Credit Learning Center. Making Sense of Mechanic's Liens A Practical Introduction

Transcription

1 Credit Learning Center Making Sense of Mechanic's Liens A Practical Introduction

2 Thomas Jefferson Construction is the future of the country No private banking system First lien, Maryland Created as an enabler

3 Thomas Jefferson Construction is the future of the country Created As An Enabler

4 Construction Credit is unique Terminology Back charges, NTOs, Retainage, Pay-if-Paid Objections

5 I can t pay you until I get paid!! Typically being asked to extend lines of credit that can be 2x, 5x, 10x, the net worth of your customer.

6 Weak Link Lender Owner Prime contractor There s Not one Good guy Or Bad Guy

7 Just how do you justify the credit?

8 Justifying the Credit

9 Bank Owner Building/ Land No liens can be filed below this line.

10 Bank Owner Building/ Land General No liens can be filed below this line.

11 Bank Owner Building/ Land General Service Provider Distributor No liens can be filed below this line. A Defined Right

12 Lien Right: Requirements Building/ Bank Land Owner 1. Within 3 tiers of the owner General Service Provider Dist. No liens can be filed below this line.

13 Owner Bank Owner Building/ Land 1. General Service Provider Dist. No liens can be filed below this line.

14 Bank Owner Building/ Land General Service Provider Distributor No liens can be filed below this line.

15 Bank Owner Building/ Land General Service Provider Distributor MS No liens can be filed below this line.

16 Lien Right: Requirements Building/ Bank Owner Land 1. Within 3 Tiers of the Owner General 2. Tangible Goods must be Affixed 3. No s to s Service Provider Dist. No liens can be filed below this line.

17 Bank Owner Building/ Land General Service Provider Dist. No liens can be filed below this line.

18 Bank Construction credit Owner requires extra due diligence. General Building/ Land The ladder of supply must be fully investigated. Service Provider Dist. No liens can be filed below this line.

19 Bank Owner Building/ Land General Service Provider Dist. No liens can be filed below this line.

20 Bank Owner Building/ Land General Service Provider Dist. No liens can be filed below this line.

21 This image cannot currently be displayed. Bank Owner Building/ Land General IF IF IF IF Might Service Provider Dist. No liens can be filed below this line.

22 Mechanic s Liens: A 3 Step Process Step 3 Foreclosure - after 30 days within 6 months Step 2 Lien - 90 days from last furnishing Step 1 Notice - 31 days from first furnishing Each step is a prerequisite

23 Bank Owner Building/ Land General Service Provider Dist. No liens can be filed below this line.

24 Bank Owner General Preliminary Notices Identify Yourself Waivers of Lien Service Provider Dist. No liens can be filed below this line.

25 Bank Owner General Battle of the Innocents Service Provider Dist. When you need your notice to be right. You really need it to be right.

26 Notice to Owner Notice given to various parties on the ladder of supply as a prerequisite to filing a lien claim. The Notice is designed to identify potential lien claimants to the owner. or Notice of Identification or Preliminary Notice

27 Notice to Owner

28 Notice to Owner What State Dollars in / Dollars out Invoices in / Invoices out Sworn Statements in / out

29 Rules and Tools Private Corporation Partnership Individual Owner Public Federal State Municipal Liens and Bonds

30 Mechanic s Liens: A 3 Step Process Step 3 Foreclosure after 30 days within 6 months Step 2 Lien - 90 days from last furnishing Step 1 Notice - 31 days from first furnishing Each step is a prerequisite

31 Mechanic s Lien Private Construction A mechanic's lien is a right, permitted by state law, securing payment to contractors, subcontractors and suppliers of materials or labor in constructing or repairing (improving) a building. The claim attaches to the land as well as the buildings on that land. 80% (nto) - 10% (lien) - 10% (suit)

32 Capturing Information

33 Credit Application Job Information Sheet

34 A well written Credit Application will help You get paid! The Credit Application contains information that will be very important in the event of a default. If you know where a customer works or banks, for example, you may be able to file garnishments after obtaining a judgment. It is much easier to get this type of information from your customer while you are still friends.

35 Job Information Sheet Critical Information Before Shipping Who s Responsible How Accurate?

36 Job Information Sheet Owner Project State Public vs. Private Liens or Bonds Your Position on Ladder of Supply Notice Required? State Statutes 8 days or 8 months

37 Managing State Statutes Owner General OH PA NJ Building/ Land IN IL NJ Which State Statue?

38 Invoice Date vs. Furnishing Date January 4 th January 9 th First Furnishing vs. Last Furnishing

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42 Managing the Process Invoice Date vs. Delivery Date 1/4/07 1/9/07 Do you understand your invoicing? Estimated Billing Delayed Billing

43 Managing the Process Invoice Date vs. Delivery Date 1/4/07 1/9/07 Count Days / Not Months 30 days from First Furnishing

44 Managing the Process Act Early Avoid Errors Priorities and Policies Write em Down!

45 Managing the Process Act Early -- At least 7-10 days prior to a deadline (NTO). 3 weeks prior for a lien. Define and communicate procedures Be consistent

46 Mechanic s Liens A 3 Step Process Step 3 Foreclosure - after 30 days within 6 months Step 2 Lien - 90 days from last furnishing Step 1 Notice - 31 days from first furnishing Each step is a prerequisite

47 Lien Foreclosure A proactive legal process by which an owner's right to a property is terminated, usually due to a default. Typically involves a forced sale of the property at a public auction, with the proceeds being applied to satisfy a debt.

48 Lien Foreclosure Foreclosure is a process not an event! Get a construction attorney involved as early as possible. Filing can generally be repaired. Recognize most cases are resolved before trial.

49 Public Construction

50 Rules and Tools Bonds Private Corporation Partnership Individual Owner Public Public Federal State Municipal Liens and Bonds

51 Bank Owner Building/ Land General Service Provider Dist. No liens can be filed below this line.

52 Credit Learning Center Making Sense of Mechanic's Liens A Practical Introduction