In business and in life, the devil is often in the details. When it comes to getting paid on a construction project, you may just find Lucifer himself hanging out right where all of the other rules, requirements, and nit-picky details exist to make life even more challenging for construction businesses.
Mechanics liens and bond claims are two very powerful legal tools that construction industry participants can use to secure their payments on their projects, virtually guaranteeing that these companies get paid the money they’ve earned.
But, as we’ve written about in the past, there’s a virtual minefield of rules, requirements, deadlines, and other regulations that must be navigated in order to file a valid, enforceable mechanics lien. Sometimes, these requirements are clearly big deals. But other times, messing up one of these requirements can seem like a, “you gotta be kidding me!” kind of moment. As in, “you’re gonna reject my lien claim because of that?? You gotta be kidding me!!“
Case in point: getting your own company’s name wrong on your lien claim. Before you dismiss this as something that could never happen to you, read on to hear how it’s happened to other construction companies just like yours.
Getting Your Own Company’s Name Wrong
Incorrect Business Type
Imagine the following scenario: you work for a plumbing subcontractor named Totally Tubular Pipes, or TTP for short. TTP ends up on a project where they have a payment issue – they’ve completed their work according to the letter of the contract, but their customer won’t pay.
TTP manages their lien rights on all of their projects, and so after sending preliminary notice, and some time later, a notice of intent to lien, they decided to go ahead and file a mechanics lien before the deadline runs out.
In the space where you identify yourself as the claimant on the lien form, the person filling out the form for TTP writes in “Totally Tubular Pipes, Inc.” Sounds good, right? Wrong!
Unbeknownst to the poor person filling out the form, TTP is not a corporation, it’s a limited liability company. Therefore, the correct legal name for TTP is not Totally Tubular Pipes, Inc., it’s Totally Tubular Pipes, LLC. And in this case, that little, nit-picky mistake cost them because their mechanics lien was rejected.
The following table shows some of the many ways that required information on a mechanics lien claim can be incorrect. zlien has an entire team – JobSight – that’s dedicated to proactively correcting these errors for our customers.
Sole Proprietorships and DBAs
Are you a sole proprietor? Did you know that means that you do not actually have a company? Surprising, huh?
This is because sole proprietors are really individuals doing business under a trade name. So, let’s change up the TTP example from above a little bit to illustrate this scenario.
Let’s assume that TTP is not incorporated but is instead owned by a guy named “Rusty Pipes.” In this case, the actual, legal name of TTP is, “Rusty Pipes doing business as Totally Tubular Pipes.” (‘Doing business as’ is sometimes written as “d/b/a”.) And yes, it matters that the correct name is used!
Not only do you want to be careful with this issue, you also must be consistent as we’ll discuss in the next section.
This is another seemingly infinitesimal issue that can come back to bite a contractor in a big way. Using our old friend TTP, imagine this scenario: when good ‘ole Rusty first applied for his contractor’s license, he called his business “Tubular Pipes.” But as the years went on, Rusty decided that his little plumbing business needed a little more pizazz.
And so one day, he started calling the business Totally Tubular Pipes instead of the original. However, even though Rusty always referred to his company in conversation with it’s snazzier new name, he failed to update the name on all of his other important business documents, including his contractor’s license.
When it came time to file that lien, he wrote in “Totally Tubular Pipes” even though the name on his license just said Tubular Pipes. No biggie, right? Wrong! The lien was rejected!