There is a common misconception that preliminary notices are a nuisance for general contractors, property owners, and lenders. That sending a prelim will create unnecessary tension and worsen the relationship between subcontractors and the parties at the top of the payment chain.
But the truth is that preliminary notices are a valuable tool for everyone involved in the project.
In fact, pre liens were created to benefit property owners and other upper-tier parties to make it easier to track and manage workers and payments.
Prelims are mainly viewed as a way for subcontractors and material suppliers to protect their rights to file a lien on a property. And while this is a significant benefit, it isn’t their only function.
Below, we’ll detail how preliminary notices are helpful to you, property owners, and general contractors.
Unfortunately, the construction industry is often plagued by slow pay, short pay, and no pay issues. Preliminary notices are a powerful way to mitigate construction payment risk and should be prepared for every project.
At CNS, we specialize in helping contractors, subcontractors, and material suppliers protect their right to payment.
Why Property Owners & GCs Prefer Preliminary Notices
Preparing and sending prelims for every project helps establish a relationship with the general contractor and property owner from the very start of a project.
This is important because having a good relationship with parties higher up in the payment chain will help get you paid faster as well as improve the possibility of getting hired for a future project.
Of course, there will always be instances when a GC may try to dissuade you from sending a prelim, maybe even stating that it is a sign of distrust.
But it is important to note that sending prelims is often the law in many states, it is the industry standard, and it’s also best practices for both you and your GC.
However, most general contractors will welcome preliminary notices because they help make their jobs easier.
Construction payment disputes are a headache for everyone involved. General contractors want to ensure fair and timely payments to avoid mechanics liens that could delay or derail the project.
Because of the many parties involved in a single project, preliminary notices give property owners and GCs several advantages to prevent such complications.
Pre Liens Help You Get Noticed
General contractors need to keep track of everyone working on the project that needs to get paid. But because of the sheer number of contractors that are sometimes brought on board, it can be nearly impossible for a GC to identify everyone on their own.
Sending a preliminary notice will inform the GC and property owner that you’re involved in the project and must be paid. It will also make the GC aware of the work you are expecting to complete so that it can be verified and payment can be processed.
Pre Liens Improve Communication
Most construction payment issues that occur are due to poor communication. With potentially hundreds of people working on a single project, it can be easy for information to get lost as it is passed on from person to person.
Since a prelim will make the GC, lender, and owner aware of your involvement in the project, it will help establish a line of communication so no one is left out of the loop.
Oftentimes, payment delays arise due to construction invoicing errors. If this were to occur, you are more likely to be notified of your error to correct it and receive payment if you have an open line of communication established.
Pre Liens Help Reduce Risk
As mentioned earlier, a primary general contractor responsibility is to ensure that the project runs smoothly. That includes making the appropriate payments to all parties in a timely manner.
Otherwise, a mechanics lien could be placed on the property and severely hinder the project’s progress. Receiving prelims helps GCs avoid these types of risks before they start.
Since they’ll know all of the project participants, their work, and how much they’re expected to be paid, GCs can manage subcontractor payments more effectively and follow up if necessary to ensure there are no complications down the chain.
Pre Liens Showcase Professionalism
General contractors and property owners want to know that they’re doing business with professional companies that adhere to industry standards and understand what they’re doing.
After all, a well-organized, efficient and responsible company is less likely to create complications during a project.
By sending in preliminary notices on every project, you show the GC and property owner that you are aware of and abide by standard processes in the industry. This will create a strong first impression, display professionalism, and, in turn, help establish trust.
Send a Preliminary Notice for Every Project
Preliminary notices are versatile tools at your disposal that are meant to mitigate risk for you as well as property owners, general contractors, and lenders.
By ensuring that you send a pre lien at the start of every project, you are taking steps to strengthen your relationships with those parties at the top of the construction payment chain.
Not only will this improve communication and the likelihood of you being brought in for a future project, but it will also reduce your chances of experiencing payment issues.
However, at CNS we understand that preparing and sending out multiple preliminary notices can be time consuming when juggling so many responsibilities.
That is why we provide pre lien services designed to make the process as easy and stress-free for you as possible, all while delivering exceptional value.
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.