As a contractor, subcontractor or even the company that provides the materials for construction projects, you rely quite a bit on word-of-mouth and recommendation from your clients in order to build your business and secure a constant stream of projects. It is normal to want to do anything in your power to minimize conflict between you and the people who hire you.
Upon initial consideration, the idea of filing a Preliminary 20-Day Notice may seem like an aggressive tactic that could alienate your clients and customers. After all, it is the first step in securing a mechanic’s lien on a property.
However, provided that you employ this tactic for each and every project you undertake, you not only protect your company’s bottom line but also prevent clients from feeling like you have specifically targeted them when you do file such paperwork.
The Preliminary 20-Day Notice can be part of your standard practices
Contractors and other construction professionals often only require a down payment before they begin a project, with the client often paying the remainder of the balance after the completion of the work. When you negotiate the exact terms of that initial payment and the payment of the balance with your clients, you can simply inform them that it is standard procedure for your company to file a Preliminary 20-Day Notice when beginning a new project.
If your clients have questions, you can explain how the law in California works. As a construction professional waiting for payment, you must have a Preliminary 20-Day Notice on record in order to secure a mechanic’s lien against the property if they refuse to pay after you complete the work or deliver the supplies.
In most circumstances, customers will understand this standard practice is merely a way to protect your business and will not worry too much about that particular term for the project. Those who get very upset about the potential for a Preliminary 20-Day Notice could already have the intention of not fully paying your company for one questionable reason or another.
A mechanic’s lien is the best way to guarantee payment on your work
When you invest thousands of dollars worth of time and materials to improve the value of someone else’s property, you deserve fair and adequate compensation for your labor. In the event that a customer attempts to avoid paying as promised for work already performed or supplies already delivered, a Preliminary 20-Day Notice will make it easier for you to secure a mechanic’s lien.
That mechanic’s lien will prevent the property owner from selling or refinancing the property without paying you first. Ideally, you will never need to secure or enforce a lien. However, as it is impossible to predict the way that people will behave, executing a Preliminary 20-Day Notice as part of each new client intake can protect your business and its profit margins.