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Collecting on a Project Starts When the Contract is Signed
When you sign a contract with a client everyone is happy, but it may not always remain that way, that is why you need to think about collection as soon as the contract is signed. Hope for the best but prepare for the worst. You need to get a Preliminary 20 day Notice sent out as soon as the Contract is Signed. If you can’t find the form call our office and we will provide one. Preliminary Notices are required by all subcontractors and if there is a lender or you are contracting with someone other than the owner of the real property (i.e. a tenant) they are required for Prime or General Contractors. The form must contain the name of the owner or reputed owner, the contractor (if you are a subcontractor) who you are contracting with, and the name of any construction lender. The form must be mailed certified return receipt requested to each of the parties listed or personally delivered with proof of delivery. The form must contain a general description of the work you are performing and the approximate dollar amount of the work to be performed. Ask for this information immediately after the contract is signed, the owner and/or general/prime contractor is required to provide it.
Unless the Preliminary 20 day Notice is served you will not be able to file a mechanic’s lien or serve a stop notice on the lender if you are not paid for work or material you performed or supplied to the Project. While the paperwork is a hassle it is required so you have lien or stop payment rights to make sure you are paid.