Preliminary notices are the first step toward protecting your payment for a project and a prerequisite to filing a mechanic’s lien. If you’re unsure of what a prelim is and how it works, be sure to read our article, “What is a Preliminary Notice? It is Your Blueprint for Risk Reduction.”
Pre liens are powerful tools when experiencing slow pay, short pay, and even no pay situations. But for them to be effective, they must contain the necessary legal requirements and be sent on time.
Unfortunately, there are many pitfalls that contractors, subcontractors, and material suppliers run into when preparing their prelims.
At CNS, we provide preliminary notice services to help you avoid common mistakes that could put your right to payment at risk. To learn more about our prelim services and what they include, take a look at our article, “What Goes Into Our Preliminary Notice Services?”
Continue reading to learn about the most common pre lien mistakes.
Preliminary Notice Pitfalls To Avoid
Many states have stringent requirements and guidelines when preparing and sending out preliminary notices. Even the smallest mistake can render your pre lien completely ineffective, leading to the loss of your claim rights.
Below we will detail the most common pitfalls to help you avoid such mistakes.
Failing To Send A Prelim
The first and most common prelim mistake is failing to send one altogether. Pre liens exist to notify your customer that you have the right to collect unpaid costs and file a mechanics lien if they fail to pay. By not sending a pre lien, you may forfeit the ability to place a valid lien on the property.
Sending A Prelim Late
Many states have strict timeframes for when a preliminary notice should be sent. Failing to send the prelim on time is just as bad as not sending it at all, as it causes the prelim to become less effective.
These timeframes don’t just vary by state but can also vary between general contractors, subcontractors, and material suppliers. At CNS, we can help you determine the correct time frame for your prelim to avoid sending it late.
Failing to Notify The Correct Parties
Preliminary notices must be served to the property owner, general contractor, and construction lender at the start of a project. Under certain circumstances, secondary ownership parties must also be notified. This information can become increasingly difficult to collect with larger-scale projects, but it is nonetheless essential. CNS provides a research process in our preliminary notice services to help find and verify unknown parties.
Overstating the Pre Lien
Incorrect information in your pre lien can quickly invalidate it, and one of the most common information errors is overstating the amount for services.
The amount stated in the prelim should be a rational estimate based on the principal amount of the contract, subcontract, or purchase order. Trying to anticipate additional expenses that may or may not be incurred could result in the loss of collection rights in the future. This mistake is even more critical when filing a mechanics lien. Learn more about other mechanics lien mistakes in our article, “Common Mistakes When Filing a Mechanic’s Lien.”
CNS Preliminary Notice Services
While the above mistakes are some of the most common, there are still many others that can occur when preparing your prelims. And unfortunately, sometimes taking on bigger jobs carries greater risks related to the information that must be present in your notices.
At CNS, our preliminary notice services are designed to find and verify critical information to help you expand your business and work with customers that you might not know well.
Prefer to call? You can reach us at 800-366-5660.
Disclaimer: CNS is not an attorney, and if you need legal advice, please contact one.