Preliminary Notices are proven to reduce risk & speed up payment - Watch the video to learn about prelims and send one for free at: www.levelset.c...
In this video, we’ll answer lots of questions about Preliminary Notices (also called Pre-lien, Preliminary Lien, Notice to Owner, 20-day Notice or Monthly Notice) including:
- What is a Preliminary Notice? (0:26)
- Why is getting paid so hard in construction? (0:57)
- When to send Preliminary Notices? (4:24)
- Who should send Preliminary Notices? (5:20)
- What happens when you send Preliminary Notices? (6:07)
- What happens when you don’t send Preliminary Notices? (7:13)
- Common reasons why Preliminary Notices aren’t sent on a construction project. (8:30)
- What does a Preliminary Notice form look like? (4:50)
[Best of transcript here]
-What is a Preliminary Notice?
Matt: Preliminary Notices are called different things depending on what state you're in. People call them pre-liens, notice to owner, notice of furnishing, 20 day notice. We don't really like the word Pre-lien in terms of a notice because that kind of draws in the idea that a lien is going to be filed anyway and Preliminary Notices aren't that; they're a friendlier document and they're just meant to communicate.
- Why is getting paid so hard in construction?
Matt: There's a lot of different people trying to get paid and payment must go from one party to the next party to the next party all the way down the line without problems in order for everyone to get paid and paid on time.
- When to send Preliminary Notices?
Matt: In most states, the Preliminary Notice requirements are done at some point near the first month of the project. They are most effective when they're sent early on in a job.
- Who should send Preliminary Notices?
Piper: My answer is always everyone. Over 85% of our customers are sending these Preliminary Notices on every job.
- What happens when you send Preliminary Notices?
Matt: When businesses begin sending Preliminary Notices, some funny things start happening. Their payment process speeds up all on its own. It's funny whenever you actually have preserved the right for later on, you don't have to use that right as often.
- What happens when you don’t send Preliminary Notices?
Matt: If there's not a payment problem on the job, you may be okay without sending your Preliminary Notice. But also whenever you don't send this Preliminary Notice, other construction businesses don't know that you're on the job. If the problems do arise later on in the job, your recovery options, they change dramatically. If you haven't sent that notice and you can't file a lien, the recovery process might be more legal oriented.
- Common reasons why Preliminary Notices aren’t sent on a construction project.
Piper: The first is that they are nervous to send them to their customers because they think they're going to damage their relationships.
Matt: That's a notion that we kind of would like to dispel to some degree is that you're sending me a Preliminary Notice, you don't trust me? It's not a trust factor. It's just, we're all working together, this document's required. If there is trust here, that I'm going to do the job, I'm going to, you know, stay within my rights and I'm going to act responsibly whenever it comes time for payment. And it's just a reassurance of that.
Piper: The second misconception I hear a lot is that I only need to send this Preliminary Notice on problem projects. And that's not true.
Matt: It’s not. In fact, when a problem occurs, you may already be too late to reap the benefits of sending that preliminary notice. It should really just be that at the beginning of every job, a Preliminary Notice is sent.
Piper: And lastly something we hear a lot is, I don't have time to send these notices, which we understand you guys are very busy. That's where we come in.
For free state-specific resources and Preliminary Notice forms that help you get paid faster check out www.levelset.c....
Over 500,000 contractors and suppliers connect on Levelset’s cloud-based platform to make payment processes stress-free. Users easily exchange payment documents like Lien Waivers, Pay Applications, and Preliminary Notices, they see a complete picture of who is on their job, and are empowered with the resources and knowledge they need to be confident in payment. The results are faster payments and fewer surprises.
Levelset is venture-backed by S3 Ventures, Altos Ventures, and Brick & Mortar Ventures. Headquartered in New Orleans with offices in Austin and Cairo, Egypt, Levelset employs more than 150 people. For more information about Levelset, visit levelset.com or call 866-720-5436.
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