are notorious for being separated into multiple projects and many phases.

The best advice we can offer is to use a Preliminary Notice Service that is designed to be ON TOP on these anomalies and performs the research process on each and every preliminary notice. For piece of mind with your preliminary notice choose:

CRM Lien Services, Inc. “Serving Industries that build America” for over 30 years.

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Customer Friendly Notices

Most of the fear clients experience when considering using the “Preliminary Notice Process” is that they will offend their client. This fear has some merit if the Preliminary Notice is not properly explained. So the first challenge is to remove this fear by emphasizing the benefits your customer, as well as your customer’s customer, receive by being included in a properly researched and served Preliminary Notice.

To begin, your Customer’s Customer must be made aware that the purpose of the notice is to HELP HIM avoid becoming subject to a mechanics lien as a result of something going wrong* during the improvements to his property. Once your Customer’s Customer understands that the Preliminary Notice is not only a fair and legal warning. But is also a set of instructions as to how he can avoid a mechanics lien.

The warning section of the Preliminary Notice is quite clear. It shouts “DON’T PAY ANYONE” Keep your money and offer it in exchange for a “RELEASE OF LIEN RIGHT”. ReleaseValue<>The process is quite simple. I (your customer’s customer) will give you your payment, in exchange for you releasing any rights you may have to bring a lien against my property. Once this exchange of equal values takes place, the fear of a mechanics lien is removed and your customer’s customer no longer has concerns about being subject to a lien or having to pay twice for some error or oversight which he did not create or authorize.

So by sharing this with your customer’s customer, the source of the monies for this project is free to make it’s way to you (the person who took a chance, protected their job related accounts receivables, and helped to keep their customer’s customer safe and happy)

So now that we have the beginning and the end covered, what about those in the middle? Your customer or any trail of customers between you and the end user. Well the language of the Preliminary Notice surely informs the end user (or your customer’s customer) how to protect themselves in the construction liabilities process. Of Course anyone in the process can seek protection under the Lien Laws by serving their own preliminary notice and being subject to the Payment for Release of Lien Rights process. Unfortunately, Those in the middle are expected to be close enough to the actual project so that they can manage the flow of monies and prevent any waste due to mistakes or lack of productivity.

IE: If they cannot run their business effectively and efficiently, no laws or statues will prevent them from becoming victims of the things that can go wrong on a construction project.

Example: *if a general contractor instructs the driver of the Ready Mix truck to pour the concrete into the forms which have been incorrectly positioned by the General Contractor. Who then should cover the cost of this mistake? The property owner? the Ready Mix Company? Most likely not. The GC positioned the forms, so the GC should eat the cost to make it right. The Mechanics Lien Laws do not cover this, nor are they intended to cover it. This is a case of mis managed construction and is the price a GC must pay for being in business. However, this type of Oops usually ends up with the Ready Mix Provider or the Property Owner having to eat the cost. Why? Because nobody read the preliminary notice and the release of lien rights was not provided when it should have been provided.

While this is just an example to help drive home a point, these things do happen. The good news is that you and your customer’s customer will be protected from this situation and your risk will be managed, by properly communicating the workings of a Customer Friendly Preliminary Notice.

Want a service that will reach out to both ends of the spectrum? CRM Lien Services has been providing this type of assistance to providers and owners for over 30 years. If you need a service who really does know how the systems works, give us a call today: 1-800-PRELIMS.

Tell me, how long must someone be in this business to have an 800 number like this? There is peace of mind in using an experienced professional. Try us . . . you will be glad you did!ContactUS

Preliminary Notices – What to avoid

If you want to use the LAWS that are created to protect your lien rights, you must adhere to some very basic principles. When talking about the laws and wanting to seek protection “Under the Law”, you must first develop a sincere respect for the law. Being naive or cavalier is sure to position you for some very unwanted and disappointing surprises.

Lets start with a very simple attribute of the Lien Laws, more specifically the Mechanics or Construction Lien Laws. They are designed to allow all who participate in the “Improvement to REAL property” to protect their earnings derived from providing materials or services for the “Improvement to REAL property”. Now the operative words are “ REAL PROPERTY” which, for all intensive purposes, means “REAL ESTATE”. Land, Buildings, Houses, Roads, etc. These laws have nothing to do with repairing someone’s automobile or selling flat screen TVs to a hotel chain. Those items fall under the designation of “Personal Property” and while other laws do exist to help you protect your interest in personal property sales or services, The mechanics lien laws are not the correct choice.

Another caution is to be certain that the legal name of your business or the business name you have chosen to use to provide materials or services to an “Improvement to REAL property” meets all the criteria issued by the state where the construction project is located. If the state requires you to be a licensed contractor or grants you privileges to conduct business under a fictitious business name. Then you must be sure to use the name for which you are legally authorized to conduct that business. If that means having a legal dba (doing business as), than be sure that your dba is current and valid. Same holds true for a Contractors License. Do not expect the legal system to work for you if you have chosen to ignore the requirements of the very system under which you seek protection. If your contractors license is suspended, expired, or revoke. Do not try to use the lien laws until these defects have been remedied.

Last, but surely not least. If the law requires that you must first serve a valid preliminary notice before you attempt to claim a lien right, then make sure you have a valid copy of the served preliminary notice and the ability to prove, within the requirements for proof of service, that all entities have in fact been served within the time frame as allowed by the governing statute.

As a side note, the preliminary notice requires a “Description” of the materials or services you are providing to the “Improvement to Real Property”. The best way to determine if your description is adequate for compliance is to ask yourself the following question:

If my preliminary notice is eventually used to support the filing of a mechanics lien and the lien is taken to court as part of a foreclosure lawsuit, will the Judge hearing my case understand what it is that I have supplied or provided to the construction project?

Descriptions like “Materials”, or “Services”, or just about any One Word Description or abbreviated jargon that may satisfy your client could cause the Judge to be more inclined to dismiss your case for failure to satisfy the statute and rule that your preliminary notice is defective. If you are a Plumbing Materials Supplier, a small effort to list materials as “Plumbing Materials” or should you be  an Electrical Contractor, changing services to “Install electrical service”, can make a big difference in the evaluation of your supporting preliminary notice.

These issues may appear as moot. But after hearing the horror stories of so many clients who have come to CRM after experiencing the downfall of not respecting these very basic components of conducting business safely under the law. We believe it best to share with you these simple lessons of what to avoid when seeking protection under the mechanics lien laws.

To learn more, or if you have questions regarding your company and the services or materials you provide to Improvements to Real Property. Choose the following like for a free consultation.

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State Registry – Preliminary Notices

A few states have implemented, or are in process of implementing, a State Registry for Mechanics or Construction Lien Related Notices. Utah now has the SCR (State Construction Registry), North Carolina has a Mechanics Lien Agent Office and New Jersey is soon to launch it’s own State Registra for similar documents.

These stand-alone agents are not to be confused with the County Recorder and the services provided by the Recorder’s Office. The concept of the new State Registry is to consolidate a central point for notices as they relate to the establishment of lien rights of those who participate in the construction industry. Many of these systems are similar in objectives but different in process.

To be safe, one who is determined to secure their lien rights while taking risk in the construction industry should make sure they are in complete compliance with the requirements of the State PrelimRegistries. However, doing so may often present a challenge. While the rules of compliance are quite comprehensive, the nature of the construction project is not always so cut and dry.

Wanting to be in compliance may be the easy part, while trying to comply could become subject to actions, or lack thereof, of the entity who must file the “Pilot” document before the preliminary notice or notice of furnishings may be filed. So what happens if the “Pilot” document (Notice of Commencement) is never filed? This is a sure dilemma for those who have already exposed their accounts receivables to the project and are flying without a seatbelt.

At the moment, most States leaning towards the Registry Strategy do not have the answer to these questions. However, if you speak with any attorney, most will say that you should do whatever you need to do to protect yourself. IE: keep records, time slips, get things signed for when you drop off supplies or complete processes. In addition, most attorneys agree that serving a Statutory or Non Statutory Preliminary Notice at the start of the job can only help defend your position should things on the job go south.

CRM has kept abreast of the development and implementation of these registries and understands the scope of their requirements for registering your preliminary notice. In addition to registering your preliminary notice, when possible. CRM also serves a hard copy of the preliminary notice by Certified Mail to all who are listed in the State Registry which may impact the advancement of your mechanics or construction lien.
To make sure your notices are executed for maximum protection of your lien rights, let CRM research, prepare, record with the Registry when available, and serve all of your preliminary notices and take the guesswork out of your job related, accounts receivables, protection tool.

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Where to begin?

Many of those searching for the best way to protect their lien rights often ask:

Where do I begin?

The absolute best answer to this question is:

At the CRM 50 State Guide!

The reason is simple. Those who are unfamiliar with the process or perhaps have not used the process in a long time, are usually unsure of how the whole thing works. So without spending hours search the internet. Or, feeling silly asking basic questions. CRM offers the absolutely easiest way to get onboard with the notice process. By starting with the CRM 50 State Guide you can do your research in the shortest amount of time, find the answers that will direct you to take the next step. And be confident in doing so.

The CRM 50 State Guide directs you to the best answers to your “Where to begin?” questions by sorting through 4 primary pieces of information that you will know, or know where to look, or be able to take an educated guess.

#1 Where is this construction job located? (Just the STATE, not the exact address)

#2 Who is the Owner of the construction job? (Just the type of owner) EXAMPLE:

  • Private (Company or Corporation)
  • Public: (School District, Fire Department, Parks and Rec)
  • Federal: (FBI building, Penitentiary, Post Office).

If you know how the job is titled, chances are you can take an educated guess as to who owns it.

#3 The type of construction project? (Is it someones house? a restaurant, Church building, Cell Tower) You only need to be able to determine if it is Residential or Non Residential. The laws for mechanics liens differ based on the intended purpose of the structure. Being able to rule out Residential will shed clarity of the choice of information)

#4 How far removed are you from the actual Owner of the Property? (Direct, Once removed, twice removed, etc) It is usually easy to know when you are working direct for the Owner, or perhaps if your customer is working direct for the Owner. The best way to give it your best guess is to select the  2nd tier option as this will place you on an answer page that will give you the guidance needed to request a notice or call for clarification.

In all cases, the “Where to begin?” question is almost always answered by using the 50 state Guide.

It’s free, it’s accurate, and it’s very easy to use.

CRM’s online 50 State Guide . . . a good place to start!

Notice of Unpaid Balance or Prelim?

Protecting your rights to claim a mechanics lien in Texas can get a little dicey.

Unlike many states which require a preliminary notice or notice to owner to be served at the beginning of the project. Texas takes a different approach by requiring those who are protected by the lien laws of Texas to serve what is known as a “Notice of Unpaid Balance”.

This “Notice of Unpaid Balance” can appear in many formats. It can be as simple as a statement of job account or as complex as a custom designed document. As long as it meets “ALL” of the requirements of the Texas Statute including “WHO” it is served upon and “WHEN” it is served, it should be adequate to establish your rights to move forward with a mechanic lien.

Now because it is a “Notice of Unpaid Balances” it has absolutely nothing to do with “Past Due Accounts Receivables”. The Notice of Unpaid Balances is impervious to the Terms of Payment you may have extended to your client. Let’s use the following example to expand upon this point:

Assume that you have this great client who has begun to work on improving a privately owned building in Houston, Texas. Your client needs some very lucrative terms in order to commit to you for suppling all of the materials he will be needing to complete this job. You decide that you can extend him 90 day terms in order to lock up the business. So far, so good.

On March 5, 2016 he orders $75,000 in supplies. You ship the materials to the job site on March 14, 2016 and you prepare your invoice on March 21, 2016. Of Course, your invoice has 90 day terms, So it won’t become due until June 20, 2016. So the question to ask is:

What must I do to secure my mechanics lien rights?

To be in compliance with the Texas Statute you must serve the “First Notice of Unpaid Balance” on or before May 15, 2016. Now realizing that the invoice is not due according to your 90 day terms, you will not be in compliance with the Texas Statue that will protect your right to lien. Unless this First Notice of Unpaid Balance is served by May 15, 2016. Furthermore, you will also need to serve a Second Notice of Unpaid Balance on or before June 15, 2016. Keeping in mind that most likely you have not been paid a dime before June 20, 2016 nor were you expected to be paid before June 20, 2016. You still must serve both the First and Second Notice of Unpaid Balance within the times as required by the Statute. Remember the Statute does not address “Past Due Accounts Receivables”  It is only concerned with “Unpaid Balances”. Therefore the minute that order leaves your warehouse and the invoice is created, you have “Unpaid Balances”. Granted they are not due according to your 90 day terms. But they are unpaid regardless if they are due or not.

So, if playing it safe and protecting your “Unpaid Balances” with a right to file a mechanics lien, is part of your sound credit policies. Then you don’t want to allow your generous terms strategy end in Unpaid Balance that may become an Uncollectible Receivable.

What if I issue more invoices in the same month?

What if I combine other orders, for different jobs, on the same invoice?

What happens if I do not serve the first notice?

 

Want to learn more about protecting your accounts receivables for Texas construction projects? We have the answers and the conversation is free.

Call or Contact CRM Lien Services, Inc. We are here to help!

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