How to secure your lien and bond claim rights with Ariela Wagner
This week, special guest Ariela Wagner from SunRay Construction Solutions joins us to talk about liens, bonds, and getting paid. Ariela shares some amazing tips to help you confidently manage your lien and bond claim rights and avoid costly mistakes.
Topics we cover in this episode include:
- Preliminary Notice Requirements
- Lien differences across state lines
- Federal vs. State Requirements
- Working with a company like SunRay to manage lien and bond claim rights
- How to avoid waiving your lien rights
- The power of communication and documentation
LINKS
Visit https://SunRayNotice.com to learn more about Ariela and the services her company offers.
Visit https://www.sunraynotice.com/resources to access the 50 States Lien Laws and other free resources.
Join the conversation on our LinkedIn page: https://www.linkedin.com/company/contractor-success-forum
FIND US ONLINE
Rob Williams, Profit Strategist | IronGateESS.com
Wade Carpenter, CPA, CGMA | CarpenterCPAs.com
Stephen Brown, Bonding Expert | McWins.com
TRANSCRIPT
[00:00:00] Rob Williams: Welcome to the Contractor Success Forum. Today we’re discussing securing your lien bond and claim rights for your cashflow in a recession. And who we have with us today is Ariela Wagner. And she is absolutely amazing.
I was reading all about her and she has a software company that she has actually started and developed, and they have got over $10 billion in receivables that they have collected for people. It’s absolutely amazing.
We are here at the Contractor Success Forum to discuss how to run a more profitable, successful construction business. And so we’re so happy to have Ariela with us. And we have Stephen Brown and Wade Carpenter with us also. And I’m Rob Williams. And welcome Ariela. So this is great guys. I can’t believe what a great guest we have.
[00:00:56] Ariela Wagner: Thank you so much. I do wanna make a small little correction. Sunrise secures $10 billion annually, over 10 billion. We actually don’t collect the $10 billion annually. Just wanna make sure that little piece is said.
[00:01:08] Wade Carpenter: I also wanted to point out when we had Alex Barthet on the show not too many episodes ago, and I know he introduced us to Ariela and he said, you know, she’s not a lawyer, but he’d put you up against a lot of lawyers he knows as far as, you know, this topic, and especially if they don’t do construction.
So we’ve got a very knowledgeable guest with us today.
[00:01:29] Ariela Wagner: I’m very honored that he said that, and I’m certainly honored that I’m here with the Contractor Success Forum, because this is a really important topic.
[00:01:37] Rob Williams: Yeah, because with us, you know, with our bonding agent that we have and our two cash flow people here, cash flow and getting that is just absolutely so important to a construction company, especially right now. Because as we’re going into this recession and we have a hurricane, we have these timely things that we’re discussing with her.
So many of my people that I’m working with right now, the main issue is huge, outstanding, just out of the normal receivables.
[00:02:08] Ariela Wagner: So, I thought what would be fabulous is if we can discuss some of the key points and how we can help contractors, subcontractors, and even if there are some suppliers listening to us now, what are some key important parts to their business practices, especially now more than ever?
We at SunRay have seen an increase of 79% in liens. Liens meaning, just to make sure everyone understands, generally speaking, a lien is filed or recorded when you’re not getting paid. Which is a major issue, clearly. So I think going back into the steps of why it’s so important to follow, especially going into the last quarter of this year, people you’ve had relationships with. What are the processes as a contractor or subcontractor, or supplier that I should be following?
And I think that the first part of it is we have to differentiate contractors’ contracts, which I’m gonna leave. Alex Barthet and Allison Schneider and all the incredible attorneys that I work with, I’ll leave them to go over contract terms. But there are some very important terms that should be in contracts, especially today for subcontractors and contractors, which are, you know, material price escalation. Stop work. Force majeure. There’s other pieces there. Again, I want you guys to speak, those who are listening, to those experts, those extraordinary attorneys throughout the United States that I’ve built relationships with over the last 16 years of being in this business.
[00:03:38] Rob Williams: We have an episode just a few episodes before. So if you guys want some of that legal term, we’ve got Alex, a couple of episodes before this, so rewind a little bit and listen to that one. So, yeah, thanks for pointing that out.
The importance of your credit applications
[00:03:51] Ariela Wagner: From my perspective what’s really important is your credit applications and understanding what should be going into a credit application. And since this is a national podcast, there are different rules in every single state. California has their own rules that you have to be incredibly cautious of.
But the first part is your credit applications. Are you setting up your jobs with people that are going to you know, are they going to pay you back? You need to do your research on it, just not willy-nilly.
The second part and then we’ll go into these, each of them, you know, later. And I’d love to hear from the other experts, the CPAs, the bonding companies, your feedback, which, what you’ve experienced as well.
Preliminary Notice Requirements
[00:04:32] Ariela Wagner: Securing your money. How in the world do you secure your money? And a lot of people think, oh, I’m not gonna send a preliminary notice. So almost every single state in the United States of America has a preliminary notice requirement. Which means if you are a general contractor and you hire a sub, so this is for those subcontractors out there. You’re a subcontractor and you’re not in privity with the owner of the property, meaning you don’t have a direct agreement with them, you need to send what’s called a preliminary notice.
So every single state has a different name. In Texas, It’s a third month fund shopping notice, in Florida it’s called a Notice to Owner Notice to Contractor. In Ohio it’s called a Notice of Furnishing. And every single state has a different time requirement. So that would be another piece. But again, if you don’t send it within a specified period of time, then unfortunately you may lose your lien rights.
[00:05:30] Rob Williams: What’s so interesting about that is we’ve had this in the conversations and some people don’t know exactly, not only the timing of it, but what is the situation. Because I don’t think you send it on every single invoice you have, do you?
[00:05:44] Ariela Wagner: I love–
[00:05:44] Rob Williams: –it when you just don’t get paid, I think, you know.
[00:05:47] Ariela Wagner: That is such a great question, and I think it’s an internal process. That is such a great question. So why would you send this preliminary notice? Depending on your company, you might wanna send it if you are, for example, if the project is over $10,000. You are gonna secure your money.
Generally speaking, these notices are very economical, so we’re looking at a $36 notice to secure your money. It’s almost silly not to do, but a lot of people have concerns. Wait a second. Is this is a part of the cost of the project? So A, do I have a do not notice customer list? B, should I be sending notices on projects over 5,000?
And then I have the disclaimer that I’ve actually seen in my business. I just had a phone call from a man literally last week. Ariela, he’s been my best friend since high school and he’s not paying me. And I’m like, look, I’m really sorry this is happening. This is absolutely horrible. And now he, unfortunately, because he secured his lien rights, he has a right to lien the property. So those are the, those situations where you think you’re working with someone incredible.
I mean, look at companies in general these days. You know, you think it’s a healthy, wonderful, strong company three months later– I mean, I think that the CPAs could speak about this– and then you’re like, wait a second. They’re filing chapter 11? What, what’s going on? So you wanna be really careful. So be careful with your “do not notice” customer list.
And the second part is you don’t know if the project, it may start off at $5,000, but very quickly we have change orders. And those change orders may add up to $55,000 and six months later you’re like, wait a second, I haven’t been paid in 90 days. What do you do? The only rights you have at that point, if it’s a private project that’s not bonded, is of course to possibly sue on your contract.
So you wanna have as much leverage on getting paid.
[00:07:56] Rob Williams: Yeah.
[00:07:57] Ariela Wagner: Why they’re so powerful. Yeah.
Fear around securing your money
[00:07:59] Rob Williams: Let’s just say I am framing this project for a general contractor. And I do this bid, you know, do I turn this in now? Do I wait till the end of the month when he’s supposed to pay me, and then turn that in? And, say I’m trying to get in good with this general contractor, because I want future jobs.
When we file this, is the owner gonna say, oh boy this was just filed on me. And so am I afraid as a framer that he may not use me again? I think these are probably a lot of the things going through these subcontractors’ heads, you know, am I causing some ill will? Or does this happen on a regular basis? Can you talk about that?
[00:08:40] Ariela Wagner: Absolutely. So I think that what happens a lot of the time are smaller subcontractors have this fear. And that fear is generally not warranted. So that fear making business decisions out of an irrational, illogical part of the brain. Especially now, I would tell every single subcontractor, it is essential to put together a credit and collections process.
My question is do you feel badly when you’re not paid? Because they’re not gonna feel badly when the money’s in their wallet. So what’s important is if there is some type of fear, what they need to say is that as a part of their company’s credit and collections policies and procedures, they send preliminary notice. And this preliminary notice allows everyone to know on the project that they are furnishing labor and material to the project, and it’s not due to the lack of the integrity of the general contractor or the owner. Things happen on projects.
Owners, sadly, I, another situation where owners, unfortunately, a husband and wife, they get a divorce, their assets are frozen. What do you do? It’s not the general contractor’s fault all the time, as many people think. It could be the owner.
Do not make decisions based on fear. Make decisions that, five months from now as a business owner, where am I gonna protect my own business? How am I gonna protect my own business? And that’s what’s so important about being proactive and sending these preliminary notices.
Lien differences across state lines
[00:10:24] Wade Carpenter: Some of the things you brought up about the different states, you know, I’m in Atlanta, these guys are in Tennessee, and you’re in Florida. But a lot of my contractors here cross state lines. And they don’t know the lien rights and those kind of things, differences.
As well as when they jump into, say, federal contracting and they get under Miller Act stuff. So can you just talk to us a little bit about the differences? And I know you can’t generalize, but I do see that as a problem for a lot of contractors is they cross state lines and they don’t know the laws.
[00:10:55] Ariela Wagner: That is a really great question. The first thing that every contractor that crosses state lines needs to do is to confirm if the work they are doing requires them to be licensed in that state. That’s very important. If they’re required to be licensed in that state, and the vast majority of time they are required to be licensed, they will not have lien rights.
Okay, so that’s number one. And how do you find that out? That’s actually simple. SunRay works with attorneys. You can also search online through that the statutes, certain things, if they’re required to be licensed or not.
The second part of it is SunRay has a wonderful area on our website. Go to SunRayNotice.com and you click on 50 States Lien Laws, and it will show you each and every law for that state in a very simple format. If you’re a general Contractor subcontractor or a supplier. And that subcontractor goes sub subcontractor. And like I said, most states require a preliminary notice.
And I’m gonna use the word preliminary notice as the first prerequisite to securing your lien rights. But in Tennessee, interestingly enough, you have something called a notice of nonpayment, and that is not tricky at all. It’s only tricky when you don’t know something. If you throw me on top of a roof, I probably will fall off. But yeah, you could go to the website and it will give you your lien and bond claim rules.
But going into that, if you know you’re gonna go into that state, be proactive. Look up your laws. Make sure that you are following these processes because you don’t wanna go across state lines, and obviously you have your hotels, you have your subs, you have all this money you’re putting out there at the very beginning, you wanna secure your money. So definitely going on to those websites. Our website could be extremely helpful.
Federal vs. State Requirements
[00:12:49] Ariela Wagner: The second part is for Miller Act. Miller Act is federal. I always think of like the movie scene when they go, oh, is this state or federal? So what does that mean? States are your states. When we’re talking about Tennessee and Florida and Georgia and California. Those states have their own laws. Federal is going to cover the whole United States. In fact, I think a lot of people who cross lines wish that Federal was just like state laws because federal is easy.
There is no preliminary notice requirement at all. That’s number one. Number two, if it is a federal project, and I like, if you’re listening to this, please make sure you write this down. Pull over and stop if you’re in your car. If it’s over a hundred thousand dollars– and this is where our bonding guru and genius can speak on this topic– you’re required to carry a bond. Now, in your process, to all the subcontractors and suppliers listening to this, you want to ask for a copy of the bond. It should be part of your process and you shouldn’t feel badly for asking for a copy. So that’s really as simple as it is.
[00:14:04] Wade Carpenter: Stephen, you’re our federal contracting genius. Comments?
[00:14:08] Stephen Brown: Well, from my perspective, the bond is tied to the contract. So in order to collect money that’s owed you, it depends on what your contract says, and the federal government has their own rules and information. And Ariela, the Miller Act, you may not know this is named after Elvis Miller, Elvis from Memphis. We love him. Elvis Miller was from right over here in Searcy, Arkansas. He was a great man, and there would be no bond business if there wasn’t for him because back in the old days, subcontractors and laborers were just not getting paid. So contractors were doing work for the government collecting their money and because you couldn’t file a lien against the federal government, there was no way of getting paid.
So it’s important that you differentiate the state versus federal contracts, because it depends on how you collect your money. So if it’s a federal job or a state or municipal job that’s governed under the Elvis Miller Act, then you just simply file a claim on the payment bond. So that job has to be bonded. That’s what the Miller Act says. There has to be a performance and payment bond in place. So yeah, Elvis Miller, he’s our hero.
So you have to file that claim properly. And I also tell my customers, if you’re doing a private job for someone, make sure you get a letter from their financial institution that the funds have been set aside to pay for your project. That saved us a number of times when the bank decided to cut off someone on a particular project. So there’s my two cents worth.
Private, public and federal projects
[00:15:47] Ariela Wagner: Your point was extremely brilliant because we need to talk about the different types of projects. There’s private, public, and federal. Each one has a different process and approach. Very similar, but different.
So for private projects that’s owned by, you know, Mr. and Mrs. Smith, you can have an LLC. Those are privately held projects. Generally speaking, those projects aren’t bonded, but they can be bonded. Those larger projects of 15 million or above, maybe 10 million above, again, our guru on bonds can discuss that. But what is the purpose of the bond? A bond is there so that when you need to place the claim, it attaches to the bond instead of a property.
So what does this all mean? You can only lien private projects. You cannot lien government projects because they have what’s called sovereign immunity. Example, I go to replace the windows at the White House and I don’t get paid. Well I can’t lien the White House. What should be available is a bond because it’s a public project.
So we went over a private. Public consists of a school, a public school. Not to be confused with private schools. But public project is anything owned by city, state, local government. So those are your public projects. Courthouse.
Federal is clearly VA hospitals, military bases. Those are your federal projects. So you do wanna differentiate those three, and you wanna make sure that you ask in advance if you’re working on public projects: is this project bonded?
Now, here’s another really great tip. For public projects, not federal. Public projects. Most states have requirements of when general contractors have to carry a bond. Now, general contractors can also require their subcontractors to carry a bond, but what we’re talking about is payment, and subcontractors trying to get paid on public jobs.
So again, in some states, they’re required to record the bond. Be very careful. They don’t always record them. That being said, when you’re starting your projects, request a copy of the bond. Now, my favorite question to ask, and if I were running a credit and collections department is: if you weren’t required to carry a bond, what do you do on public projects? Well, if you don’t get paid, what happens? So really you wanna speak with your attorneys and get joint check agreements because the only alternative is to sue the contractor, okay?
So those are the three types of projects, private, public, federal. And at SunRay, I actually have a project information sheet. It’s really important to fill out. There’s no difference if you are an architect and you have your blueprints in front of you, you need your blueprints for your credit and collections. 1, 2, 3, 4, 5. Know what kind of project you’re working on, so if you’re not paid, you know what to do.
[00:19:00] Rob Williams: That’s a great point. We had an episode on joint checks, so if you guys have questions about joint checks, go back and look at that episode and listen to that.
I didn’t realize a lot when I was a contractor, I did some military bases and some universities. I guess universities would be, well, it depends on whether it’s private or public, but I guess they’re– I don’t guess they’re state. They’re federal–
[00:19:18] Ariela Wagner: No, it depends. Because you can have the University of Florida, which is state, and then there’s Lynn University, which is private. And how is it determined If you don’t know? The property assessor’s office in every state can, you can look it up and it will tell you if you don’t know. It will say it’s owned by the government and will tell you if it’s federal. It will tell you who owns the property.
[00:19:41] Rob Williams: I had a controller and a staff, an accounting department in there, and I was dependent on them doing these things, but you know, sometimes I bet they weren’t doing the things like this. If we had somebody like Ariela back then that, that probably would’ve given a lot of peace of mind.
You know, it’d just be nice to have an outsider you know, the controller knows what he knows, but he may not be an expert in that particular part.
[00:20:05] Wade Carpenter: How does your service work for contractors?
[00:20:07] Ariela Wagner: So first and foremost I love what you were saying about your internal office. And this is life. This isn’t just SunRay. This isn’t just Contractor Success Forum. The truth is you don’t know what you don’t know. That’s number one.
And number two, it’s very important if you are looking for a resource. And then I will go into what SunRay does in a moment. But to me, this is about contractor success, and subcontractor success. What you don’t know you don’t know, but ask the questions. And I tell my staff and I tell people I’m closest to– and this is where I won’t be diplomatic. You ask a stupid person a question, you’re gonna get a stupid answer. If you wanna ask a brilliant person, you’re gonna get a brilliant person’s answer. If you wanna ask a staff your opinion so that you’re loved and what do I do? And you want that answer. Sometimes it’s hard to hear the truth. So if you go to your, hypothetically, controller who just left the healthcare sector and is in construction, well guess what? You’re gonna get a healthcare sector’s opinion and you’re going to also put yourself in a position where you don’t know if they’re telling you just to make you feel happy, because you’re the president of the company.
“Oh, I agree.” Okay, well I want you to disagree with me. I wanna know what the right thing to do is to secure the money of the company. Because I secure the money of the company, I secure jobs. And that’s our job as presidents, as entrepreneurs. We hire people. We wanna keep them employed. They wanna leave, that’s their prerogative. But it’s our job as business owners to make sure we protect those jobs and especially during this scary time ahead of us.
Working with a company like SunRay to manage lien and bond claim rights
[00:21:47] Ariela Wagner: But going back to what SunRay does and why I’m expressing. You can go online, you can put your information into the system. SunRay does preliminary research of who owns the property. But one of the most important parts of these notices is the project information sheet and making sure at the beginning of the project, A, you know where you’re working. B, you know who you’re working for and who’s upstream. You wanna know when you started working on the project and you want a dollar amount or the credit amount initially that you’re giving your customers.
So they go in, you create an account. It’s incredibly simple. A five year old today can do that. It’s actually funny, I was just thinking: a totally side note. These kids, they’re like this on their iPhones, right? They’re brilliant. But literally it’s that simple to set up an account.
When you go into the system, it is not abracadabra. My system does not have the artificial intelligence yet where it can go into your brain, find out where you were working, who you were working for, your first day on the job, if it’s private, public, or federal. You have to have those pieces of information to begin with. Own what you do. Be proud of the work you do.
If you’re an electrician, you don’t wanna have something sideways. You wanna make sure you’re doing an incredible job so when the inspector comes in, he goes and he leaves, he signs off. Same with your paperwork. When you go into the SunRay system, yes it’s easy, but you wanna make sure that you have the right information. So I’m gonna give everyone an example.
In the state of Florida, if you’re a sub of a sub to a GC, the document and the statutory name is Notice to Owner Notice to Contractor. Many people believe that you just need to send the notice to the owner of the project. It seems like a very simple thing. It’s called a notice to owner. Well, in fact, that’s not the case at all. Those who are vested, generally it’s on a Notice of Commencement. Knowing who, again, is upstream. If the General Contractor who hired the subcontractor who hired you is not noticed, you do not have lien rights.
So why is this again important? You don’t know what you don’t know. So when you’re entering this and there are points that stop the user, but it’s really important that before you even enter the information, just like before you enter that commercial project or that residential project or the public project, you wanna know what you’re doing for the day.
You also wanna know what you’re doing with your paperwork. So it’s that simple. It literally takes 60 seconds to enter. You enter the information, it’s researched, it goes through quality control, it goes through our mail department. We have our own internal mail department, and then off it goes to the owner, General Contractor, lender, surety companies and whoever’s required to receive the document.
And it’s that simple. And the beautiful thing about the service as well, online software is that you have deadlines. So every single state has a different deadline, as I’ve mentioned several times now. So hypothetically, if 90 days from a last day or on the project, it will let you know when you need to proceed forward based on your last day on the job.
So you have your notice, generally speaking, if you’re a sub or a supplier, and then you have your deadlines whether you’re a general contractor, you can set up your projects there with your deadlines so that you don’t miss your deadlines. Because contractors of course, don’t get paid on private projects too.
[00:25:21] Stephen Brown: I thought that was interesting, Ariela, that you were talking, too, about the different tiers of protection. If you’re a sub of a sub, you may not have lien rights on–
[00:25:34] Ariela Wagner: If you’re a GC, in fact on federal projects, I believe it’s general contract– obviously subcontracts are subcontractor. I am gonna, before the end of this program, I’m gonna verify that.
[00:25:45] Stephen Brown: Well, I know that’s the case on federal projects.
[00:25:48] Ariela Wagner: On federal projects, so, I’m gonna get that information, make sure we have a hundred percent accurate information for our audience.
[00:25:57] Rob Williams: You contractors out there, if you are a bigger contractor and, you have a controller and you have a collections department, send this episode to them to listen to also. And Ariela’s information or, you know, we’re, we’re here to inform you guys. We’re not selling things here. So if you somebody else that does that, but it’s amazing to have a resource like that, like SunRay.
[00:26:18] Stephen Brown: And remember, you know, too, on bonded projects, that the whole reason that all these tiers can’t file a claim on a bond is because the bond has to have some cutoff point. Bonding company wouldn’t be in business if it went out 25 tiers of people who owed money. That’s kind of written into the Miller Act, and it’s part of what protects the bonding company.
But anyway, I think it’s just fascinating, Ariela, that the timing has to be right and that you can help our contractors get these liens filed properly or notify a bonding company of a claim. Now you gotta find out what that bonding company is and the bond number in order to help them with that. But it’s important for you to know who you’re working with, contractors, and how you’re gonna get paid.
And it’s amazing how many people will start work and there’s no contract. And they might get their first draw, and then when it comes time to get their second draw, they don’t get paid until they get a bond or they sign the contract. And the contract is something that you don’t wanna sign.
So again, these contracts spell out your collection terms, and then in order to enforce those collections when you’re owed money, getting that lien filed properly is everything. And so many of my customers always ask questions about liens, and I’m like, you’ve gotta talk to your attorney about it. So I think it’s great that SunRay provides these services.
[00:27:51] Ariela Wagner: Absolutely. And just to make sure everyone does hear the facts, we’re a hundred percent accurate. It is third tier on federal projects. Want to make sure that we give accuracy.
But yeah, it’s very important and I could certainly give you a project information sheet that people can download for free, whether they ever use SunRay services, they don’t. It really is to inform everyone out there, this is what I need. This is the important information I’m gonna need upfront. Because everything is great in the beginning of a project.
Yeah.
[00:28:22] Rob Williams: Tell us what your website is and where do they go to find that?
[00:28:25] Ariela Wagner: You can go to SunRayNotice.com and there’s a resource page and you can download that form for free.
[00:28:35] Rob Williams: Okay, That’s great.
How to avoid waiving your lien rights
[00:28:37] Rob Williams: We talked a little bit about the credit application, securing your money, and one of the subjects that gets confusing, and I don’t know if you’re involved in that or if it’s just the lawyer and the contract, is when you’re turning in these and you’re signing your rights away, you know, as you turn in your draws and you’re not paid yet. I don’t know if you get involved in that process or is that just where we go to–
[00:28:57] Ariela Wagner: Well, you definitely could go to the lawyers, but what you’re talking about are your waivers and, releases of liens. And in our world I like to explain them as receipts for payment. With those receipts repayment, you have to be incredibly cautious of what you’re signing. And it depends on what kind of project you’re working on. First and foremost, if you have a contract, general contractors, attorneys prepared it. Remember that those contracts are for the GC, not for you. That’s number one. The subcontractors and suppliers.
And number two, those are usually there’s waivers that you’re agreeing to, that you’re gonna sign. So you have to be very careful with that. When you’re signing these waivers and releases, there’s about, I would say, for this because this could be a topic that we could discuss for two hours. The big piece that I always caution customers on are your finals. Do not just sign off on a final. Especially in the state of Georgia. Okay. In Georgia there’s rules there that you have to be very cautious with. So you just wanna be very careful, finals and if it’s conditioned upon payment.
And the other part is, are your through dates. I am not an advocate of putting in $10. You wanna put in the correct through date with the correct amount. Those are three pieces. Make sure when you’re signing a final, it’s conditioned upon payment. On your progress payments, you have a waiver, your through dates so that when it comes time, and God forbid you’re in a position where you have to sue, that you have not waived your lien rights.
It’s very important. Not just anyone should be signing those and giving them off. You want somebody reading those, making sure there aren’t any tricky wording in there. The whole point is so that you don’t waive your lien rights, or you give away something just to get that check.
But again, unfortunately, he who has the gold rules.
[00:30:54] Rob Williams: I was just looking for my stamp that, that Alex sent us. That conditional part, that was great. I can’t find it, but I know it’s here somewhere. Where you can actually stamp on there. Because I don’t think we as subcontractors realize that when we have to sign that to turn in our draw, that we can actually modify that and put something on there. And I thought that was such a great tip to have that stamp. I think that’s what you’re talking about when you say that conditional upon.
[00:31:19] Ariela Wagner: Yes. Condition upon payment.
[00:31:21] Stephen Brown: That’s a great point Ariela, is that you waive your lien rights to get paid and you haven’t been paid. And they say, well, that’s a condition that I won’t pay you till I get a release of lien. And you go well, what do I do? Well, you know, you trust them. And Alex was talking about that and we all said, man that’s a bad move right there if you get a lien and then you just say, well, now you waived all your rights, so I’m not gonna pay you. And I said I don’t know who would do that. That’s, so.
[00:31:51] Ariela Wagner: Oh, it happens every day. And–
[00:31:53] Stephen Brown: Come on down to Miami. It happens every day.
[00:31:55] Ariela Wagner: Like Texas and California, Florida, those are your debtor states. That’s the issue. I, and especially now in Florida, if we have listeners, you know, people do know there are lien laws. The contractors. The bad ones. We’re not talking about the good ones.
We’re talking about how to prevent yourself in getting into hot water with a crappy human being who’s probably a sociopath. My favorite quote is, someone treats you like crap. You’re not special. They treat everyone that way.
So if you have 90 days from a last day you’re on the project. And again, for all of those listening, if you’re working in a state, you need to know your deadlines. Don’t just rely on just software. You should know when or approximate time, so you find yourself in a position of strength, not weakness, and going, oh my God, last minute, this is what I have to do.
So going back to the situations with that, in Florida, people know that they have 90 days. Oh, we’re gonna pay you. We’re gonna pay you. We’re gonna pay you. Well, guess what? At day 70, if you don’t get paid from last furnishing labor and material, lien the project.
I tell my customers all the time, you know what, if you don’t like your money, that’s fine. Give it to me. I’ll have it. You know you don’t wanna collect it, that’s fine. Whatever you have left over, just give it to me because you apparently don’t care about it. Of course, that’s a horrible thing to say, but hopefully that’s a motivating factor.
[00:33:16] Rob Williams: It’s probably a better alternative than I can think of when I got paid and I didn’t really know the proper procedures, and I’d go straight to their bank, you know, or somebody I know, which was a lot worse situation than filing those liens. So I think that’s probably a lot lesser of an obligation, and I’d Probably rather have that happen than send out a collections department on me or something like that. Do it early before it escalates into something really ugly.
The power of communication and documentation
[00:33:43] Ariela Wagner: And I wanna add something important. You know, it could be reduced through extraordinary communication and documentation. When you’re on your projects, before you leave, take photographs. Make sure you’re documenting everything that you’re doing. Make sure that if there is something that is in question, that it’s documented with the General Contractor.
Hey look, I wanna make sure we’re on par. Here’s the photographs. Whatever it is you’re doing, whether you’re the electrician, drywall, painter, choosing. One particular situation was a painting company. The owner signed off on the paint, the owner signed off that this is good.
And then he wasn’t happy. Well, guess what? He signed off. Literally, signature. Not just verbally signed off that he’s happy with this color. And I think the communication via email, photographs of your job will prevent a lot of the disasters. It takes maybe five minutes.
You know, set meetings biweekly with your General Contractor. And if you’re a General Contractor, make sure you’re setting meetings with the owners of the project. A little bit of organization and being proactive is going to help you get paid faster so you could work on more projects and not deal with nasty text messages, cruel phone calls, creating emotional distress. We all know what it feels like.
[00:35:05] Rob Williams: This is great. This has been an amazing episode that’s so valuable to contractors, and I think especially growing contractors that don’t know everything. And the big contractors, there’s probably something in here that they don’t know, or maybe it’s a good reminder.
But I think a lot of the ones, like for me, that had been transitioning from one style of business, you know, private, going into some public, this is the scariest part. You know, do you get paid and do you get out of business? This may let somebody stay in business that is just terrified of collections and doesn’t know what to do, and this could be the difference of a company surviving or not surviving.
This is one of the biggest cashflow topics that we can talk about today, so I really appreciate it. I don’t know if you guys have anything else in closing. This is a long episode. We, this is a long drive, guys, if you’re driving from one job to the other, pick a far job for this episode because this has been lots of value in here.
[00:36:02] Stephen Brown: I loved it that Ariela said a number of times, you don’t know what you don’t know. How many times have we said that? That should be the name of our podcast. You don’t know what you don’t know. And you know, she shouldn’t have to motivate you listeners to wanna collect your money. I mean, I appreciate the fact that she mentioned that, think about your employees, think about the jobs you’re saving. But I tell ya, some folks just don’t wanna do it and they would rather do anything than get involved with that. Just have the systems in place. Be professional. You’re not being rude. And do it the right way.
[00:36:40] Rob Williams: Well, thanks so much. Ariela Wagner and we have Wade Carpenter with Carpenter and Company CPAs and Stephen Brown with McDaniel-Whitley Bonding and insurance agency. And I’m Rob Williams with IronGate Entrepreneurial Support Systems. And we really appreciate– and just one more time, tell us how they can find you.
[00:36:56] Ariela Wagner: Absolutely. You can go to our website. It’s SunRayNotice.com. That’s S-U-N, as in Nancy. R-A-Y, N-O-T-I-C-E.com. And if anyone does have any questions, you don’t have to be a customer. Happy to help anyone. I may not be able to get back to you immediately, but I do get back to every single email. So, I wanna thank you all for the opportunity to speak on your Contractor Success Forum, and I wish everyone a sunny day.
[00:37:26] Rob Williams: Yeah, and go look at our show notes, ContractorSuccessForum.com. And thank you for listening to the Contractor Success Forum today.