Late or non-payments impact your cash flow. And your options can feel limited when your reputation is on the line. However, in some cases, portable restroom operators can place a mechanic’s lien against the property for the money owed. Doing so may generate swift action from the property owner, allowing you to retrieve past-due payments.
When circumstances don’t permit this action, you may need to pursue collections or other legal means. In this article, learn what a mechanic’s lien is, how it works, and when you can use it. Then, explore alternatives to collecting unpaid debts.
Generally, a mechanic’s lien is a tool used in the construction industry. It’s a legal claim that a contractor, supplier, or subcontractor can place on a property if they haven’t received full payment for services, labor, or materials rendered. Once a property has a mechanic’s lien, it remains there until paid, meaning it shows up during a title search, and typically, the parcel can’t be sold unless the new owner agrees to pay off the lien.
Let’s say you provided portable restrooms while a resident built an addition to their home, and the general contractor failed to pay for your services. Placing a mechanic’s lien forces the property owner to get involved and pressure the general contractor to pay you. Often, this action results in quicker payment, helping PROs improve their cash flow.
Mechanic’s lien rules vary by jurisdiction. In many states, the law only applies to real property, such as land and buildings, not portable restroom services. The process for filing a lien also varies by location. It may be as easy as stopping by city hall to complete a form to file a lien against the property owner. But, like other legal processes for collecting unpaid bills, further steps may be required.
You may need to:
Since mechanic’s liens can’t be used in all cases or jurisdictions, it’s necessary to have backup plans. The most effective collections activities get your customer’s attention without impacting your portable restroom company’s reputation. As always, documentation is critical. Track all communications in case legal action is required.
PROs may take the following actions when a customer fails to pay:
Although most businesses face occasional late or non-payments, you may need to reassess your billing and collections process if it’s a regular thing. Ensure timely customer payments by simplifying your payment methods or requiring funds (like a deposit) upfront. Otherwise, head to your local government office and see if a mechanic’s lien is an option.
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