Client Won’t Pay For Maintenance You Performed? What Do You Do?
Nexus Property Management ™ is able to provide maintenance services for our clients at well below industry averages because we’ve created and operate in-house maintenance teams that are available 24/7/365. Our maintenance technicians are the faces of our operation and it is this branch of our company that is most valuable in terms of helping our clients deal with costly catastrophes. If there is an emergency, a truly professional company will take care of it promptly to limit the damage and protect the owner’s asset...but what if the owner then refuses to pay?
We run into this issue about once a year so it’s rare but can still be very costly. Our technicians need to be paid for the work they’ve performed and as a business we need this money. Recently, our Nexus maintenance techs responded to a burst pipe in a basement in Providence. We’d never had an issue with the owner and we wanted to keep the tenants happy so we took care of it before the water damage spread. In the end, the cost came to about $6,000! The owner refused to pay.
Now, whenever possible, you should try to get a deposit up front to avoid these situations, but if you’re unable to do so, like in this situation, you need another option. The answer is to file a mechanics lien.
How Do I File A Mechanic's Lien?
Our policy is to give the owner thirty days to commit to repayment. The state of Rhode Island allows for 200 days, but there’s no good reason to wait that long. Waiting a month allows the dust to settle, for any emotion on the part of the owner to die down, and gives ample time to figure out whether the issue will continue to be a point of contention. There is a standard format and in Rhode Island the document used is called the “Notice of Intention To Do Work Or Furnish Materials Or Both”. You will need to fill this out and file it with the city or town where the job was completed (not where your business is located). Other states will have similar forms and procedures. Seek the assistance of a lawyer the first time through if need be. You can then draft your own letter. Greg Rice, Nexus’ General Manager, conveniently runs you through the steps and sections beginning at 4:56 in the video below.
In your letter, you’ll need to address where the property is, the type of work that was done, who it was done for (property owner), and the exact amount of money owed. Working with a professional property manager like Nexus makes this easy as we keep detailed (itemized) invoices that can easily be added as addenda. We also attach the management contract between ourselves and the owner, any approved work orders, along with dates that include time stamped digitally signed contracts and agreements. When applicable, we also share documentation that shows the owner has named us on their Insurance Document whereby he or she agrees to have us act on her behalf. In short, we create a conveniently organized, professional package of documentation that shows we have the permission and authority to perform the maintenance in question.
In Rhode Island, you then file your mechanics lien in Land Evidence Records for the city or town in which the work was performed.
If you’ve filed correctly, a lien will then be placed on the property. This doesn’t mandate that payment be made to you immediately but it adds your name to the property. The most typical outcome is that the owner is unable to sell or refinance the property until you get paid. You would appear on any potential equity transfer to ensure you get what you deserve...eventually.
Of note, liens are added in the order they are filed, which is another reason not to wait 200 days. If someone were to file a lien before you, they’d get paid before you, in the same way, mortgages get paid before liens.
The Benefits of Technology
Something like this can be a major inconvenience and can really disrupt your money flow. You want to be able to act fast for the benefit of tenants and owners but you can’t afford to put yourself at risk. When people think property management, digital documentation and technology probably aren’t the first things to come to mind, but a property manager who doesn’t take advantage of these tools is wasting time and effort that could be better spent on their owners’ assets. They’re also putting themselves at risk of not being prepared with all the necessary documents to file in a situation like this. Nexus has taken the use of modern tech to the extreme by creating our own proprietary software called Nexus Back Office™. Time is money and technology is the key to efficiency. We hope that you’re also able to use technology to make issues like filing mechanics liens as easy as possible.
Mick Lefort is the Vice President of Operations for Nexus Property Management™. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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