What is the First Step
Step one – make sure that you are billing regularly for the debts that you’re owed. Whether that’s monthly payment applications or invoicing based on your contract, whatever it says in your contract or your agreement, that’s what you need to do to make sure that you document the fact that you’re owed money.
You Need to Document Everything
Sometimes clients come to me and say, “Well I’m owed this money on a change order, “but I’m told that I can’t bill it.” While that may be true, recognize that, if you don’t submit a bill, you’ll have a hard time convincing a judge that you’re owed this money.
Secure Your Lien Rights
Next, at the beginning of the job, you need to make sure that you serve the proper preliminary notices under your lien and bond rights. So that’s typically a notice to owner or notice to contractor, usually done no later than 45 days from your first work or delivery of materials on the job site. And those 45 days, that’s the date that it needs to be received by the owner, not just the day you mail it.
So you get this preliminary notice out of the way, the next step is within 90 days of your last work on the job or last delivery of materials, you need to record a claim of lien or serve a notice of non-payment on the bonding company.
Remember that these notices and the lien have to happen absolutely no later than 90 days from your last work. That does not include punch list work and it does not include warranty work. These are very tight deadlines, both the 45 days and the 90 days.
Enforce Your Lien
Assuming that you have properly protected your rights under the lien and bond law, you then need to make sure that you enforce your rights. The lien and the bond claims, won’t produce dollars all by themselves. It’s not that you serve this document and all of a sudden you get paid. You need to make sure that you follow up on it.
You need to be communicating with emails and phone calls. And when you get to a point where you’re getting the run around, you’re not getting answers,and your calls are not being answered, that’s when you need to call a board-certified construction attorney to help you get paid.
Most Cases Settle
Most collection cases that we handle settle, typically within one to four months of our filing the case. And that’s because the other side gets a lawyer, the lawyer usually is knowledgeable about these issues, and can explain to them that in many instances, subject to very limited exceptions, if work was done on their property, materials were delivered and releases were not given, the money is owed. They may have some back charges, they may assert other issues, but remember that if you do nothing, you will likely get nothing.
We Can Help You Get Paid!
That explains the process from beginning to end of collecting your debt. Don’t let it just sit in your QuickBooks or Sage accounting system, do something so that you can get paid. Turn that account receivable into actual green dollar bills so that you can pay your bills, and maybe have made some money on that job, and make some profit. If you have questions about this or any other lien or contract topic, send me an email, [email protected].
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