Filing a mechanic’s lien can be the difference between collecting your debt, or not.  It’s as simple as that.  And if you’re doing work or supplying equipment or materials on a project that requires delivery of a preliminary notice, you’ll be left without lien rights unless you deliver that preliminary notice pretty immediately after first furnishing any labor or materials. Not only must the preliminary notice be timely, but it must also be correct.

Preparing and delivering your own notices could be a recipe for disaster.  Here are four reasons why its smart for your company to outsource its preliminary notice work.

Preliminary Notices Are Technical, With Lots of Room for Error

There is no single “preliminary notice” form that can be used in any state and any situation. What your notice must say can and will differ depending on where you’re working (i.e. state), what type of project you’re working on (i.e. private, state, federal) and what tier you fall.

State statutes can get very particular about the notice’s wording, oftentimes requiring the notices to contain specific language in a certain font-size, bold and/or in all caps.  Statutes are also picky about how notices must be sent, who they must be sent to, and how you will need to prove that you actually sent the notice along.

Take the state of California, for example.  There is a 20-day preliminary notice required on private construction projects in California that must contain a statement identical to the one required in California Civil Code §3084 in “10-point boldface type.” Plus, §3084(a)(6) also requires that the sending party maintain a “proof of service affidavit” and any records of mailing (i.e. the certified mail record).

If you wanted to send this notice yourself, you’d have to make sure you had the right form.  The California law change January 1, 2011, so be careful which sites you trust.  Then, you’d have to make sure you send it to the right people (the owner, the prime and the lender), that you send it in the right way, and that you maintain the correct proof of delivery (affidavit and mail record).

Whoa, that’s a lot of work, and as you can see, a lot of opportunity for error.

Outsourcing your preliminary notice work makes this entire process very simple.  Here at Zlien, for example, you simply give us the project details, and we make sure the appropriate form gets to the appropriate places in the appropriate way.  Everything you need to prove it was sent will be permanently saved for you on our online servers.

Time Spent Working On Preliminary Notices Is Time Wasted For Your Company

Your employees already have a lot to do, and the things they do make your company money.  Whether they are doing project management work, or accounting work…it’s highly unlikely that you have an employee 100% dedicated to sending preliminary notices.

Most of the time, if a company sends its preliminary notices at all, they will pick someone on their staff to prepare and send these notices.  Whenever a notice is required, this employee has to interrupt his or her workday to figure out which notice to send, how to send it, and then to put together the notice and mailing.  If the employee does it 100% correct (see above), they will spend at least 15-25 minutes for each notice.

Is it worth that amount of time?  Is it worth taking that employee away from things that make your company money for them to work on these technical and time consuming preliminary notices?

The answer is most certainly “no,” especially in light of how much outsourcing can save you in real money (see below.

Professional Quality Control

When you outsource your preliminary notice work, the company preparing your notices will likely not only be preparing and sending the form as required by applicable statutes, but they will also be checking the project data.

At Zlien, we very frequently find errors with the identified property owner or property address.  Sometimes, an address won’t have the direction (N, E, S, W) properly listed, or a property owner will just be incorrect (i.e. reference to individual rather than a business entity).

Instead of relying on an employee who only prepares and sends these notices sporadically, you’ll have a professional set of eyes taking a look at your data and checking it against available public records databases.  It could mean the difference between enforceable lien rights, and no lien rights at all.

For more information about how Zlien will research the property owner and legal property description with your order, see this post:  Let Us Research The Legal Property Description, Bond, Owner, County and More.

Finally, It Makes Financial Sense

Let’s look at how much it actually costs you to send your own preliminary notices.

First, you have the employee, whose time is not free.  Take an employee who gets paid $50,000 per year.  On average, a full-time employee works 2,000 hours, making a $50k per year employee compensated at a rate of $25.00 per hour.  A California 20-day preliminary notice must be sent to three parties, and will take between 45 minutes and 1 hr 15 minutes to properly send.  That’s between $18.75 and $31.25 per project.

Second, you need to pay for postage.  Certified mail return receipt requested is typically $5.85, which times three, equals $17.55.

Third, you can’t forget your paper and envelopes.  On average, this is $0.16 per notice, which is $0.48 for three notices.

So, considering only these three cost elements (there are more), you are going to spend between $36.78 and $49.28 per project to send preliminary notices.  If you outsource all of your notice work to Zlien, the most expensive plan offered charges you $28.00 per project to send all of your preliminary notices.

Proper preparation of the mechanic lien or preliminary notice form, however, is not as easy as it sounds. This isn’t because it takes a brilliant legal mind (or any legal mind) to understand how to fill in the blanks – that it certainly doesn’t – but because preparing these documents is time-consuming and requires strict adherence to certain procedures.

Let me offer you a few examples:

Legal Property Description Research

It’s nearly uniformly required across the country that mechanic liens identify the property being liened with a legal property description. The street address, in other words, is not enough. What is a legal property description?   We wrote an entire blog post on this subject, and you can read it here:  Identifying Property in a Mechanic’s Lien.

The definition of a legal property description is:

A legal description (also referred to as land description, property description, or land boundary description) is “a written statement recognized by law as to the definite location of a tract of land by reference to a survey, recorded map or adjoining property.” (from: Glossaries of BLM Surveying And Mapping Terms, Second Edition, 1980.)

To properly prepare that mechanic lien form (and even some preliminary notice forms), you need to research and find the legal property description. Hiring someone experienced in researching legal property locations is critical to properly identifying the property in your lien.

Getting The Form To The Right Places

Assuming you have properly filled out the form, the next step is getting the form filed and / or delivered to the right places, in the statutorily required way.  Here are some questions you will confront:

Does this document need to be filed?  If so, in which county office is it filed?
Most liens require filing, and most notices do not. However, there are exceptions to both. Where you file depends on the state’s requirements, with filings usually going to the county’s mortgage, auditor or recording offices.

Service Required After Filing The Lien?
Once the lien is filed, your task is not over. Most states require that the filed and stamped lien be served upon certain interested parties, including the property owner, the lender, the prime contractor, and/or those other parties up your contracting chain. Service can sometimes be through the mail, but other times require delivery by a courier or sheriff. Knowing what service is required and how it must be done is critical to correctly filing the lien.

How to send the preliminary notice?
Most states require that preliminary notices be sent in a certain way.  Most of the time, the notices are to be sent certified mail or certified mail with return receipt requested. But, there are always exceptions. Sometimes, the notice must be sent restricted delivery, sometimes registered mail, or sometimes by common courier (like FedEx) or hand-courier.

Do I Need to Keep Proof of Delivery?
Yes, and the type of proof varies.  The return receipt green card may be enough, but you may also need an affidavit of delivery. Check out this blog post on the topic: Strict Proof of Delivery May Be Required For Your Construction Notice.

Little Mistakes May Invalidate Your Lien

Unfortunately, since lien laws are very strictly construed, many states will consider a mechanic’s lien or preliminary notice invalid if there is some defect in how it is filled out (i.e. no legal property description) and how it is handled (i.e. filed in the wrong place, or delivered / served incorrectly).

The cost of these mistakes can be significant, and since there are so many moving parts in the filing or delivery of these lien and notice products, it’s a mistake to buy a simple do-it-yourself form and try to maneuver through these mazes of requirements.

Hiring a company like like Zlien (or a construction attorney), who is experienced and familiar with each state’s specific requirements, will reduce the likelihood of error for your company, and make sure your lien and notice rights are protected.

For more posts about this subject, take a look at the Tag “Why Us.”

Unfortunately for JE Dunn Construction Co., it seems someone may have really dropped the ball filing its $12.4 Million mechanics lien.   The developer of a stalled West Edge project in Kansas City now claims the construction company’s mega-lien has a mistake that invalidates it.

When it comes to filing a mechanics lien, sometimes you only get one chance to get it right. Depending on the merit of  the developer’s claim, JE Dunn Construction Co. may have gotten a very frustrating and expensive lesson about the technical nature of mechanics liens.

From the press, it looks like the lien would have converted the debt from an unsecured claim into a secured claim in the bankruptcy proceedings pending on the West Edge project.   Without the lien, the claim falls to an unsecured one, making collection a lot less likely.  That makes this lien mistake one of the country’s most expensive.

What Could Have Went Wrong?

What could have went wrong with the mechanics lien, you ask?   What kind of mistake could invalidate such a big claim?

Funny enough, the biggest claims in the world can be invalidated by just the simplest and most technical oversight.  Here are examples of common filing errors that could have cost JE Dunn Construction Co. its secured claim:

• Poorly Identifying the Property: Most states require the use of a legal property description, and others require specific descriptions of the property.   In every state, the requirement is technical, and a lien can be invalidated because of an inadequate description.  (See article about describing properties on mechanic liens).
• Signing Mistakes: Mechanic liens must be signed in a particular way.   Some states require they be notarized, some states require a verification with specific and statutory language.  The smallest waiver from these requirements can result in the mechanics lien being invalidated.  (See article on Washington lien invalidated because of verification error)
• Not Sending Notice:   Some states require notice when you begin work.  Some states require notice immediately before filing a mechanics lien.  Some states require notice immediately after filing a lien.   Failing to deliver this notice, can forfeit your mechanic lien rights.  (See blog posts about preliminary and other notices)

Who is Filing Your Mechanics Lien?

Zlien is not a law firm, and let us be the first to tell you that if you are about to file a $12.4 Million mechanics lien, you have no business filing it without the counsel of a qualified and experienced construction attorney.   That is big money, and it’s certainly worth spending a few thousand dollars on counseling.

However, there are occasions when it doesn’t make financial or practical sense to hire an attorney to file a mechanic’s lien.  That’s when we really shine.   And some law firms - like this one in Georgia – have even recommended using a lien service to file a construction lien in the right circumstances.

What’s great about our service?   Take a look at this page which explains why you trust choose us to file your mechanics lien.

Our service is licensed, insured, bonded and experienced.

Zlien leads its industry in providing a simple and transparent pricing structure.

Here are two features that distinguish us from the competition:

(1)  Our fees are published for you to see, and each product has a single flat fee.  This flat fee includes it all – postage, service, delivery, storage of all deliverables online, etc.    You’ll never be charged any other amount because of fine print.

(2)  Each of our products has a flat fee, and it applies across the country.   A mechanic lien cost $295 whether its in Louisiana, Washington, Maine, Georgia, Texas or New York, or anywhere else for that matter.

The more you file, the cheaper we are.  You can view our pricing structure on the Pricing Page.  Or, check out our Pricing Table below:

All prices include:

• Filing Fees and Postage / Delivery Costs
• Property research to obtain legal property description
• Property research to obtain public record owner of property
• Free tracking of your orders on our Lien Pilot
• Free storage of all order documents and information on the Lien Pilot
• Calculate deadlines through the Lien Pilot associated with filing / delivery of your document

Zlien understands the mechanics of getting paid within the construction industry, and that full and final payment is a challenging aspect of your business.

Zlien’s full service guarantee offers peace of mind.

In the event, your company is paid before the lien document is recorded within the county, we will refund your money! Zlien loves to hear about you getting paid.

Therefore, you can make the deal with Zlien and if your deal produces payment before the lien is recorded……that’s a good deal for us, too.

Place the order. Make payment happen.

Nearly every document carries certain expenses.   A mechanics lien, for example, has a filing fee ($30-100), the cost of delivery ($5-40), and the cost of delivering notices of the lien to one, two or more parties ($5-25).    Notices must be delivered according to statutory specifications, which can cost between $5-10 if sent via ordinary mail, or $30-60 if served personally.

Zlien’s flat fee pricing is all-inclusive, meaning you pay our low flat fee for a document and nothing else.   See our detailed pricing schedule here.

In addition to covering the expenses of each filing, outsourcing your lien, notice and other filing requirements to Zlien saves your company time, and provides your company with an independent department that can focus exclusively on your lien and notice needs.

Get started now.

Now, I’m the first to tell you that filing a mechanics lien is one of the best methods of collecting construction debt, and it’s certainly important to think about filing a construction lien as soon as you’re faced with a non-paying customer. But, being prepared and qualified to file a lien takes discipline.

If we’ve said it once, we’ve said it a thousand times….lien laws are complex and hyper-technical.   Across the country, lien laws protect contractors and suppliers by providing them the right to lien non-paying projects.   Likewise, though, the laws protect property owners to prevent owners from paying for services twice, or having an improper lien filed against its property.

So, why is filing a mechanics lien a discipline?   Because it starts the moment you sign your contract.

• In many (not all) states, you can actually waive your right to lien before ever providing any services or materials.  If you’re in one of these states, it’s important to review your contract for this type of waiver language.

• Many states require contractors and/or suppliers to deliver a Preliminary Notice to the property owner (“NTO”) before furnishing labor or materials.  Failure to deliver notice, and to deliver it properly, may result in the forfeiting of lien rights.

• Many states require contractors and/or suppliers to deliver a “Notice of Intent to Lien” or similar instrument a certain number of days after accounts receivables become due, or a certain number of days before filing a lien.   Failure to deliver this notice, and to deliver it properly, may result in the forfeiting of lien rights.   (Read about the differences between Preliminary Notices and Notices of Intent here).

• Liens must be filed within a certain time period, and each state is absolutely different.   (Get state-by-state lien deadlines here).   Liens must be filed timely, or they are likely void.

Zlien Helps Your Company Be Disciplined About Liens

Zlien is more than a simple notice and lien filing company (although we’re darn good at this, too).  We were founded to help clear the air concerning the complex lien and notice requirements across the nation.

Here’s how we do it:

• Our Lien Wizard guides you through the notice and lien requirements associated with your role in the project, and the state the project is located.   You tell the Wizard some key information, and it pulls the notice and lien requirements from its database.   From there, you can order the products / documents that are relevant to what you and the law requires.  (Watch a Video on how our Lien Wizard Guides You Through Notice and Lien Requirements).

• We provide you with Free Lien Law Punchlists.   This is a summary of the basic notice and lien requirements of each state.

• The Lien Pilot helps you calculate project deadlines.   For free, you can manage your project data, contacts and important dates.   The Lien Pilot calculates applicable deadlines and filing requirements, and prompts you when they are approaching.

• We do the work for you.  If you don’t want to prepare and send the documents out yourself, or if you just have too many to send and want to focus on running your construction or supply business… Zlien will do all the work for you.  For notices, we’ll print them, mail them, track them, and store proof of their delivery on our secure servers.  For liens and other filed documents, we’ll prepare them, have them filed, and deliver notice to the project’s relevant contacts.

You can learn about the mechanics of filing a mechanics lien from this great Avvo.com article:  Filing a Mechanics Lien in New York.

So, maybe you’ve purchased a lien form online or at your local Office Depot, or even downloaded the form on our website for free (its right here).   Filling it out and filing at the county recorder’s office is quite simple, and may not be too much trouble.   But, are you then prepared to properly deliver it to all the required parties?  And to execute an affidavit of delivery?  And to go back to the recorder and timely file your proof of delivery?

The time and detail required for these tasks can be overbearing.

And sometimes, as was indicated in the post about South Carolina’s service procedures, the process can be complicated.

At Zlien, we file liens across the country day-in and day-out.  In New York, the cost of your lien filing includes delivery to all the required parties, maintaining proof of the delivery, and filing the proof of delivery with the recorder’s office.

You give us the key information, and we do the rest.

Plus, our industry-leading lien management and compliance system provides your company with the following at no charge:

• Manage project data and project contacts in web-based Lien Pilot
• Calculate lien deadlines
• Read the notice and lien requirements for your specific project
• Get lien law alerts when laws change in the states where you work
• Your lien documents and proof of service are stored online in your free account.

We Do All The Work: You go to our Wizard and give us the project information.   From there, Zlien will get the legal property description, prepare the lien or other form, file the document with the proper recorder and send out notices of the filing.

You can also watch videos about how the Lien Pilot and Lien Wizard works here.

Unique Online Access:   Unlike any other lien filing service in the nation, Zlien gives our clients a unique Web 2.0 control panel.   From the client portal – which we call the Lien Pilot – clients can review order details, check on order status, view and download files associated with the order, and even place new orders for the same or new projects.

You can also watch videos about how the Lien Pilot and Lien Wizard works here.

We’re Licensed, Bonded, Insured & Experienced: This was the subject of an entire blog post in and of itself, and you can take a look at it here.

The Court of Appeals, Division 1, out in Washington state, has refused to deem a construction lien as frivolous based upon the complexity of the construction contract at dispute. The court in SD Deacon Corp. of Washington v. Gaston Bros. Excavating, Inc., decided back in May of this year, that the state’s “frivilous lien” statute, coded under RCW 60.04.081, requires a more in-depth analysis of factual circumstances surrounding the substance of the contract and the lien.

The court in SD Deacon further reasoned that a court can only evaluate in a frivolous lien proceeding are, by way of example, whether the lien was properly filed, signed by the proper party, properly served, and meets the statutory form requirements. Issues of substance of the lien (i.e. the contract amount, amount due or change orders) are issues which require more substantive proceedings to analyze factual circumstances.

Because the frivolous lien procedure codified in RCW 60.04.081 does not provide for such proceedings, a party seeking to extinguish a lien filing will be unsuccessful in attempting to show to the court that the lien was frivolous.

Essentially, the court’s new rule is that the “lien must be so devoid of merit that the claim has no possibility of succeeding” and that “there must be findings supporting the conclusion that the lien is invalid beyond legitimate dispute.”

The Court’s ruling provides some hope for “fringe” contractors who’s claims hold some element of uncertainty, but who desperately need the security provided by a lien in order to collect payment from an uphill contractor or owner.

The frivolous lien statute was enacted to prevent fraudulent claims against contractors, by awarding successful parties attorneys fees. The ruling in the case shows that the award of fees will not be granted unless your lien fails to meet statutory form requirements.

Zlien, Inc. has the knowledge and experience to meet these stringent requirements. Let us help you ensure your lien’s success!