Tag Archives: Preliminary Notice

Are You Paying Too Much for a Preliminary Notice?

The cost to research, prepare, and serve a preliminary notice (also referred to as a “prelim”) is based upon some very simple principles.

  1. Time to conduct research and verify the information so the prelim will in fact be valid once it is served.
  2. Time to enter this information into the most current prelim form, which complies with the current state statute.
  3. 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:

  1. 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.
  2. 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.
  3. 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:

  1. The Property Owner
  2. The General Contractor
  3. 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?

For fair and reasonable pricing, turn to CRM Lien Services. ContactUS today for a proposal for our Preliminary Notice services. You will be glad you did and so will your customers.

Preliminary Notices: Unique Questions And Answers That May Surprise You, Part 2

Part 2 of a 2 part series

In the previous blog we talked about what the true estimate amount you should include in your preliminary notice and what to do if you over supply what you estimated. Next we will look at serving the Lender, protection after payment has been made and undelivered certified mailings.

#3 If a Lender is added to the project after I serve my preliminary notice, do I need to serve the Lender?

Adding a Lender to a Construction Project after the preliminary notice has been served is a major hassle for those who want to protect their lien rights on the project. This is a testimony to the need for amended preliminary notices. Should you be informed, or become aware, that a construction lender has been added to the project. Contact your notice service company immediately and request that they amend the original preliminary notice to include the lender. Then be sure the lender is served. The serving of the preliminary notice has become such a severe concern that California now requires General or Direct Contractors to serve a preliminary notice on the Lender for every project in excess of $400.00. In the past the California General Contractor by virtue of their contract with the property owner was granted mechanics lien rights. However, since July of 2012, the Lender must be served by the General in order to secure the lien rights of the General Contractor.

Lets face it. If the Lender is funding the job and you are expecting to be paid through that funding, it makes sense that you want the lender completely aware of your participation in the construction project.

#4 If I sign a Final Waiver and Release, get paid, then asked to provide additional work or materials to the same project, am I still protected?

This is a slightly different spin on question #3. You finish your part of the job. You sign a Final Release. You get paid in full. So far so good. Now your customer asks you to handle a few additional items to help him finalize the job for his client. Great! More work for you, more income, how bad can it be? The answer is not bad at all, if you get paid for the additional work. However, what if the added work is equal to or in excess of your original profit on the job and you don’t get paid as agreed? You could be holding a very empty bag.

Protecting yourself is very easy. Once you sign a Final Release and you start on the add ons for the project, have a new preliminary notice served. Treat the whole process just as if you had a brand new project. By taking this very inexpensive step to protect your newfound income, you can prevent a very profitable project from going south.

#5 What happens if the owner is sent a first class certified mailing of my preliminary notice and the mailing is returned undelivered?

This is a very common occurrence although most engaged in the construction process pay it very little mind. It is not unusual for you or your preliminary notice service company to research and verify the address of the Owner or some other entity that is required to be served a preliminary notice. You send them their copy of the notice by the approved serving method and low and behold it comes back to you as undelivered. There are multiple reasons as to why this happens.

  1. The mailing address may be different than the physical address.
  2. The entity has moved since they began to work on the project.
  3. The entity just refuses to take delivery of Certified mail.

The list goes on but I am sure you get the drift. The end result is that the notice comes back to you as un-served. To be honest, you have completed your preliminary notice service obligation (for most states).  The date that you deposited the preliminary notice with the USPS is the date that service is considered to be complete. However, where is your good faith effort to make sure the entity needing to be made aware of your lien rights is informed? If the notice, upon being returned is discovered that for some reason it was sent to an older or invalid address, you or your service should step up their research. If necessary call the entity to verify their mailing address is correct. On the other hand, if you served to the correct address, we suggest that you send another copy of the notice by first class mail and keep the original served notice with your preliminary notice. This will put you in a position to support your service and your good faith effort to making sure everyone was served and your additional efforts should be looked upon favorably should your preliminary notice every need to go to court.

By the way. The above processes is what you may expect when using CRM Lien Services, Inc. to be your preliminary notice processing service. For more information or to request a proposal for your notice service needs click here.

Preliminary Notices: Unique Questions And Answers That May Surprise You

Part 1 of a 2 part series

During the past 25 years of preparing preliminary notices for our clients, our team has been asked a variety of questions that while we considered different or unique, they have proven to be invaluable and helpful for our clients. The following list features some of the most unusual questions along with the answers below including:

  1. Should the amount appear on all copies of the Preliminary Notice?
  2. What happens if we supply more than we originally estimated?
  3. If a Lender is added to the project after I serve my preliminary notice, do I need to serve the Lender?
  4. If I sign a Final Waiver and Release, get paid, then asked to provide additional work or materials to the same project, am I still protected?
  5. What happens if the owner is sent a first class certified mailing of my preliminary notice and the mailing is returned undelivered?

These are just a few of the questions we are asked about preliminary notices. Knowing how to answer these properly is something you should expect from your preliminary notice service. If you’re not receiving immediate and intelligent responses, hold on to your bootstraps. You could be in for a long and rough ride through the construction project accounts receivables protection maze.

So let’s break these down one at a time.

#1 Should the amount appear on all copies of the Preliminary Notice?

This first question concerns the amount listed on the preliminary notice. Your preliminary notice service company must comply with the State Statute to properly prepare your preliminary notice. Some states require that an estimated amount of your charges for the services or materials being provided are included while other states are not concerned about the amount and have no requirement at all for a declared value.

For example, Arizona is a state with unique requirements as it insists that the estimate is declared and should it exceed 20% of the original value you must serve an amended preliminary notice.

The bottom line is that the estimate component of the Preliminary Notice is all over the ballpark. If your notice service company is not on top of these requirements you may easily end up with a compromised preliminary notice.

Please keep the following in mind when declaring a value.

  • The estimate is for the amount the real property will be improved by your participation in the construction project.
  • If you are extreme when you declare this value you can compromise the notice.

For example, a company renting a tractor to help clear land is expecting to receive 3 weeks of rental income for an estimated value of $3,000.00. However on their preliminary notice they list their estimated value as $73,000.00. This is done because they want to protect the value of the tractor in the event it is damaged or stolen. This is an extreme over estimate because the tractor will not become part of the improvement. Only the rental income should be declared because that is what it will cost the owner for the equipment being used.

When you over estimate the preliminary notice value all sorts of chaos can evolve and could ultimately throw the entire project into a construction lenders nightmare. Our best advice is to include exactly what is required by the state statute. Adding abstract amounts will not protect the value of the tractor and could cause you lots of grief with your customer.

#2 What happens if we supply more than we originally estimated?

Supplying more than you originally contracted can be tricky when it comes to protecting your lien rights. If the increased amount is just to cover unexpected overrides on the project you can usually rest upon the “good faith” estimate you included in the original notice. (Arizona is the only exception should the overrides exceed 20%.) However, if your overrides start to become substantial and beyond the scope of the original proposal, you are wise to have an amended preliminary notice served. You will want to notify all of the parties who were served the original notice that your amount has increased substantially and that you want them to be aware of their liability for the expanded amount of your potential lien claim.

One key point when serving an amended preliminary notice is that you never want to compromise the date the original notice was served. Therefore, your amended notice must declare that you are amending a preliminary notice that was originally served at a prior time.

We will cover the next four questions in part 2 of this series. Remember, if you have any questions regarding your Preliminary Notice, please let us know. We would be glad to help you! For more information about our services or to receive a proposal for your notice preparation needs, click here.

Preliminary Notice – Signed, sealed, served and in your email box on the same day

How long should you wait before you receive your copy of the served preliminary notice?

eCopy-preliminary-notice-service

When you ask your preliminary notice service for a copy of your served notice and their reply is something to the effect of “You want it when?” perhaps you should be considering another service.

At CRM we offer our clients everything from an immediate (eCopy) .pdf image of the served preliminary notice within minutes of being deposited at the Post Office for delivery, to a complete set of hard copies attached to their monthly served notices report.

Of course we also offer next day service to our clients by uploading your served notice to our proprietary online database system, eGreenies2, as well as the original eGreenies software application which is part of our subscription based eSystems online Preliminary Notice Management Tool.

Most clients want immediate service, especially when it comes to their preliminary service notice provider.  CRM is known for fast, professional service that stays current with technology trends to accommodate all of our customers.  One of the services offered is a FREE eCopy Service. To take advantage of this, all you need do is to indicate on your CRM Customer Preferences Profile that you want your served notices sent as an eCopy and provide us with your email address where you would like your copy of the served notice to be delivered. We will take care of the rest including getting you your copies right away.

Are you Needing More Than One FREE eCopy of Your Served Notice Delivered to Your Customer?

CRM Lien Services can help with this too! Just indicate on the Customer eCopy box on your request form and your customer will receive the eCopy at the same time you receive yours. This is very useful when your customer is in a “Subcontracting” position and by law, not required to be served a formal copy of the preliminary notice. By having CRM send a courtesy copy you keep your client in the loop, and avoid any questions which may arise from your decision to protect your mechanics lien rights and have a preliminary notice served on the project.

Keep in mind, the eCopy of the served preliminary notice will include all of the USPS Certified Mail Numbers which allows you to track the time and place when the entities named in the notice are physically served as well as the name of the individual who signed for the notice.

Not a big deal you say? You are right. It is probably a moot point in the service protocol. This is, of course, until you find yourself needing to file a lien to advance the actual collection of your unpaid balance. Then these Certified Numbers and copies of signed receipts become the catalyst to support the validity of your preliminary notice in the serving of a mechanics lien that will stand up in court to defend your claim.

Having the choice to receive an immediate eCopy of your served preliminary notice. Or being able to go online and have “Instant Access” to every notice served on your behalf by CRM during the last 24 months is the type of benefit you should expect from any reputable preliminary notice service. At CRM we have listened closely to what our customers have told us about choosing a service because of the “added value” they provide. While there is no doubt that almost any service can prepare and serve a preliminary notice, it takes an experienced company like CRM to make sure that your needs are respected; before, during, and long after the notice is served.

To learn more about the “Instant Access” through eCopy or any of the CRM customer benefits offerings, select from any of these links on our website: www.crmlsi.com, eCopy, eGreenies2, eSystems.

CRM Lien Services, Inc. “Serving Industries that build America” for over 25+ years.

Ease the serving of a Preliminary Notice with Softening Letters

Receiving a formal legal notice, such as a Preliminary Notice by certified mail can be a daunting experience for almost anyone. When you consider those who may be receiving a legal notice for the first time or perhaps as a rarity in their business or personal life, it can ignite unjustifiable fear or concern. However, when a “Softening Letter” accompanies the legal notice, the anxiety is drastically reduced and the acceptance of the legal notice is usually met with a greater understanding and appreciation.

This is unquestionably true in the Construction Industry where laws require that Preliminary Notices be served by anyone wanting to preserve their lien right for a project in which they have been contracted or subcontracted to provide materials or services.

While the Preliminary Notice is usually structured to inform and advise what action a recipient should take in order to avoid a mechanics lien, this information is usually couched under the title of “Warning”. The natural reaction to the word warning is fear causing the recipient to ask the question “Why are you placing a lien on my property?” The preliminary notice will always identify itself as a Preliminary Notice , not a Notice of Lien. However, the combination of the warning and the fact that it is a legal document served by certified mail can often be the trigger for an apprehensive reaction.

So a properly crafted Softening Letter placed in the envelope in front of the preliminary notice will help to take most of the perceived sting out of the actual preliminary notice. Using softening letters when you have elected to serve what the industry calls a Non Statutory Preliminary Notice has an even greater effect on putting the recipient at ease.

So why send a non-statutory preliminary notice at all, especially if it is not required by State Statutes?

The truth is that many companies who provide materials and services to construction projects throughout the United States make it a policy to send a preliminary notice on every job. By doing so they are able to communicate to their customer, and those in the prominent positions for the project, that they are participating in their project, they have no intention of filing a mechanics lien, and they are more than willing to provide the project owner with releases of lien rights every time they are paid or scheduled to be paid for their materials or services being provided to their project.

Using a Softening Letter to buffer the serving of a preliminary notice, statutory or non-statutory, is always a recommended process as a means to have your lien rights protected while not causing your clients to misunderstand and sometimes overreact to the receipt of a preliminary notice.

If your organization would like to start using the power of Softening Letters when you protect your lien rights, or would like to talk with us about our customized Softening Letters complete with your logo and electronic signature, contact us via email or chat live with us now.

CRM Lien Services is a professional service firm specializing in the preparation and serving of mechanics liens and related documents throughout the country. The level of research CRM invests into each and every document they prepare has proven over and over again to be one of the primary building blocks for securing detailed and enforceable liens and bonds claims for hundreds of clients. To learn more about all of our services,  Click on one of the following links: Pre-Notices, Liens & Bonds, Other Notices and Other Services.

Understanding Ownership in a Preliminary Notice

A Preliminary Notice is designed to alert the property owner and general contractor that a subcontractor (or supplier) is getting ready to perform work or furnish materials at a specific real property location. The preliminary notice is generally the first step that a subcontractor must take in order to establish his or her right to file a mechanics lien. While some states do not require preliminary notices, most require some type of notice to be served before you can file a lien. In California, the preliminary notice (previously known as the 20 Day Preliminary Notice,  is required for everyone, except the direct (General) contractor who wants to establish their lien rights.  However,as of July 1, 2012, if there is a construction lender., the direct (General) contractor must also serve a preliminary notice

The preliminary notice requires that you identify ownership of the real property upon which you are performing the work or furnishing the supplies. Naming the correct property owner is crucial as the notice is designed to notify the owner of the property that you will be doing work on the construction project. If it is not served to the correct owner, the owner may claim that you did not comply with the statute and your prelim will have no legal standing.

So how do you go about finding the correct owner of the property?

First of all, it is important to understand that quite often the person having the work done is the tenant, not the real property owner. For example, say a mobile phone company is renting a space in a local strip mall. While the construction contract is issued by the mobile phone company, the mobile phone store does not own the property; the strip mall owner does. This is an important distinction that many who file preliminary notices fail to consider. If a materials supplier serves a prelim and lists the mobile phone store as the property owner, the prelim will most likely be declared invalid and the materials supplier will have no legal ground to file a mechanics lien. However, if the materials supplier lists the mall owner as the owner and the mobile phone company as the tenant, and both are properly served, they can move forward and, if necessary, file a lien.

The property owner is usually identified through legal public records. Don’t just assume that you know the correct property owner; look it up and verify your information. There are multiple ways to research and identify the true owner of a property. For example, you can pull the title, building permit, or the Notice of Commencement (Florida) to find the correct property owner. Make sure you have identified the true owner of the property before you serve the preliminary notice. If you have not identified the correct owner, it doesn’t make a difference what else you have included in the prelim. It will all be invalid and unable to support a claim of lien.

When you go to file a lien on a property, you must include the actual owner in the lien. This is why identifying the correct property owner and tenant in your prelim is so important. Without the correct owner and tenants, your mechanics lien will be invalid and should you file an invalid mechanics lien you may become liable for damages.  By having both the Owner and Tenant properly identified and served through a preliminary notice, you can bring a lien against both the owner and the tenant. By filing  mechanics liens on both parties, you should be able to secure and collect the money owed to you and your company.

The research process for completing a preliminary notice  can be somewhat daunting; however, using an experienced Preliminary Notice Service Provider like CRM Lien Services will shift the research and preparation to those who have years of experience with this process and alleviate your need to condust all of the research and remove your concerns about serving a compromised prelim. Partnering with a qualified service provider will take the guess work out of the prelim process, help you save valuable time, and protect your lien rights with accurate and compliant notices. CRM Lien Services will thoroughly research the correct information and professionally prepare your preliminary notices and mechanics lien so your job related accounts receivable are fully protected.

If you’d like to learn more about CRM Lien Services or obtain a quote for your preliminary notice or mechanics lien services, click here. We look forward to serving you with all of your prelim and mechanics lien needs!