Why You Should be Ecstatic to Receive a Preliminary Notice

There are plenty of articles already available in the Construction Payment Blog detailing why parties on a construction project should always send preliminary notices on their projects. Always.

This article focuses on the other end of the spectrum: why property owners, general contractors, and every other party should be happy to receive these notices, and exactly what benefits they provide.

The lien process was created to keep all parties that provide permanent improvement to a property in a secured position. The idea is that if a party improves a property they are provided an interest in the property equal to the amount that they are owed. And, if they are not paid for that improvement, they can recover the amount due from the property itself.

In order to ensure this process is fair for everyone, and not favoring one party over another, a system of checks and balances was put into place. Two crucial parts to that system are preliminary notices and lien waivers. Below are a list of reasons why the preliminary notice is the crucial first step in ensuring fair payment for everyone and why general contractors should be happy to receive them.

Many Reasons Receiving Notice is Beneficial Relate to Visibility

The overarching reason as to why you should be ecstatic to receive preliminary notices from parties working on your project is that these notices provide you with a very important asset: Visibility.

Visibility is essential to running a successful and seamless project for multiple reasons:

1. Knowing exactly who is working on your projects allows you to track the flow of payment down the chain. In turn, this will allow you to track lien waivers for all parties. Securing lien waivers from all parties below you will allow you to protect the project and your customer from having a lien filed.
2. The ability to keep a project free of liens and payment issues can is one mark of true professional (even if a little bit of luck may sometimes be needed). Your customer expects no problems to arise in this area and being able to deliver will only provide you with a happy customer in the end.
3. The fact that parties down the chain are sending preliminary notices shows that they have bought into the fair payment system designed by the law. They are showing this by giving you a heads up that they are working on your project so that your job can be easier. It is certainly a plus to know that the subcontractors and suppliers working on your project are looking at this as a team-effort and are not just in it for themselves.
4. See reason #3 above. Not only can you have peace of mind knowing that your project is being treated with care, but you can feel assured that those doing the work below you are professional and organized parties. If they are aware of this process then they have done their research, then it is a good indication that they have their ducks in a row in other aspects of the job as well.
5. Construction is a relationship business. By knowing exactly who is on your project, you now have the ability to develop a relationship with them. It goes without saying that by expanding your network, you are likely also expanding the amount of business you may receive.

The above mentioned reasons are just a few of the many benefits that result from treating the preliminary notice and lien waiver process with a fair mind. This fairer and more organized process is a win-win situation, and the future of the construction industry. Now is the time to get onboard.

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