ACT Contractors Forms... From The Paper Side of Contracting.

One of the most commonly requested forms for California is the California Preliminary Notice, sometimes called the CPN Form, California 20 Day Notice or California Pre-Lien or California Pre-Lim. Five different names for the same form. The CPN or California Preliminary Notice, is often the first step in the California Mechanics Lien process so it is no wonder these forms are popular!

NOTE: CALIFORNIA PRELIMINARY NOTICE LAW CHANGED AND THOSE CHANGES WENT INTO EFFECT JULY 1, 2012. THE FORM USED HAS BEEN CHANGED FOR BOTH PUBLIC AND PRIVATE WORKS.  THIS BLOG POST STILL APPLIES AS NONE OF THE 2012 CHANGES CONFLICT WITH WHAT IS SAID HERE!  

What is the California Preliminary Notice?

The California preliminary notice or 20 Day Notice as some people call it, is a notice intended to inform a property owner, lender and/or project contractor (NOW CALLED THE DIRECT CONTRACTOR AS OF JULY 1, 2012) or other interested party, that someone is working on the project who has a right to file and enforce a Mechanic's Lien or Stop Notice against the property.

Why is the California Preliminary Notice necessary?

Think about it from the property owner's position. The property owner typically has a contract with a general contractor to do all the work on the project. The General then hires speciality contractors to do those parts of the project covered under their speciality. Plumbers do the plumbing, electricians run wires and do the electrical and so on. The property owner may see many different people working but really doesn't know where these workers are from! They might be employees of the General Contractor or someone else. Some property owners may not see the job until it is finished so how could they know who was working on or supplying materials for their project unless you NOTIFY them with a California Preliminary Notice!

It is unreasonable to hold the property owner accountable, to make sure everyone is paid for their contributions to the work, unless the property owner KNOWS who needs to be paid from every check they cut! If the General bills for the completed roof, and the roofing contractor on the job has not notified the property owner of their existence through a CPN, then the property owner can reasonably assume the roof was done by the General's own men and can pay the invoice without further condition. Likewise, if the roofing material supplier did not notify the property owner through a California Preliminary Notice, why would the property owner question if the materials have been paid for?

If the property owner pays the general for the roof, and the general does not pay the roofing contractor who because of this does not pay the roofing material supplier, the owner has acted properly given the information that they have! If both the roofer and the roofing material supplier had each properly notified the owner through the California Preliminary Notice, the property owner would be legally bound to make sure these parties have been paid or face a mechanic's lien from both.... See! How can anyone be expected to act on information they don't have? You can't make sure someone is paid unless you know they NEED TO BE PAID!

Who needs to give the California Preliminary Notice?

If you have a "direct contractual relationship" (for definitions be sure to read Part 1 of this blog series) with the property owner (i.e., the owner or the owners agent signed a contract directly with you) you are then classified as a Prime Contractor or Original Contractor (now defined as the "direct contractor" which is part of the new July 1, 2012 law changes) and you do not need to give a Preliminary Notice to the property owner to protect your lien rights. In this case, the property owner obviously knows of your existence since he has signed a contract with you and has probably been informed of your lien rights in this same contract. IMPORTANT: If there is a construction lender on the project, even a Prime (NOW CALLED A DIRECT CONTRACTOR AS OF JULY 1, 2012) Contractor should give this lender a preliminary notice to inform them of the Prime Contractors existence, contact information, and right to lien. (THIS IS NOW REQUIRED BY THE NEW 2012 LAWS... BUT AREN'T YOU GLAD WE TOLD YOU THIS WAS A GOOD IDEA SINCE WE STARTED SELLING CONTRACTOR FORMS OVER 17 YEARS AGO!)

If you are a contractor, subcontractor or if you are a material supplier and you do not have a direct contractual relationship with the owner but are dealing through an original contractor (NOW CALLED A DIRECT CONTRACTOR AS OF JULY 1, 2012)or another subcontractor, you MUST SERVE the preliminary notice in order to later enforce a mechanic's lien. No California Preliminary Notice, then No Lien, it's as simple as that.

Who do I give the California Preliminary Notice to?

California law requires that you serve the Preliminary Notice to the property owner, the original or prime contractor (DIRECT CONTRACTOR), and the construction lender. If you believe or even suspect that someone has an interest in the property or if you are not sure whether you need to give a California Preliminary Notice, be safe and give this Notice. It is cheap insurance against a property owner later saying they did not have notice of your existence and of your lien rights and therefore, any mechanics lien you might place is not enforceable against them.

What is the 20 Days all about?

To be covered for ALL your work, you must serve the Preliminary Notice within 20 days from first furnishing labor or materials. If you are late serving this notice, then your lien rights are limited and will not cover labor or materials furnished anytime prior to the 20 days before service of the notice. Huh???

Let me explain with a real life situation.

Joe is the painting contractor on a project consisting of building a new home. Joe was hired by and is under contract with the General Contractor on the job. This means Joe does not have a direct contractual relationship with the property owner. Joe is a subcontractor on this project. The General on the job wants the exterior "buttoned up" and has Joe paint the exterior. The Job starts Monday, September 1 and the exterior is finished by Thursday September 4. As per his contract with the General, Joe submits an invoice for the exterior painting at the end of the week on September 5. Joe waits for his check and after two weeks, gets worried and decides to protect his lien rights by giving a California Preliminary Notice to the Property Owner, to the General, and to the lender. Joe also tells his paint supplier to file a CPN for the materials. The CPN from Joe and his paint supplier are given to the interested parties on September 22, 21 days AFTER Joe started work on the project. Had Joe given the CPN a day earlier, within 20 days, ALL the work and ALL the materials supplied would be lienable. Since Joe and his supplier gave notice 21 DAYS after starting, only that work and those materials used 20 Days prior are lienable. That means, as far as the California mechanics lien process is concerned, Joe worked the first day for nothing and the materials used were free. Keep in mind that this is a simple illustration following the exact letter of CA mechanics lien laws and that there might be other considerations that could change the situation....but don't count on it...

GET IN THE HABIT OF SENDING A CALIFORNIA PRELIMINARY NOTICE JUST AS SOON AS YOU HAVE A SIGNED CONTRACT! SEND THE DARN THING EVEN BEFORE THE WORK STARTS! REGARDLESS, BE SURE TO SERVE THE CPN AS SOON AS YOU CAN, EVEN IF YOU HAVE ALREADY STARTED WORK! All future work and all work done 20 days prior to the date you give notice with a CPN can be included in a mechanic's lien.

How do I "Serve" the California Preliminary Notice?

The CA Preliminary Notice must be served by registered or certified mail or personal service. You must be able to show proof that the CA Preliminary Notice was served by a proof of delivery in the case of service by mail or by an affidavit of the person making the service showing the time, place and manner of service. If you file a copy of the CA Preliminary Notice with the County Recorder, they will make a "good faith" effort to notify you when and/or if a Notice of Completion or Notice of Cessation is recorded. This is an important triggering event in the timeline of procedures for getting paid through a mechanic's lien so be sure to take the time to file the California Preliminary Notice with the county recorder!

In the next installment in this series about the California Mechanic's Lien Process the topic of how a mechanics lien might best be used as well as the CRITICAL TIMELINE that must be followed if you want to protect your lien rights.

Any questions or comments you might like to make regarding the California Preliminary Notice??? Please post these below.

    Putting the pieces together... In the first part of this series on the California Mechanics Lien, we defined some legal terms that are important to know if you want to understand the California Mechanics Lien Process. In this, part 2, the concept and requirements for a mechanics lien in California, are the topic.

What is a California Mechanics Lien?

     The Mechanic's Lien is a NOTICE of a charge, hold, claim, or encumbrance upon property. The term implies the right which California law gives to have a debt satisfied out of the property. The California State Constitution provides Mechanic's Lien law to help assure that a mechanic gets paid for labor and/or materials supplied to erect, repair or otherwise improve the property of another. A mechanic, for contractors purposes, is anyone (individual, company or corporation), other than the property owner themselves, who supplies materials or who furnishes labor to improve real property.

     A mechanics lien is recorded with the county recorder and is public information. Anyone who does a property title search at the county recorders office will "see" the mechanic's lien. The mechanic's lien gives notice to any interested party that the lien claimant (the person or company that claims the mechanic's lien) has reserved right to pursue a lawsuit to have their debt satisfied "out of the property."

     Mechanic's liens are valid even after the property is sold so most potential buyers of the property would insist that the property be "free and clear" before making a purchase. Also, lenders will not want to lend money on any property that has a mechanic's lien against it since the lien claimant would have a higher "priority" position on the property title than the lender. Having a higher "priority" determines who gets paid first, next, and so on. The lien claimant might win a judgement and foreclose on the property to get paid out of the proceeds. Depending on the situation, this could mean the proceeds from a foreclosure might not be enough to pay the lien claimant AND the lender in which case the lower priority lender would lose out!

     When a mechanic's lien is "perfected", the lien claimant has taken his case to court and received a judgment. The lien claimant then has the right to foreclose on the property and to use the proceeds to satisfy the judgment... taking into account that "others" with a higher position on the property title, like the first or second mortgage holders (if any), must be paid first.

     Realistically, mechanic's lien judgements rarely result in foreclosure. The judgement creditor is usually very enthusiastic about paying the judgement long before it goes that far.

Note: Mechanic's Lien Law varies significantly between projects on private property & projects on public works. The information contained in this document refers to labor & materials supplied on privately owned projects.

Requirements you MUST meet BEFORE you can place or File a California Mechanics Lien.

• You must be a California Licensed Contractor with a license that was current and in good standing during the period starting when the contract was signed through when the labor or materials were furnished. California DOES NOT allow an illegally operating, un-licensed contractor to lien! If your license has expired because you forgot to pay your renewal fees, before California Law, you are un-licensed and have no lien rights!

• You must have a valid contract that is both legal and enforceable between you and the property owner. This is critical. Your contract form must comply with ALL laws in effect at the time it was signed (like these California Construction Forms)! Be extremely careful with whom you purchase your contract forms. Be extremely careful that all required notices are given. Make sure you have complied with ALL the requirements of the consumers right to cancel any home improvement contract. A mistake here can cost you ALL THE MONEY rightfully due you!

• You must have actually furnished labor or materials to erect, repair or otherwise improve the owner's property. You cannot file a lien for intangibles such as "lost profit." You can only lien for the value of ACTUAL furnished labor or materials at the time the job was completed or work ceased.

• Unless you have a direct contractual relationship with the property owner, you must timely give notice to the property owner of your right to lien by providing the owner with a proper, statutory California Preliminary Notice (aka 20-Day notice, CPN, Pre-Lien, Preliminary Notice).

• You must follow and comply with the timeline set forth in California Law. This is the real key to the entire process. Timing is everything! If you miss any single deadline, your lien rights will be lost or at least greatly impaired!

In the next part of this series of articles on the California Mechanics Lien Process we will discuss the all important California Preliminary Notice IN DEPTH!

Do you have questions or can you share your own experiences with the California Mechanics Lien process? Please comment below.

     In this series of blog posts I will explain, or at least TRY to, the California Mechanics Lien Process in a way that us mere contractors can understand. I will explain the specific forms that are required like the California 20 Day Notice Form, the California Mechanics Lien Form, and the California Release of Mechanics Lien Form. With the right CA contractors forms and the right guidance, it should be a DIY project for any California Contractor to protect their lien rights and to perform many of the steps necessary in the CA mechanics lien process. Often, just filing the mechanics lien itself is all it takes to get a stubborn customer that won't pay, "negotiating", and bringing the situation to an end. However, should it go that far, filing the lawsuit and bringing the lawsuit before the court is, without question, the job for a construction attorney.

Here are the topics of the blogs in this series about the California Mechanics Lien Process:

• Part 1 Definitions needed to understand CA Mechanics Lien Law!
• Part 2 What is required to file a mechanics lien in California? Deadlines are important!
• Part 3 The California Preliminary Notice, 20 Day Notice or Pre-Lien
• Part 4 Mechanics Lien Strategy for Dummies
• Part 5 The Mechanics Lien Form, Filling and Filing
• Part 6 The Lawsuit and The Lis Pendens not DIY
• Part 7 The Release of Mechanics Lien Form, Filling and Filing

California Mechanics lien laws are full of confusing terms. What is a "general, prime, sub or original" contractor for instance. Before we start, some definitions are necessary:

PRIME CONTRACTOR: The contractor who has a contract directly with the project owner to do and be responsible for that entire contract is sometimes called a Prime Contractor. ANY contractor can be a PRIME CONTRACTOR if they have a "direct contractual relationship" with the property owner. Bear in mind that even small projects can be broken down into smaller parts. An owner of a commercial warehouse, for example, could contract directly with a general contractor to do most of the remodeling project while also contracting directly with a painting contractor to be responsible for the painting. Since both the general contractor AND the painting contractor have a contract directly with the property owner or have a "direct contractual relationship" with the property owner, both the general contractor and the painting contractor are PRIME CONTRACTORS! Being a Prime Contractor is not necessarily exclusive since there can be many Prime Contractors on any project. This is an important concept for California Mechanics Lien Laws. A general contractor, or any other contractor, is a prime contractor if they have a contract directly with the property owner. A general contractor is not automatically a prime contractor. If a general contractor has a contract with another contractor to do the framing and carpentry work on a project, for example, then this general contractor is not a prime contractor. Why? Because this general contractor does not have a contract directly with the property owner and because of this, there is no direct contractual relationship between the property owner and this general contractor!

ORIGINAL CONTRACTOR: Another name for a Prime Contractor.

DIRECT CONTRACTOR:  This is a New TERM DEFINED in the new laws that went into effect July 1, 2012.  Direct Contractor is also another name for a Prime  or Original Contractor.

GENERAL CONTRACTOR: A California Licensed Construction Contractor holding a CSLB classification (B1) License, whose primary contracting business is in connection with any structure built, being built, or to be built requiring at least two unrelated building trades to complete the project. The general contractor is usually hired by the project owner to oversee the entire job, to coordinate and direct the activities of all other contractors, and to assume full responsibility for the delivery of the finished project within the time frame agreed upon. The general contractor might also be responsible for only part of the overall project. In California, a (B1) license only allows the general contractor to specifically do framing and carpentry work. To complete a project which involves other trades such as plumbers, electricians, HVAC etc, the general contractor must hire a licensed specialty contractor, in that trade, to do that portion of the project. Just because the general contractor has a contract for the "entire job" does not give the general the right to do any part of the project other than framing and carpentry work, unless the general contractor holds additional license classifications covering the other work on the project.

SPECIALTY CONTRACTOR: A California Licensed Construction Contractor holding one or more CSLB specialty classification license(s) (C) or limited specialty classification license(s) (D), whose primary contracting business is in connection with any structure built, being built, or to be built requiring a specific building trade, or "specialty", to complete the project. The specialty contractor is a PRIME OR ORIGINAL CONTRACTOR only if hired directly by the property owner to do specific projects involving the work the specialty contractor is licensed for.

SUBCONTRACTOR: The term "subcontractor" is often misused. Any contractor can be a PRIME or ORIGINAL Contractor and any contractor can be a SUBCONTRACTOR. I have heard specialty contractors referring to themselves as "subcontractors" when they really should say that on this particular project, I am a subcontractor. Simply put, any contractor who signs a contract with another contractor to do part of or all of the other contractors work on a particular contract for a job the other contractor has, is a subcontractor on that project. In California, a subcontractor can be ANY licensed California contractor that signs a contract with another licensed contractor. Construction Subcontractors are usually specialty contractors hired by the General or Prime Contractor to perform certain tasks required to complete the entire project and may include, for example, trades such as plumbing (C36) , electrical (C10), roofing (C39), cement work (C8), and drywall (C9). A subcontractor can be hired by a Prime or Original Contractor, by a general contractor, or by ANY OTHER Contractor on the project including another subcontractor.

SUBCONTRACT TIERS: Subcontractors may, in turn, hire their own subcontractors to do part of the work they have contracted to perform. The "level" any subcontractor has in the Prime or Original contract is called their "tier." To illustrate this, take Joe, a masonry contractor (C29), who signs a contract with a homeowner to re-do the outside walls of a house. Joe is the Prime Contractor on the job because he has a contract directly with the property owner. The front and the bottom of the house is to receive brick veneer over the existing stucco while the remainder of the house will receive paint. To prepare the surface, the old paint needs to be removed from the existing stucco. Joe, who is the prime contractor on the job, hires Phil, who holds a Painting Contractor (C33) license, to do the sandblasting and painting. Phil is a subcontractor on this job because Phil has a contract with another contractor and not with the property owner. Phil does not have a "direct contractual relationship" with the property owner. Phil, after sandblasting and seeing the condition of the stucco surface, gets a change order to re-float and texture the stucco, which must be done before paint can be applied. Phil, in order to execute the change order, in turn hires Eddie, who is a Plastering Contractor (C35), to re-float and texture the walls for painting. Eddie does not have a direct contractual relationship with the property owner and instead, has a contract directly with a subcontractor on the job who, in this case, is Phil. That makes Eddie a subcontractor or more accurately, a sub-subcontractor, on this project. So the contract tier goes like this: The first tier, the highest tier, belongs to the prime contractor on the project... Joe. The next, lower tier belongs to Phil who has a subcontract with Joe to do the sandblasting and painting. The next lower tier, the lowest on this particular job, belongs to Eddie who has a sub-subcontract with Phil to do the stucco work necessary to prepare the stucco walls for painting. Both Phil and Eddie are subcontractors on the job and you would say that Phil is a subcontractor on a higher "tier" than Eddie. Now you can see that on more complicated projects, there can be subcontractors, sub-subcontractors, sub-sub-subcontractors and so on... and that each of these are on a different tier, higher or lower, than the other!

 Whew!  Glad that part is over aren't you. In the next post I'll discuss what you absolutely MUST have to be able to file a mechanics lien in California and the critical timeline you must follow! I'll also give you a link to download a California timeline reference card to help keep you out of trouble in your quest to get paid through the California Mechanics Lien Process!

Oh, and by the way, please sign up for our newletter and email notifications of new posts from ACT Contractors Forms using the form above to the right.  

Please post any comments you may have on the topic of mechanics liens in California.  Do you have a question you would like answered? Do you have a mechanics lien experience you wish to share? Post it below. Oh, and by the way, please sign up for our newletter and email notifications of new posts from ACT Contractors Forms using the form above to the right. 

     Whether you call it a construction labor lien release, construction worker labor lien release, workers labor release, laborers lien waiver or simply a laborers release, more and more property owners are demanding they get labor releases from every worker on their project. No wonder this is becoming more "popular"... it seems like consumer advocates, in everything they write, tell property owners to protect themselves from having a labor lien placed against their property by using this form. General Contractors also find this form useful as a tool for checking up on their subcontractors to make sure the sub is paying their employees out of the progress payments they have received.

     The problem is that state laws from California to Florida DO NOT provide for a labor release form like they do for other, construction related lien release forms. Also... State labor commissioners are given broad power to collect wages due employees from SOMEONE. The prefered "pocket" to get these overdue wages is the actual employer of the worker on the construction project. If this is a subcontractor on the job, and their "pockets" are empty, the next pocket looked at will be the contractor whom the owing subcontractor has contracted with on the project. This contractor can be another subcontractor of a higher "tier" or level or it could be the Original or General Contractor on the project. If the wages cannot be paid at this level of the construction subcontractor "tier" then the next higher tier is looked at until the top "tier", which is the project property owner, is expected to pay the wages!

What does this "Problem" mean?

     The short answer is that you can NEVER rely on a labor release form to fully protect you from claims made by workers on your project like you can the other construction lien release forms used between your construction contracting company and other construction contracting companies working for you. You can, for example, pay a subcontractor for the job they agreed to do and demand a lien release from the subcontractors company. This release will protect you, in most cases, from a lien from this subcontractor. If, however, this same subcontractor took the money you paid them and "ran", failing to use this money to pay wages owed his workers on your project, you will most likely be expected to pay these wages even though you already "paid" the wages once through payments received and mis-appropriated by the subcontractor. Then it's up to you to get re-imbursed for these wages directly from the subcontractor who should have paid them in the first place. That just ain't right!

So what good is this labor release form then?

     Use this form to give comfort, but no real protection, to any property owner who "demands" it as a condition before paying you. That's a no-brainer. But the best use of this form is between your construction company and your subcontractors...

     Use the labor relese form to "check-up" on your subs. Make sure the sub is actually using the money they receive on your project to pay wages owed to their workers on your job! How? By contacting random names on the labor release form and ASKING them if they have been paid. That is why it is important to get the workers phone number as well as their names, on any labor release form. And make sure the labor release form you use clearly tells any employee who signs it, that you are paying the subcontractor based on their signatures, and that the sub should be paying the workers out of these funds! Make sure your labor release form looks "official and professional" and not typed up so signers think before lying about receiving their wages.... like this construction worker labor lien release form.

     You say, what's the point? Workers will lie about getting paid to keep their jobs...right? I agree, for the first missed paycheck anyway. But someone will almost always speak up after they miss that second paycheck and are probably looking for a new job! The sooner you find out if a subcontractor is mis-appropriating funds, the smaller YOUR liability will be since you can put a stop to it sooner rather than later.

Have you had experience, good or bad, using a labor lien release? Questions about the usage of this form? Please share your comment so we can all benefit!

     A profitable way to "recession proof" your contracting business is to focus a part of... or even ALL OF your efforts on insurance restoration work.

     One of the most important contract forms, mandatory for any insurance restoration contractor, is an Insurance Restoration Contingency Agreement such as our Authorization of Insured Form. This form creates an agreement with the insured that states that he authorizes you to negotiate as his agent, with the adjuster. The AOI states that you will do the job for whatever the insurance company allows and the insured will only have to pay his deductible plus any upgrades he chooses. BUT, most importantly, the Insurance Contingency Agreement also provides that YOU WILL DO THE WORK!

To illustrate why this form is so important, let me give you this scenario:

     A hail storm appears out of nowhere in Oklahoma and damages the roof of the house owned by "Joe Homeowner." Joe calls your roofing company, right after the storm, and asks you to come look at his roof. After Joe gets off the phone with you, Joe calls his homeowners insurance company and after finding that this type of damage is "covered" by his policy, places a claim.

     You go out to Joe's house, get out your ladder, crawl up on the roof, inspect the damage, take some measurements, take some photos, then tell Joe that he should relax, you will negotiate with the insurance adjuster to get Joe the best settlement so the job can be done right. You tell Joe that, best of all, you'll do the repairs for whatever the insurance company pays and the ONLY out of pocket expense Joe will have is the deductible on his insurance policy. Joe tells you to go ahead, you shake Joe's hand, get the adjusters name and number and go back to your office to start "negotiating."

     Some of you, particularly those without experience in this, are going to ask WHY didn't the contractor get a repair contract signed RIGHT THEN? Simple, to create a contract you would need things that you just don't have. For example, you can't create a scope of the work until you see what the insurance company will "cover" to settle the claim! AND... since you don't have a scope, there is no way to give a PRICE and even if you could, you just told Joe, and this is the standard in insurance restoration, that you would do the work for whatever the insurance settlement was! If you can get Joe to sign a contract for what YOU think should be done for YOUR price to do this work, you could be way off from the insurance settlement. You could, for example, tell joe that the whole roof needs to be torn off and replaced and for $10K, which the insurance company should pay for, you'll do the job . What happens if the insurance company only authorizes a $5K repair? You've just sold Joe on a complete re-roof and the adjuster is now telling Joe that this is unnecessary and replacing the damages shingles is all that is necessary. Do you still want to do the repair job? Now that Joe thinks you don't know you're a** from a hole in the ground, the better question is ...Will Joe Let You DO The Repair Job?

Now lets get back to our scenario:

     OK so you've made 5 trips out to Joe's house with the adjuster, have emailed the adjuster two different sets of photos of the damage, written the adjuster 10 emails, gotten pricing and checked availability of the existing shingles on Joe's roof and pleaded Joe's and your case to the "stupid" adjuster for two weeks. The adjuster wants to do a repair and you tell them the whole roof is damaged and a repair will not put the roof back to the condition it was in before the storm and the repair will not match the existing. From the ground, because adjusters are above being a roof monkey and NEVER climb roofs, the adjuster says it looks like a repair will do fine. You climb up on the roof again and take more pictures. You go back and forth and finally the adjuster agrees with you and authorizes a re-roof ! You're so proud of yourself, because you just got Joe a $10K re-roof job when he was expecting a $5K repair. Yay! You tell Joe you have great news and make an appointment to see him day after tomorrow.

     Now, in the meantime, some "roofer" from out of state drove by Joe's house, saw the damage and, looking for work, knocked on Joe's door. He gave Joe a price of $6k to do a complete re-roof, scientifically basing his bid on the materials plus his truck payment, plus his alimony and child support payment, plus two months past due rent on his apartment... you know, a real businessman!??

     You meet up with Joe and tell him the good news. He politely thanks you for getting him more money than he ever thought possible, then tells you "thanks, but I got a bid for $6k to do the re-roof and I am going to go with that one." The part he doesn't say is that you just made him $4000 because he will still get $10K from the insurance company and the job is now costing him only $6K so Joe gets to pocket the difference! What can you do about this? Nothing. You didn't get Joe to sign anything so he is not obligated to accept your "bid".

     You just spent days of running around, meetings, emails, photos, crawling up on Joe's roof not once but three times and your payday for this...NOTHING! KISS IT GOOD BYE!

     An Insurance Repair Contingency Agreement like our Authorization of Insured Form, helps keep this from happening to YOU!

Contractors, do you have questions about Insurance Restoration Contingency Agreements like this?  Please share your comments, questions and experiences below!

WHAT IS A ROOF CERTIFICATION? 

Before most lenders will write a loan for an existing home, whether it is a re-finance or new purchase, FHA, and HUD require  that the entire roof surface be certified to "find that the roof is in good condition for it's age, does not leak and has an estimated remaining useful life of over 2 years."  Usually, the roof "certifier" is also required to guarantee this by providing a 2-year, no leak guarantee.  If the roof leaks in this two year period, the certifier is required to fix any leak at no charge provided the leak is not the result of physical damage to the roof from whatever source.  

WHO DOES A ROOF CERTIFICATION?

While Appraisers and Home Inspectors often make notes about the condition of a roof when they are filling out their reports, a roof certification must be done by someone who will stand behind the certification. If the roof leaks during the period it is certified for, the person or company that made the certification is obligated to fix the leak or... HAVE the leak fixed at their expense, as stated above.  Therefore, most roof certifications are done by roofing contractors as they are equipped to make any repairs.  Also, a professional roofing contractor has the necessary expertise and skills needed to make sure the roof will last the required 2-years. 

ROOFING CONTRACTORS THIS CAN BE A GREAT BUSINESS TO GET INTO!

There are many roofing contractors who do nothing but Roof Certifications and the work related to these. Typically, the price for a basic roof certification, with no remedial repairs, ranges from $150 to $350 and that is for only an hour or two's work! If repairs or even a re-roof are needed, usually the roofing contractor certifying the roof, does the work. So you can see this can be a VERY lucrative direction any roofing contractor might want to take their business.

WHAT DO ROOFING CONTRACTORS NEED TO DO ROOF CERTIFICATIONS?

Roof Certification, just like any home inspection services, can benefit greatly by using a software program designed to assist in this process. 

Of course you will need the right roof certification form and having this in a software program is critical. Also, those doing roof certifications will need a way to easily and inexpensively, include photos of the roof and any problem areas with their certification. Particularly helpful is a way to transmit the roof certification form, the photos, and other documents to the property owner, realtor, and/or financial institution, electronically.

A roofing contractors form software program that can easily "drag and drop" photos to a form designed for photos, and that includes the necessary, approved, roofing certification form(s) and other documents, with the capabilities of converting all these documents to a secure PDF file for easy transmittal by email, is important to the success of any roofing contractor going into the roof certification business.

Nothing will say "amateur" like a roof certification filled in by hand with Polaroid pictures attached, and of course, these must be faxed, hand delivered or mailed to the client. With a PDF, you do not even have to go to the expense of PRINTING out the certification documents and photos! Any hard copies will be printed out by the recipient of the emailed PDF files!

Do you have questions about roof certification forms and how they are used?  Thinking about a roofing contractors form software program for handling your job photos, your paperwork- both insurance and day-to-day, and "sending" these by email? Please post questions and comments below!

     You know that contractor from Tennessee I discussed in yesterdays blog post about the length of contractor forms, specifically, the length of your home improvement contract? Well he did end up faxing over a copy of the home improvement contract form he was using for re-siding a house... You know the one that was 8 PAGES long without the federal cancellation form! .... You know, the contract form that cost the contractor a $9000 re-siding job because the customer "needed to look it over" before signing and never called back?

     When I pulled the papers from the fax machine, I expected to see a generic, "try to do everything", contract form that was overly long and "scary" because it included much more than was necessary for home improvement work.  I was right... and I was wrong.

     What I saw was a wordprocessor based form, downloaded from the internet as a contract for all "construction and improvement projects" sold to a Licensed Tennessee Home Improvement Contractor, that had notices and terms from at least TWO other states! and... This same Tennessee Home Improvement Contract, was missing the Tennessee required notices.  It did not even have the the most basic TN notice... the notice giving contact information for the Tennessee Home Improvement Commission (THIC)! 

Why was this Home Improvement Contract 8 Pages Long?

1. It had notices that the creator typed in from not just one, but two other states!

2. Instead of using the correct, home improvement 3-day cancellation notice, a single, small paragraph, the creator incorrectly used a "recission" notice for the sale of merchandise that took up half a page by itself.

3. It had a 3-day AND a (7-day) notice of cancellation form which the form creator included because, in their own words, the seven day notice is a "mandatory contract inclusion in many states". Guess what, the ONLY state that has a seven day notice to cancel is CALIFORNIA, so why add pages for that in an agreement for Tennessee or for any other state for that matter?

4. It had long detailed provisions for things like setbacks, lot lines, excavation, hard earth, things that are completely unnecessary for most home improvement jobs and certainly not needed for re-siding a house.

5. It was created in a wordprocessor program instead of a professional, page layout program... and wordprocessor forms are ALWAYS longer because wordprocessor programs are limited in what they can do.

6. The layout of the contract was very "homegrown" and not well thought out. This is the difference between typing and "typesetting".  For example, things that should have been placed side by side were placed on their own line taking up twice the space. 

No wonder the homeowners panicked when they saw this thing.

    Be careful that the contractor forms you use meet your specific needs. Generic, "one size fits all" contractors forms can cost you much more than the forms themselves. Ask questions and look at samples before you decide on which form to use. And make sure your home improvement contract is not too long for the customer to "swallow" because it contains too much of the wrong "stuff" and too little of the right!

     Have you had an experience, good or bad, with the home improvement contract form you use for your business? Do long contracts matter to the average homeowner?  PLease leave your comments below so we can all learn!

     I talked to a contractor today from Tennessee, who has purchased contractor forms from us in the past. This contractor went out to get a home improvement contract (not one of ours by the way) signed by a customer getting new siding on their home. Mind you, the customer had already ACCEPTED the one page bid (this contractor form was ours) with EXACTLY 5 lines in the scope of work field.

     The contractor made the appointment, sat down in front of both the husband and the wife at the kitchen table, opened up his briefcase and took out his computer generated home improvement contract and laid it in front of them. The homeowners took one look, quickly flipped through the document,  and told the contractor the dreaded words, "we need a few days to look the contract over before we sign."  Why?  Because it was 8 pages long... not including the two pages for the attached, and required, notice of cancellation form! No wonder the couple hit the panic button.

     Put yourself in the homeowners place. How can any contractor possibly justify an 8 page contract when the entire scope of the job took up ONLY 5 LINES? Everyone expects the length of your contract forms to be appropriate for the size and complexity of the work being done! Wouldn't you?

     Even in California, the state that has more requirements on what has to be in a contractor form than any other, the California Home Improvement Contract we sell is only  THREE PAGES. This contractor was from a state with almost NO law requirements and yet the contract form he gave them was 8 PAGES LONG. Geez, I've said it before and I'll say it again. What customer feels good about signing a contract for a simple home improvement job, that is LONGER THAN THE CONTRACT THEY SIGNED TO BUY THEIR ENTIRE HOUSE!

     Does anyone out there remember what a contract form is supposed to look like? You know, a "good old" contract that is written on one page, front and back, with the signature line at the bottom of the FRONT page? Sorry, but that's the way your customers EXPECT the agreement to look like! Flop down a contract "book" in front of them, where they have to go through page after page just to find the spot to sign, says "LAWYER" not "CONTRACTOR", and the first emotion your customer usually feels is FEAR!  BUZZZZZZ, there goes the panic button!

Don't kid yourself into believing that the length of your contract form doesn't matter to the average home owner. In my next post I'll tell you about what I found when this contractor from Tennessee faxed over a copy of this very same contract form....

How long is YOUR home improvement contract? Ever had someone reject it? What would you like to see as far as the layout and content of your "perfect" home improvement contract? Please comment below.

In part one of this post I gave my 2 cents about contractors marketing with door hangers and some of the things and techniques I have learned over the years. I've never kept count, but I am sure that over 35 years, I have probably put over a million door hangers on the front door knob of somebodies home and I didn't do that because they don't work!

     Now I would like to tell you of a great way to get these door hangers delivered "free" and at the same time increase the happiness of your employees. It is simple. When you get a job you send your crew out to do the work... right? These guys are usually paid hourly and are always looking for more ways to make money. Here's what you do...

      On the next residential job you get in a neighborhood of homes, print up 100 door hangers with the address of the customer on the door hanger. Once again, this is why it is great to have contractors forms software that can do this for you.

     On the door hanger, be sure to put  something like "we are doing your neighbors home at XXXXXXXXX, please drive by and see what a professionally (insert your service here) job can do for a home like yours... then give us a call for a FREE inspection & Estimate..." Also, be sure to code these door hangers so when you get a call, you will know where the door hanger came from.

     Now give these door hangers to your crew.  Tell them that ON THEIR OWN TIME, put these on 100 doors of houses that need the same services you are selling and that they are doing. Why should they do this?

     Because you are going to give them a commission for every job you sell from one of these door hangers. BY commission I mean a HUGE commission, (by their standards), for your entire crew. WE used to give them the same commission that are sales staff received for selling the job, 10% of the job price. You can give them whatever you want but there are great advantages to giving them a nice - big - commission.

• First... your guys will know that their commission depends on the customer driving by and taking a look and sometimes talking to the homeowner, so they know the job better be done RIGHT!
• Second... your guys will appreciate the chance to make a nice chunk of change over their wages, for this simple "job".
• Third... doing this will make your guys not only part of production which they are anyway, but will make them a part of "sales" which they always feel left out of. You'll find your workers rooting for the salesperson instead of griping that they do not have enough work and that the "stupid" salesman doesn't know anything about, well, anything.

     Believe me, when you institute this, after getting a commission or two, your crews will BEG you to print up more door hangers! Your job quality will go up. Best of all, your crews will "police" themselves about the work they do, about how the truck looks and about how they look on the job because they know their commissions depend on it!

If there ever was a win - win situation between a contractor and his employees... this is it!

P.S. Be sure to get permission from your customer to use their name and address in this way. This should be part of your home improvement contract terms and conditions!

Have any questions about where to buy door hanger paper or how to make door hangers from your PC? Just put any questions in the comments below and we will be glad to answer them!

My 2 cents on door hangers used for marketing by painting contractors, roofing contractors or any home improvement contractor that does ‘visible" work.

By visible I mean work that is visible from the street by a neighbor driving by. This could be re-siding a home in a neighborhood where many homes need this but could also apply to swimming pools or any other trade where the work is visible from the street.

     First, I have seen some really PRETTY door hangers that mostly get thrown away. Why? Because if the home owner is not thinking PAINTING or ROOFING or whatever else you're providing at that precise moment they pull them off their door, they will be considered nothing more than a nuisance just like any other junk advertising.

     Pretty doesn't get the lead. What gets the lead is a strong "call to action". The call to action must be designed to make that same person think PAINTING or ROOFING even though they are probably thinking about having to pick up the kids or run to the dry cleaners. A coupon is a plus but that alone will not get the door hanger read!

     There is no more Direct advertising than door hangers advertising exterior painting, placed on the front door of a home that needs painting. You can't even consider this a "cold call" , it's more like fishing in a bucket full of fish! If this is not your target customer, what is? Why do so many of these get tossed without a second glance... because you have not given the home owner a REASON to read the darn thing. A pretty picture may grab their attention for a moment but in order to get the door hanger read, you must give the homeowner compelling TEXT, you know ...writing, that makes them think about PAINTING their house. When you do that, the door hanger will be kept and you will get a call! With the right call to action, UGLY door hangers get read much more than "Pretty" ones!

     To find the MOST compelling call to action, you need to experiment and that's why it's nice to have a contractors form software program that allows you to be able to print door hangers from your PC. That way you can test without being locked into 5000 door hangers that do not work because you got a deal from a print shop. TEST your call to action. One of the most difficult thing for contractors to do is to stop doing things the way YOU think they should work, and start doing things the way they ACTUALLY work for your customers. Duh, you say! Of course I want the door hanger to work but... you have to keep your OWN MIND out of the process. That's why it is so important to test different approaches, coupons and call to actions! Once you have found the ones that work, then think about repeating this big time with those 5000 hangers!

     One of the most compelling "calls to action" for painting, and other "visual" trades like roofing, that I have found in 30+ years as a painting contractor and roofing contractor, is the "keeping up with the Joneses" approach.

     You know, Marge & Jim down the street are getting a new paint job or roof by these guys, so we should too! I drive by their house every day and it sure looks good! Something like:

     I've even had great success with making the word "FREE" as the first thing seen on the door hanger. Everyone likes something for free, don't they. It can be a FREE ESTIMATE, or a FREE ACCENT COLOR, or a FREE UPGRADE TO OUR PREMIUM PAINT, or a FREE

UPGRADE TO OUR BEST PAINT JOB (if you offer different "grades" or "levels" of work . . . and you should).

 

     The important thing is NOT to get caught up with "pretty" and experiment to find what actually works!  

     In part two of this series about door hangers I'll tell you how to get these hangers delivered for "FREE" and help your paint crews at the same time!