3 Things To Ask Your Mechanics Lien Company
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Zlien started doing business back in 2007, when there were barely any companies offering mechanic lien and preliminary notice filing services. Since then, a few folks took cues and now claim to offer professional lien and notice services. However, buyers should beware.
The mechanics lien and preliminary notice business is not without its complications. Just as it’s complicated for a construction business to manage all the nuances in mechanics lien compliance, the same difficulty presents itself to those lien and notice companies. Trusting your notices and liens to a service provider is not a decision to take lightly, as any small mistake can impact your rights. Here are three things to think about and ask your mechanics lien service before committing:
1) How Do You Keep Up With Law Changes and Compliance Issues?
If a mechanic’s lien service provider doesn’t have a plan and a consistent policy to monitor law changes and compliance issues, consider this a huge red flag. State legislatures make at least 5-10 changes to mechanic’s lien and bond claim laws somewhere in the United States, and court decisions are constantly making tiny alterations. Each decision and state legislative bill may impact the lien and notice forms to use, as well as service requirements, timing issues, and more (Check out our Lien Law Alerts category, which publishes lien law changes nationwide).
When you ask a provider about their compliance procedures, they may tell you that they have a “network of attorneys.” Well, consider this a red flag too.
Having a “network of attorneys” is just a fancy way of telling you they have a list of attorneys in every state. Big deal. I can give you hundreds of lists of attorneys who do construction law or construction lien work. I promise you, having a “network of attorneys” is not going to notify that mechanic’s lien provider each time a lien law changes, or help them ensure that their forms and procedures are compliant.
There’s another problem with the “network of attorneys” claim. These type of mechanic lien providing companies usually act as a simple referral house for attorneys. Each time you order a preliminary notice or a mechanic’s lien, you’re going to be shuffled off to an “in-network attorney” to fulfill your order. There are three negative implications to this type of business method:
- If you’re working in multiple states, you’re not likely to have the same attorney help you in each place, which is going to be confusing and inconsistent. You want a single vendor you can work with to get these things processed.
- When you get shuffled off to an attorney, you’re going to get contacted by that attorney, you’re going to get charged attorney prices, and these attorney’s are going to followup with you to try and convert the lead into more legal work.
- Finally, the company itself doesn’t do anything for you, they are just a clearing house or referral manager for this attorney network.
An example of a vendor who has a “network of attorneys” type business model is NLB Access. While they may not function exactly as I’ve outlined in the above section, they are certainly a type of service that will process your preliminary notice and mechanics lien orders by utilizing a network of attorneys across the country.
NLB Access tries to spin this as a positive. On the “Solutions” page of their website, they say:
Some notice filing companies may be cheaper, but NLB provides you with a case load manager that is an experienced legal professional who will review and process your claims..Our General Counsel’s office, in collaboration with local counsel, will inform you of your rights and create an effective strategy to recover your money.
I may be wrong about this, but imagine trying to work with these people if you need 100 notices sent within a month in 5 states. Will you be shuffling from local counsel to local counsel? And who knows how much they would charge for this (they don’t have flat rates posted on their website)?
2) What Is Your System For Fulfilling Orders?
Managing preliminary notices, mechanic liens and bond claims on a number of projects is challenging. When an order comes into a mechanic lien service for a new lien or notice, what does the company use to fulfill that order? How do they know what form to use? How do they actually get the form filled, and what courier network do they have in place to get your document delivered or recorded?
All very important questions. When learning about a lien service provider’s system, listen in to see what they do to reduce the risk of errors. When handling hundreds of envelopes and pages of paper every day or week, being organized and having a system that reduces the risk of error is a key feature.
Unfortunately, if you peel back the onion, you may find out something scary: A lot of these lien services don’t have any system at all. Sometimes, they just have a staff with access to a server where there is a folder and bunch of document template forms. If you’re working with a lien service operating like this, you should hear “document templates” and equate it with “disorganized mess.”
Zlien has spent five years and hundreds of thousands of dollars in developing a state-of-the-art order fulfillment system. This works on two ends. On the front end, when you’re placing an order, the system guides the user through the various forms available to choose the right form for the job. On the back end, when a order is placed, our staff members automatically have everything they need to fulfill the order.Forms are automatically generated and filled-in with your client data, and there are a host of features that monitor our staff members work to mitigate the risk of error.
Another thing to keep in mind is order tracking. You will want to know the progress of your order as it is being processed. Is this something your lien service will perform automatically, or are you getting manual emails from your provider giving you an update when they get around to it?
If you’re getting manual emails, beware. This means the lien service provider is probably managing all of their orders manually, and it is surprisingly easy for them to get busy and forget all about your project.
Zlien is proud of its automatic system progress emails, which was actually just updated and posted about here.
3) Are You A Licensed Legal Document Preparer and Insured?
Once you are comfortable about a lien service providers systems and compliance procedures, you next want to turn to something that is perhaps most important: Their credentials and security.
Here are some issues to keep in mind:
Are They Licensed?
The Legal Document Preparation and/or Software industry may not need a law license, but in some jurisdictions, there are laws that regulate these service providers. The state of California, for example, does specifically recognize “Legal Document Assistants,” and requires that they have a license to prepare legal forms for that state. There are also some regulations on how these companies may advertise themselves.
Zlien is a licensed Legal Document Assistant in the State of California (LDA-352). If your lien service company purports to prepare legal forms in the State of California without an LDA license, it is breaking the law. And it’s easy to figure out if the lien service is actually licensed. California statutes require LDAs to put their license number on their website in their footer.
I can give you an example of two companies who are purporting to prepare mechanic liens and preliminary notices in California without a license. LienItNow.com does not have their LDA license information in their website’s footer, and Tradition Notice Services (from Tradition Software) does not have their LDA license information in their website’s footer. A construction company ought be careful in using these services.
Are They Insured?
Mistakes happen. Period. There’s no such thing as a perfect anything. If you’re trusting your mechanic lien or bond claim rights to a lien service provider, you would be well served to see whether that company carriers errors and omissions insurance. If they carry errors and omissions insurance, it means that company is serious about their business (they invest in E&O Coverage) and serious about serving their clients (they won’t leave you hanging).
Not only does Zlien carry errors & omissions insurance, but we also publish our insurance policy’s declarations page on our website. Ask your lien service provider for their insurance information.
