If you haven’t, you likely have serious collection issues on unpaid balances owed to you.
Lien leverage is your most valuable tool in getting paid by customers who don’t want to pay or adjuster’s who fail to pay you promptly.
How does it work?
Understand your State’s lien laws. Most states have a 60 to 90-day lien limit, meaning a contractor has 60 days, for example, after their last work performed on-site to file a lien against the property.
How do you do it?
15 – 20 days before your lien limit expires, send a Demand Notice letter to your customer detailing the amount owed and stating your intent to file a Lien if necessary. Give 5 business days to pay the amount due. If payment isn’tt made with the 5 days, prepare and send the Notice to Lien and Property Lien to the customer (it must be notarized, so having an office person qualified as a Notary is helpful). The Notice gives 10 days to cure the collection, and if after the time expires, file the Lien with the County Recorder before the expiration date.
Most customers hate the idea of a Lien and will do whatever they can to avoid it. Once you file the Lien, an attorney can begin foreclosure to force payment.
Contractors, you must understand you have no power and authority to force insurance companies to pay your invoice promptly. They can take as long as they want. Contractors frequently tell me that the adjuster won’t even return their calls once they have completed work.
But hear this – your customer is their customer, and as a policyholder, your customer can get through to their adjuster any time they want. So, put the responsibility where it belongs, and that’s on your customer. It’s not the carrier who owes your payment; it is your customer who owes you! If they face a potential Lien on their property, they will pressure the carrier to get their act together and close the claim and get you paid!
When do you use the Lien?
Anytime your Lien rights are about to expire.
You may be working with a very kind and cooperative customer who wants you paid. FILE THE LIEN!
You may have an upset customer who wants you to lower your bill before they pay. FILE THE LIEN!
You may have an insurance company who either disputes your bill or is not responsive to paying you promptly. FILE THE LIEN!
Under any and all circumstances, don’t let your Lien Rights expire. FILE THE LIEN!
Once your rights expire, the only recourse left is in the Courts. That does get expensive, so you want to use every means available to you before resorting to the Courts. FILE THE LIEN!
If you have a customer who is stubborn and non-communicative or uncooperative. Don’t wait, FILE THE LIEN!
The process is inexpensive. It costs nothing to fill out forms and mail them. Filing the Lien with the County Recorder costs as little as $25 in many municipalities. There is no significant expense until an attorney is used to either begin foreclosure or who files a court action. In the end, this may be your only recourse to get paid without going to Court.
The Lien provides the very best assurance that you will be paid, and in many cases, paid sooner, so don’t let your Lien Rights lapse without using them! FILE THE LIEN!