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June 1, 2008
Timely Advice ----- For subcontractors and material suppliers
A note from our President….
The way we all do business has changed with the uncertainty of our economy.
It used to be that a handshake or a trade would seal a contract between two people. Those parties involved would do their best to uphold their end of the agreement so there was little need for paperwork and formalities. In fact, one of my grandfathers was a trial lawyer in Arkansas and was known to work a case in exchange for some chickens or perhaps a pig.
This type of barter, trade and handshake doesn’t happen too often anymore.
The slowing economy has created an element of uncertainty in the business world so that even those with the best intentions can’t predict what will happen from one week to the next. Bankruptcy is often one bad deal away for most companies. People are finding that letting a deal ride on a handshake is a risky proposition. You may trust a General Contractor but their company is only secure as long as the Owner they are working for is financially secure and reputable. How many Owners have had to call it quits overnight or have had to sacrifice paying their General Contractor over paying their employees? If the General Contractor doesn’t get paid, will you?
Changing the way we do business might alienate those that we have trusted for so long. How do we explain that a handshake is no longer the way we seal the deal? Some of you may be worried about presenting the idea of sending a Notice to Owner as it may imply that you don’t trust the General Contractor. Yes, sending a Notice to Owner will create more paperwork for the General Contractor because they have to issue a release of lien or a partial release of lien every time they pay you.
You have to realize and make your customer realize that sending a Notice to Owner is the only way to make sure you have the ability to file a lien on the job site property if you don’t get paid. Your decision has nothing to do with not trusting your customer. The General Contractor already has lien rights because they have been hired by the Owner – you don’t.
So for those of you that are concerned about how to approach the subject with your customer, just remember that you are sending a Notice to Owner because you want to establish lien rights to protect your company and your employees. A lot of people rely on you to get their paycheck at the end of the week. Don’t let them down because you are nervous about offending your customer.
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