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What should I do when a project is cancelled?

Hi there, We always try to send a prelim within 30 days of sending an invoice. We've had a recent situation where within 10 days of the material shipping to Pittsburg the whole project has been cancelled. We charge a 25% restocking fee to our customers (to cover handling, etc.) and we have cancelled the initial invoice and reissued the new (restocking fee) one. Can I still send a prelim even though the job is cancelled and I assume the amount I would enter would be the 25% restocking vs. the full amount?? Thanks, Linsay

1 reply

Oct 14, 2019

Preliminary notices aren't adversarial in nature, and at the end of the day, they're more or less just informative letters. This is especially true considering Pennsylvania doesn't usually require preliminary notices be sent in order to preserve the right to file a mechanics lien. So, there's nothing preventing a sub or supplier from sending a preliminary notice for a restocking fee, even after a job has been canceled. However, in all reality, the typical benefits of a preliminary notice - transparency, improved communication, collaboration, and the preservation of rights - might not be on the table. So, it might be valuable to assess the goal of sending the notice. If a customer has agreed to a restocking fee, then it's perfectly acceptable to demand the fee be paid, if a demand becomes necessary. But, a preliminary notice wouldn't meet this goal - a demand letter or Notice of Intent to Lien might be a better tool for that, since they demand payment. For more on Pennsylvania preliminary notices: Pennsylvania Preliminary Notice Guide and FAQs.

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