Critical. Correct. Complete. The Three C’s of Job (Project) Information

By Kristin Alford, Education & Marketing Specialist, NCS

It is critical to have correct and complete job information for every project - your mechanic’s lien and bond claim rights depend on it.

The Challenge: Obtaining critical, correct, complete project information

In this article, we will review the vital role of job information in protecting your mechanic’s lien and bond claim rights; including necessary pieces of job information, providing best practices for gathering project information and reviewing case examples where better project information could have saved claimants’ mechanic’s lien and bond claim rights.

What’s Harder than Getting Paid on a Construction Project?

“What’s harder than getting paid on a project? Gettin’ the damn job info!” a veteran credit manager bellowed through the phone. With a crackling of laughter and the sound of his fist hitting his desk, he continued “No, really! It’s ridiculous. I can’t believe how hard it is to get these folks to tell me where the project is! I mean, come on people, a ton of our steel isn’t suspended in the clouds, is it?!” He spent the next half hour regaling me with a tale of trying to uncover project information for a wind farm in the middle of nowhere. He couldn’t believe getting project information for the wind farm was easier than getting the information for a nearly completed restaurant he drives by each day. I must say his language was just as colorful as his personality; I could barely speak through my own laughter. But, as entertaining as his story was, I understood his struggle: gathering project information is not easy.

As the conversation wrapped up, he lightheartedly and half-jokingly muttered “Sometimes getting job info feels just as tough as the construction work itself.” May seem like an unfair comparison, but is there some truth in it? Time and time again, I hear the pain and frustration in clients’ voices “I don’t know who my customer sold to” “I shipped to my customer, I don’t know where the job site is” and the occasional “All I have is my customer’s information on a PO for the materials, isn’t that enough?!”

What is job information? What information should be included? Why does job information matter? How do you find job information? What can you do to make gathering project information easier?

What is Job Information (aka Project Information)?

Job information is a list of relevant parties and detailed information related to a given construction project. This information may include the project address, project type (public, private, federal), and the parties within the ladder of supply.

Why Do I Need Job Information?

General credit decisions are driven by data factors such as credit worthiness based on a credit report score and the total requested credit line. In construction credit, savvy credit professionals know credit decisions are also influenced by factors beyond the customer. Other factors may include whether a payment bond has been issued on a project, whether mechanic’s lien rights are available, or even the payment reputations of other parties in the ladder of supply.

Knowing you can make a claim against the payment bond or file a mechanic’s lien, in the event you don’t receive payment, provides you with the additional security needed to make up for your customer’s lack of credit history. Job information will help you understand the chain of payment and how money will, or should, flow through a construction project. It provides an opportunity to identify key contacts to leverage in the event of payment, delivery or material issues.

To determine the availability of mechanic’s lien rights, you must have job information. At a minimum, with the project state, project type and furnishing dates you can preliminarily determine whether you may have mechanic’s lien rights and what steps you must take to secure those rights.

What’s Included in Job Information?

You need to gather any information relevant to the project. There is NEVER too much information! For each project, you should identify the following:

Project address or legal description of the property

Where is the project located? Is it new construction or an improvement? Is it for one building or multiple buildings? Is it a road or highway project?

Project type (public, private: commercial or residential, federal)
Name/Address for project owner

Who is the fee owner? Is there a leasehold interest? Where is the owner located? Private, public or federal?

Name/Address for other partners within the ladder of supply, including but not limited to
- General contractor
- Subcontractor
- Lender
- Surety

With parties in the ladder of supply, answer these questions: Where are they located? Are they contracted directly with the owner? Are they hiring the subcontractors? If there is a payment bond, are they listed as the principal?

Know what you are contributing to the project:

Materials/services to be provided
Claim and contract amounts
First and last furnishing dates

Ideally, you should also determine whether:

Your customer is providing labor (if you are only providing materials)
The project is for one building or more than one building
The project is bonded & if it is, obtain a copy of the payment bond
The project is a leasehold situation, and if it is, who contracted for the improvement, the fee owner or the tenant

State Statute Dictates Job Information Requirements

Every state’s mechanic’s lien and bond claim statute will identify the information required to secure claim rights. To clarify, states may not provide an actual list of required job information, rather state statute dictates the information required to appear within preliminary notices, mechanic’s liens, bond claims, etc. If you review statute closely, you’ll see “the list” of requirements -- as an example, let’s review California.

California provides the required job information in a pseudo-list format. Civ. Code 8102 of California’s statute describes the requirements of the preliminary notice:

(a) Notice under this part shall, in addition to any other information required by statute for that type of notice, include all of the following information to the extent known to the person giving the notice:

(1) The name and address of the owner or reputed owner.

(2) The name and address of the direct contractor.

(3) The name and address of the construction lender, if any.

(4) A description of the site sufficient for identification, including the street address of the site, if any. If a sufficient legal description of the site is given, the effectiveness of the notice is not affected by the fact that the street address is erroneous or is omitted.

(5) The name, address, and relationship to the parties of the person giving the notice.

(6) If the person giving the notice is a claimant:

(A) A general statement of the work provided.

(B) The name of the person to or for whom the work is provided.

How Do You Find Job Information? First, Let’s Answer “Who”

It’s the million dollar question, right? In some cases it’s the billion dollar question! Before we review how to find job information, I want to discuss who needs to find job information. Tracking down job information is a two team job: credit and sales. Yes, I’m aware of the historic and sometimes tenuous credit and sales relationship – seems akin to the Hatfields and McCoys. But as a team, credit and sales can move mountains!

Great sales people are excellent at relationship building; it’s what makes for successful selling and long term client retention. The sales rep does the legwork of establishing a rapport, in some cases they are tirelessly working to make the sale, but it’s worth it because the rapport building creates a trusted relationship between creditor and debtor.

“OK, sales people are great, what does that have to do with project information?” Established trust and open communication will make it easier to ask for project information. Your sales team is on the front lines with your customers and in a perfect position to be information gatherers.

There is a simple way sales can assist with gathering information: include a job information sheet with the other credit application and contract documents. Make the job information sheet a normalized part of the sales process. Normalizing it and making it routine will help your customer (especially repeat customers) feel more comfortable with providing the information. Plus, whether your customer realizes it or not, you are helping ensure they have the right information to protect their own rights. Win, win!

As an aside, I think it’s important to mention that because the sales reps have a tight relationship with your customers, you should prepare your reps.

“Prepare them? Prepare them for what?”

Prepare them for the preliminary notice and mechanic’s lien process. Explain the preliminary notice process to your sales reps, and then if/when your customer panics because a preliminary notice arrives via certified mail, the sales rep can assist in allaying fears. Not to mention, you should also allay the fears of the sales rep; reassure them they aren’t going to lose the customer because of a preliminary notice. Educate them on the important role project information plays and speak to them in terms they can relate to.

Don’t assume I am being condescending when I say, “in terms they can relate to.” Here’s an example:

“Mr. Sales Rep, if I have accurate project information, then I can confirm whether we can secure lien rights in the unlikely event there is a payment problem. If I can confirm lien rights are available, then we can grant them a higher credit limit because I can use the lien as security. The higher credit limit = the higher sale.”

This makes sense!

Something as benign as project information can ensure your company is a secured creditor and, in turn, provide for better sales opportunities.

Now let’s address the “how”.

Now, How Do You Find Job Information?

Without question, your customer should be your first source. Gather as much information from your customer as possible. And don’t be afraid to contact other parties within the ladder of supply. For example, the project architect frequently helps manage project payments and will likely have access to copies of pertinent project documents such as the payment bond or a Notice of Commencement.

If you are selling to a subcontractor and the subcontractor knows who the general contractor is, but is unsure of the owner, call the general contractor. Prefer not to call the GC? That’s OK; you can send a kind request for the necessary project information. Here’s an example of a request for a copy of a payment bond:

To Whom It May Concern:

We are writing to you in connection with the New Cuisine Steaks project, where we have contracted with Steel Guys Inc. to furnish materials and labor (erection of scaffolding and steel trusses). We ask that you please forward a copy of any payment bond(s) for this project to the undersigned. Thank you for your assistance.

If you are concerned with negative perception, you could include language such as “The purpose of this letter is not in any way intended to be a reflection on your creditworthiness, but is intended merely to protect the rights of Steel Guys Inc., under applicable lien, bond or other laws.”

One more example here, this is for requesting a copy of a Notice of Commencement:

ABC Company is furnishing steel trusses in connection with the improvements to the properties commonly known as New Cuisine Steaks (the “Project”).

This correspondence is to request a Notice of Commencement. Please send a copy of the recorded Notice of Commencement, and all amendments thereto, for the project located at 729 Miner Road, Highland Heights OH 44143 known as New Cuisine Steaks, together with a copy of this letter to permit us to reference the proper file. The Notice of Commencement should be delivered to the undersigned.

I admit there is an additional reason I provided the above examples for requesting a copy of the payment bond & Notice of Commencement. These two documents can be a gold mine for project information.

The payment bond will provide information for the surety, the obligor (party obligated to pay the debt) and the obligee (party protected by the bond). The Notice of Commencement generally provides the property description, the name and address of the owner, the prime contractor, any other parties that need to be served with a preliminary notice (e.g., designee), and surety information if the project is bonded.

Additional Tips & Tricks

Save yourself the time & hassle of manually gathering job information. Take advantage of resources like NCS’ proprietary Job App (free for NCS clients), to electronically collect job information from any party within the ladder of supply. With the Job App you can quickly build a custom job information form, email the form (entire form or specific sections) to your team or your customer, track the progress of data gathering, review any incoming data, and seamlessly transmit the information to start the notice process.

Free your inner super sleuth. There is this crazy little device with seemingly limitless information: the internet. Use it. Take advantage of technology. Online searches may help fill the gaps in address and contact information. Note of caution: use information found online carefully – there is a massive amount of information on the web, but it’s not always accurate.

Take a virtual trip to the Secretary of State’s website and run a corporate search on the parties within the ladder of supply. A corporate search should provide you with a name, address and the party’s registered agent. In most states, if you serve the preliminary notice upon a party’s registered agent, then you have met the service requirements for protecting lien rights.

Should Have Confirmed Job Information

If you need to exercise your mechanic’s lien rights, you will be in a significantly better position if you 1. followed the statutory requirements and 2. gathered correct job information.

In the unlikely event you file suit to enforce your lien, the judge and defending parties are going to poke holes in your preliminary notice and mechanic’s lien. Questions like: Did you serve the right parties? Did you serve the documents timely? Did you correctly identify the property?

Did You Serve the Right Parties?

The Case: LM Construction, Inc. v. HGIK Hospitality LLC

Quick Look: LM Construction, Inc. (LM) did not serve the correct parties with the preliminary notice, thus couldn’t enforce their mechanic’s lien. LM was the sub-subcontractor on the project, however, LM believed it was a subcontractor contracting with the general contractor. LM served its preliminary notice on the owner, but not the GC which was a required party. When LM filed its lien, the lien was invalidated for failing to strictly comply with Iowa statute.

Did You Serve Documents Timely?

The Case: Premium Millwork, Inc. v. Great American Insurance Company

Quick Look: Premium Millwork, Inc.’s (Premium) lien was vacated for failure to comply with statute. Premium furnished to a private project in New York and followed New York’s statute for commercial projects. However, the private project was residential, which has a shorter mechanic’s lien deadline than commercial projects. Premium didn’t file its lien within the timeframe required and the court invalidated the lien.

Did You Correctly Identify the Property?

The Case: JMAC Farms, LLC v. G & C Generator, LLC

Quick Look: G & C Generator, LLC’s (G & C) lien was invalidated for liening the incorrect property. According to the court opinion, the property owner had at least 5 parcels of land in Arkansas. The owner’s home & a barn were on one of the parcels, and the subsequent parcels held several poultry houses. The HVAC materials furnished by G & C were for the improvement of two poultry houses. When G & C filed its lien, it included a legal description of the property. But the legal description was for the parcel that held the house & barn, not the parcel with the two poultry houses.

In all three cases, had the claimant correctly identified key job information, their lien rights may have been preserved.

LM didn’t correctly identify the parties in the ladder of supply. Pro Tip: serve ALL parties with a copy of the preliminary notice.
Premium didn’t correctly identify the project type. Pro Tip: commercial & residential may have different statutory requirements.
G & C didn’t correctly identify the project. Pro Tip: take the time to determine exactly where your materials are being incorporated.

What Can You Do to Make Gathering Project Information Easier?

Honestly? If I had the perfect answer to this question, I’d be set for life! I don’t have a panacea, but I do have some best practices for gathering job information. Make a commitment to create and enforce a policy to consistently gather project information.

Educate your credit and sales team on the general preliminary notice and mechanic’s lien processes.
Incorporate the NCS Job App or job information sheets in the sales process. Side note: there will always be exceptions - whether it’s a client exception or a CFO exception. For simplicity’s sake, set a threshold and manage by exception. For example, your policy may be that you require job information for any project with a contract greater than $10,000.
Communicate your job information process to both new and existing customers. Perhaps you send a form letter to your customers, letting them know this is a standard business practice and job information will be requested for each project. You could also add language within the sales quote or PO.
Be resourceful. Whether it is contacting parties within the ladder of supply, searching for and reviewing a Notice of Commencement, or sleuthing through the internet, you have plenty of resources to choose from.
Be prepared. Be prepared for pushback, because it will inevitably happen. Take each obstacle and work with your colleagues to overcome the objection. Cooler heads will prevail.

Outsource. “Here we go, she’s just gonna try and sell me on NCS’ services!”

Yes. It’s not a secret, I think NCS is an incredible company, with an impeccable record of providing best in class service; we are experts.

BUT, when I say “outsource” let’s not focus on who you should outsource to, but rather why you should outsource. TIME. Your most valuable asset is your time. You must determine whether your company has the manpower to dedicate the time and expertise needed to manage educating a workforce, gathering job information, serving preliminary notices, filing mechanic’s liens, etc.

Ask yourself “Is this the best use of my time?” “Would my employer be better served if my time were spent reviewing more credit applications, calling on slow paying accounts, increasing my efficiency in day-to-day tasks?” If the answer is “No, it’s not the best use of my time,” and “Yes, I am better serving my employer by managing other revenue driving tasks,” then partner with a service provider. Your lien rights depend on it.

Since 1970, NCS has been the leader in providing credit professionals throughout the U.S. and Canada with proactive solutions to secure receivables, minimize credit risk and improve profitability.

With our distinct service groups: Notice & Mechanic’s Lien, UCC, and Collection – NCS develops customized solutions based on your business model and organizational requirements to Secure Your Tomorrow®. NCS has educated more than 900,000 credit professionals on securing their receivables and reducing their risk through NCS events, resources, and social media. NCS offers web-based solutions such as LienFinder™, The National Lien Digest©, LienTracker® Online, and The Job App. These resources help manage credit risk, provide time and information requirements, monitor deadlines and generate notices.

Protect your receivables by partnering with NCS. Contact us to see how we can assist you in developing a Mechanic’s Lien, UCC, or Collection program. 800-826-5256 | SecureYourTomorrow@ncscredit.com | www.ncscredit.com

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