The Home Service Expert Podcast - Writing Solid Contracts to Protect Your Business from Lawsuits

Episode Date: November 26, 2021

Karalynn Cromeens is the owner and managing partner of The Cromeens Law Firm, PLLC. She holds more than 16 years experience practicing construction, real estate, and business law. In her professional career, Karalynn has successfully filed more than 1,000 lawsuits to foreclose or remove mechanic's liens, with several of those being tried to a jury. Karalynn has grown her law firm at a tremendous rate and serves as a mentor to her employees. In this episode, we talked about workers’ compensation, contracts, subcontracting...

If you're a home service guy, you need a contract. I don't care how small it is. Even if it's just written on a piece of paper, you need a contract. And here's the thing. You need a contract that's easy to understand and clear. It doesn't have to be full legal ease to be effective. Just a clear contract. Because if you get into an argument without a contract, you might as well just walk away because it's just going to cost too much to decide who is right. So a contract, having that up front, being clear about expectations. And then at the same time, another thing that is a clear collection strategy, that you have a consistent, clear collection strategy that starts at the beginning of every project.

And I say that, it's all the information that you gather at the beginning of the project that could help you later on if there's a collection issue. But not having that stuff at the front end, a good contract and collecting all the data that you need will make collections nearly impossible. Welcome to the Home Service Expert, where each week, Tommy chats with world-class entrepreneurs and experts in various fields like marketing, sales, hiring, and leadership to find out what's really behind their success in business. Now, your host, the home service millionaire, Tommy Mello.

Welcome back to the Home Service Expert. I'm your host, Tommy Mello. And today I have Carolyn Cromey here. She's an expert in construction, real estate, small business. She's based out of Houston, Texas. And the firm she is the owner at and managing partner is called the Cromings Law Firm. And she's been doing this since 2006. Carolyn is the owner and managing partner of Cromings Law Firm, PLLC, and holds more of 16 years experiences practicing construction, real estate, and business law. Within her professional career, Carolyn has successfully filed more than a thousand lawsuits

to foreclose or remove mechanic liens, with several of those being tried to a jury. Carolyn has grown the Cromey's Law Firm, PLLC, at a tremendous rate and serves as a mentor to several employees. You know, the first thing I start with, Carolyn, is first, welcome to be here. Thank you so much for having me. I'm excited to be employees. You know, the first thing I start with, Carolyn, is first, welcome to be here. Thank you so much for having me. I'm excited to be here. You know, I've never been excited, especially the last few years, about lawyers, except when they're in our favor. You keep us out of the court, hopefully. That's the plan. You know, these last few years, especially this last year, my lawyer bills, I've always said, listen, if you can find somebody to do something for you for cheaper than it costs, like if it's $30, $50, a hundred dollars an hour,

and you're making a thousand, but lawyers are the only people that got me beat. And I'm just, I'm just not a lawyer because what they do is they'll get like three of them on the phone and then they'll talk to my CPA. Then they'll want to talk. And I'm like, okay, this conversation is costing me like $500 a minute. But anyways, I'm excited because there's so many things that we could do, especially the small businesses out there. I'm set up. I've got a Delaware trust. We've got several different companies to protect ourselves. We've got a federal uncontestable trademark that still gets tried all the time, which is a pain in the butt because believe it or not, A1 was a common name. A1.

So if I go back in time, I'd not do that. But I want to start by asking you, I want the listeners to get to know you a little bit here, where you've been, where you're planning on going, some interesting things about yourself and your company. Gotcha. Well, let's say the way I got into the business was out of necessity, really. I was in law school in my last year of law school, and my husband and I just started a material supply business. And so very quickly, I had to learn how to preserve lien rights in Texas. And what about joint check agreements and all of this? There's so much of a business that's in the construction industry that you need a lawyer every day. You need the helper, you need a system in place to help you.

And so that's really how I got into it. And don't get me wrong, I grew up in the trades. My dad was a farmer. My brother's still an irrigation contractor. My first job was for my uncle as an irrigation contractor. So I've been around it my whole life. And then now where I'm at is... So it started as just something to save our own insets. And now it's gotten to something much bigger, where I'm really trying to help the backbone of the country, the people who actually build things, or as I'd like to call them, the Get Shit Done Tribe, run better and more successful businesses. Because here's the thing is they're really good at what they do, but all this other stuff could take them out in a heartbeat. And I've seen it happen.

And that's why I wrote the book, but it's getting screwed because once you sign a bad contract and it gets crammed down his throat, it could take you out of business. But I actually lost a jury trial where my contractor client had done really, he did a great job on the work but he didn't do little things like daily reports and other things like that and i threw him in default and the pay one pay clause and they were like i don't know 120 days behind and he couldn't finance

the job anymore and so he ended up losing that case because it cost him more to finish that project and went out of business because of it and there wasn't a damn thing i could do about it because he already signed the contract. And so that's what quickening screws all about is so you don't get in those situations and realize that there's nothing good in a subcontract that's out there. You know, that's an important thing you brought up. I don't think people understand this and they flatter the radar and they really do because quite honestly, the IRS doesn't have enough people to go after these guys because they don't want to go after somebody. It costs them more to go after them than to win. But a lot of times people, they contract out and they don't know really what a subcontractor is. Can you talk to me?

There's a lot of companies that beat me in a lot of ways because I don't 1099 anybody. And that means, first of all, I know there's some rules that they got to work less than 70% for you. They got to have their own LLC. They can't be scheduled. They can't drive your logo truck. There's all these things. And I promise you, half the audience right now is listening and they're doing it wrong. And they're at the opportunity of the IRS of getting out ofited and getting really all that back tax. Now the IRS won't put them out of business because they want to collect some money,

but all that money is going to be going to the IRS. So talk to us about that just because I didn't have that on the sheet, but I think it's so important. No, and here's the other thing is that you don't realize is that, okay, so there's a big difference. Just because you call somebody a subcontractor in 1099, does make them that way. So if you get caught, what it takes, what normally happens, how I normally see this is there you have an employee that usually gets

injured by personal injury, like gets rear-ended. They go to a PI lawyer. And the PI lawyer has this list of questions that they ask them, which includes, where do you work? And they get into questions about overtime violations and things like that. And what are the job duties? And so this attorney is picking up on, oh, here's another case that we can take on contingency fee to go against this construction company that is paying these guys by the day or whatever. It doesn't take into an account overtime, any of the other things that required. And so when that happens, that one employee will kick it off and send a demand letter. You'll get sued in federal court. And when you get sued in federal court for overtime violations, not paying overtime because

you didn't call them an employee, what the federal government gets to do is then look into your books for the last three years and send out notices to all of your past employees, past and current employees. Hey, you may be owed some overtime. And so all these people get noticed that this case is going on and that they can join. And so now this one guy that may have had an overtime issue is now everybody that's ever worked for you is going to get notice of this. And it becomes literally a class act. So the dangers, and they don't care if you're an individual in LLC, they will come after you. And you can't run and hide from the federal government or the IRS. And that's just the overtime side. That's not even gets into the back taxes because then you get thrown to the IRS from that. You're going to have to pay all the taxes that you were supposed to pay from FICA, Medicare. I mean, Sigma, Big Mac, I mean, the list goes.

And then penalties and interest. I mean, it's crippling. Well, the problem that I have is there's a lot of people that look at my business and they go, you trade your customers a lot of money. And I'm not the most expensive, but I go, we have an office and we have lawyers and we have real accounts and real CPAs. And the fact is, you've never talked to a lawyer and you wonder, you've never filed for a trademark or a patent. You have no idea what it costs to actually do things right. Because when you get caught, your business is not sellable, first of all, because it wouldn't even pass the sniff test. And they go, well, that's all about your mumbo jumbo. I look at these people and some of them are listening right now. And I'm not saying you're wrong because look at, I've done it the same way for a long time. I'm in my 15th year. Gosh,

that's a long time. 15 years. Finally got shit right about three years ago. But the fact is, is we can still do a better job of keeping track of these small things. And you almost need somebody that's dedicated to that. And hopefully your HR person has a little bit of influence. So we talked to a tax attorney and an employment attorney, and we're trying to lower our EMOD score. And that's another thing that gets happened is if these 1099s get hurt and they don't have any insurance or any type of workman's comp and they need to file a claim. They're suing you. Oh yeah. They're suing you for sure. And here's the other thing that I normally see too. If you're working for somebody else,

that person gets hurt on the job, they're suing the homeowner too. I'm over, over, over, overinsured. I've got a policy against the policy because it's only a matter of time. And here's what they do. They look up the owner and if there's no juice to squeeze, they walk away. They won't take it. But in Southern California, there's more prosecuting attorneys towards businesses because if they win a penny, you pay for the lawyer fees. A penny. All the jury or the judges say is, you're not going to win anything.

We'll give you $500 of restitution. But that whole lawyer fee of $100,000 is now paid. I just, it's crazy to me. Speaking of workman's comp, and we got a lot of other things to go down here, but we got an hour. What do you think about workman's comp and kind of what are some interesting

things you've been through on that? Anything? Yeah. Well, like our state, it's not mandatory, right? Some states it's mandatory to have it, which I always think if you have employees, you need workman's comp. I have workman's comp and I run a law firm just because somebody gets hurt. It limits your liability. Whatever they can get through workman's comp is it. If not, like here, if I didn't have workman's comp and somebody gets hurt they can sue me for what happened plus trouble damages because i didn't have workman's comp give me a reason why it would be okay if someone would say i'm not going to carry workman's comp i don't understand why they would have mandated i mean i guess businesses that don't truly don't have employees that truly have subcontractors right like if you're

at the general contractor's office you're going to have a few office employees, but most of the people that do the workers truly subs. Yeah. But if there's subs, you don't need it. But if, why do they give a choice with W-2 is what I'm asking. Why would they give you a choice with a W-2 to not have working staff? Because I mean, I guess it's your role in the dice, right? I guess it just seems like to me. I agree. I agree. And then you're rolling dice of what it takes. Like I said, some states mandate it. It's just not here. If you have employees in the state, you need employees anywhere. You need workman's comp just because it can be astronomical what could happen. I mean, I just settled a case for a client that had somebody

fall off a roof. They didn't have work from this comp. The litigation took five years and I think we just settled it, paid a hundred K, which was a really good outcome, but they sued the homeowner. They sued the general contractor and they sued my client. So everybody threw in something, but my guys had to pay cash for their portion because they didn't have any insurance. Wow. Yeah. That's crazy. I've been in court too many times and I've sued. I've literally sued somebody for... I had developers working on some software for me and they took the software for a developer that made a fortune. And the crazy thing is I won the lawsuit and I lost 100 grand after I paid the lawyers.

I'm just going to be honest with you. Nobody wins in litigation except the lawyers. You're never going to be made whole, right? Best case scenario in the courtroom, you get a judgment that makes you even. That doesn't consider all your time, all your energy, the depositions, the stress of dealing with litigation and putting your case on in front of somebody else to let them try. That is a stressful and time-consuming thing that it's all gone. So I really have, before we head down the litigation path, my clients really have a serious conversation about what it's going to entail. And especially if we're sitting on the fence, if this lawsuit is not about something essential, but about pride. If it's about pride, it's never a good business decision. And the only person that's going to get rich are the lawyers,

I promise you. The only time I think it's a good idea to go down litigation is if you're taking on a contingency so the lawyer will take it and they'll say i'll take 30 of what we win because that way you're not even rolling the dice you're like if you don't win you don't get paid and that's i don't yeah but the caliber of first off it'd be hard for us to find them in the construction industry. Personal injury all day long, yeah. Especially at the subcontractor level, just because those cases are so fact intensive. And the quality of lawyer you'd get at the contingency is not as good. Because I mean, they're like, whatever.

I mean, don't get me wrong. If it's easy to settle and they can take 30%, then yeah. But if it's going to take longer than a month and more time, they're just going to sit i mean i've got a federal trademark thing going against contingency case and it's just a pain because they just came out last month and said we're going to hear this case in court next june and that's the other thing right now is that kicking it kicking it and the whole time i'm getting lawyer bills we had to respond to this, we had to do this.

It's frustrating. But you know, you have a lot of experience in the field. You've helped a lot of professionals avoid getting out of these situations. What's some of the things we need to be careful about and start thinking about it and protecting ourselves? Okay, so the big one is contracts. And contracts, any way you go, okay?

If you're a home service guy, you need a contract. I don't care how small it is. Even if it's just written on a piece of paper, you need a contract. And here's the thing. You need a contract that's easy to understand and clear, right? It doesn't have to be full legal ease to be effective. Just a clear contract because if you get into an argument without a contract, you might as well just walk away because it's just going to cost too much to decide who is right. So a contract, having that up front, being clear about expectations, right? And then at the same time, another thing that is a clear collection strategy, that you have a consistent, clear collection strategy that starts at the beginning of every

project. And I say that it's all the information that you gather at the beginning of every project. And I say that it's all the information that you gather at the beginning of the project that could help you later on if there's a collection issue. But not having that stuff at the front end, a good contract and collecting all the data that you need will make collections nearly impossible. Oh, I have a vehicle wrap business that we're not doing the right stuff for that. You know, in this book called Never Lose a Customer Again, it's by Joey Coleman. What I love about his concept is he goes, look, do you really read the contract ever? And a lot of times companies, and this is the opposite side, this is me being a consumer,

is I didn't realize I allowed Instagram to go through my photos when I'm not there, turn my phone on and do all kinds of listen to my conversations. But I can't sue them because they're right. I did say, okay. I hit a little button that said confirm. And this great book, it's amazing. And I just read it because that place that the mastermind, I was telling you the cost of a hundred thousand a year ago to

one of the billionaire guys was like, you got to read this book. And the first thing we spent our time on is getting customers. We'd really become good at marketing. And then we got these sales guys that are good closers. What we don't realize is there's a third layer. It's customer satisfaction and keeping them coming back and keeping them as your best raving fans. And he made this story in there and it's pretty interesting. I don't want to share it. He says, I bought a wedding ring and it meant a lot to me. And seven years after me and my wife were married, I lost it. For the hell of me, I couldn't find it. I spent a month trying to find it before, but I made sure to make an insurance on it and pay the highest

amount of the policy ever. Like it was ridiculously high because I wanted to make sure that I could get get a like for if anything happened. He was on the phone with the gal. She was really nice. And she says, sure. She's like, well, she calls him back and says, I got good news. I can replace your wedding band. We're going to send it to you. And he goes, well, no, I'd rather have the check because I'm going to go to the same jeweler. And she goes, well, we can only give you 45% of that fee then. And he's really pissed him off. And he learned that the contract, blah, blah, blah, blah, blah. But I won't mention who it was, but it rhymes with Beberty Motual. I was listening to the Audible.

Beberty Kutual or something he said. Because I've never mentioned the name of who it was. I think a contract is super important. But I also think when you're doing a contract, most home service companies, the amazing ones that are 500 million that I go visit all the time, they'll get a third party on the phone with the person and say, so Mr. Jones, I know you're standing with our top technician, Timmy, and Timmy's amazing. I got to tell you, Timmy's the best dad ever. So Timmy tells me you want this, this, this, this, and this. It's going to take 12 weeks to get it in. And here's what we're going over.

And here's what it includes. And I just wanted to make sure that you're clear on everything and get that third party, even if it's a ceremony that works for you. And then on top of that, my guys in California, I'm not in California yet. If the person's over 70 years old, they'll send a manager out there and they'll call the kids to confirm that they're okay with this new air conditioning unit. And they're taking all these precautions because that's the kind of stuff the attorney general... I know a garage door company that got kicked out of California because the attorney general's mom got taken advantage of. But anyways, I went off on a tangent. I just think it's so important because there's a third level.

And I never caught a contract. Here's my secret, Carolyn, my secret that I've learned in a book, never caught a contract. That's what we call it. Agreement and agreement. Yes.

Because I'm scared of it. Like in California, they've basically written your home contract for you. There's so many requirements. What has to be in a California residential service agreement. I mean, California by far has the most just to protect consumers. But that's what I'm saying is that it doesn't have to be anything legal. It can be three or four pages.

But here's the thing that I'm trying to prevent is because I deal with pissed off homeowners all the time. And there's two things that they're upset about. If you don't have a contract, they have a very different picture in their mind of the work that you're getting ready to do. A hundred percent. Yep. And if you don't have a meetings of the minds of here's what we're getting ready to do, here's the timeframe. They're going to think what they have in their head is right, right, wrong, or indifferent. And then when you don't do that, they get pissed off. And then they leave bad reviews and sue you. And the other thing is that I hear all the time is

that nobody returned my calls. Nobody listened to me. More than anything, just in human relationships in general, people want to be heard. I'm not saying you have to agree with them. I'm not saying any of that. I'm just saying, let them say everything that they need to say, write it down and you can respond however you want, but let them be heard and then that's it. And then respond later on. Because the biggest thing is, is that they just get so mad that they don't,

hey, he didn't listen to me. He didn't, you know, answer my question. Yeah. Pretend you're angry right now about a graduate that we didn't get. I love this. This is pretend like you're an angry customer. I can't believe you installed this shit. It doesn't even work. The remote's broken. You didn't even leave the batteries. Oh my gosh, Carolyn, listen, tell me exactly what's going on out there. And literally this is what I'll do. I'll say, Oh no, no, this frustrates me because the most important thing in my life is my time. And we took advantage of your time. And I am so

embarrassed. You know, Carolyn, I started this company by myself when I was 22 years old. And I used to go out there and be the guy out there putting your light bulbs in and tightening everything up. And I am so embarrassed. I'm going to find out, I'm going to look into what the technician is at Doug and Madden, but there's a great chance he won't be working here. Oh, no, no. I don't know if I want that. I'm just telling you. I'm just having to bring me some batteries. And then I'll say, listen, Carolyn, first of all, I want you to love our company. And you realize companies make mistakes. And this is not okay. This is not okay. They're getting written up no matter what. But I want to know

what can i do right now to make you a happy customer and keep you coming back wow it seems like i already bought a garage door wow that's good that's what i'm saying if the contractors on these that like these homeowners that it would just they don't even have to do it that well just acknowledge that there is an issue they don't want to hear to hear it. Here's another thing that I don't think people realize is yesterday I had a friend of mine's dad and he's definitely a hothead about my service agreement. You guys didn't call me after one year and they listed on there that he's a hothead or whatever. And he kept texting me and I said, well, what's going on? I'm going to bleep his name, but what's going on? I'm just going to say Billy. What's going on, Billy?

Because he might be listening. And he goes, Tommy, your friend, my daughter, he's going through all this stuff with her. She got in a car accident. She's doing okay. But you never know what they're going through. And they might take it out on you. And the fact is that we get defensive. I've learned one thing.

When we go to the BBB or the ROC, the registered contractors or whatever, we'll usually win. But how much time did it take? Exactly. You took three days out of your life for a $200. Just pay it. Make them happy. A lot of the times, because it doesn't happen. It's literally in my life, it's been 1%, but I had 10,000 customers last month.

So therefore, there's 100 of them. Hopefully, we can mitigate that down, but still I have one guy in particular named Bruce, we call it a Bruce fire. So can you explain to our listeners, what's the biggest difference between the bid and the scope and why it's important to understand the difference? Okay. So when you're signing somebody else's contract, you need to know what you bid is not what you're hired to do necessarily. The scope of bid is not what you're hired to do necessarily. The scope of the contract is what you're hired to do. And the two are rarely the same. So you

submit a bid, I'm going to do X work for X dollars. They submit you a contract in response to that bid. And the scope that you're hired to do is never the same as the bid. And so I've seen contractors time and time again, just sign it, not even review it, and then get nailed with $25,000 of something they didn't realize was in their scope, whether it's loose lentils or electric door parts, it's never the same as what you bid. And just because it's always industry standard,

don't ever assume that. Don't ever assume that there is an industry standard and read the scope. Because once you sign it, you're on the hook to do it win lose or draw if you make money or lose money it doesn't really matter you know when i've been on the contractor side of the consumer side of things i was doing a remodel one time and this guy came in at a really good bid he had good pictures to show me and he goes i mismeasured the squares it wasn't 14 it was 34 and at the time i didn't have the time to just like i'm like dude you're now double what everybody was like is this

a joke and so frustrating but at the same time i didn't have time to just stop and start a lawsuit and i told someone in my office so like who do you want to get for the landscaping for the front we just remodeled the front and said, let's just get three bids from just three good companies. And then let's go ahead and check out when their ROC started. Because if it started anytime recently, then they're not.

They just, they remake their name. Let's look at their BBB. And I know that's old school. Then let's look at their reviews. Reviews are important. But the deal is, if you're like me, I go to the one stars and I see how they reacted to the one star reviews.

Yeah. I agree. They're not all that. I actually have a client that bid a job. And here's the other thing is when you do a bid, you put an expiration date on it or put a provision in there, the materials will escalate. Because I did a bid back in 19. The contractor sent over the contract at the end of 20.

So beginning of 21, they didn't sign it. They ended up hiring somebody else. The contractor did. It cost them $150,000 more than my guy's bid that they accepted. And now they're suing them for that $150,000. Because they signed all this paperwork. Oh, yes, I'm general contractors relying on this bid. And you're responsible.

La la la. So it didn't even matter that they didn't even sign the contract. So I don't know. We're in the middle of that one. I'm not quite sure how it's going to turn out. But I mean, those are just some of the things that once you put a bid out there, it is an offer that can be accepted. And so make sure you put an expiration date and material escalation clause

on it that if prices of material go up, that you get more money. Wait, wait, wait wait that's important so expiration date and escalation clause escalation clause yeah you're gonna say if prices of material goes up i'm in more than two percent i get whatever it costs it doesn't have to be anything fancy do you realize that one of my vendors, we're up 100% right now. And right now we have 600 doors on order. But he said, Tom, there's 200 that are on the way.

He said, literally, they've already been paid for. We've already made the orders at the set amount of price. I've already gave the consumer the price. We built in our margin. And he says, I got gotta raise your prices retroactively on those 20 oh shit and there was a guy here that i just had hired and he goes i gotta see your contracts with these guys he goes is this a joke and i told the guy i said this is not possible i said that's more than my margin so i'd have to install a door for a loss yeah exactly and he

goes well what do you want us to do he goes goes, I can't get them. And listen, this company is $600 million. They're not like a little fly by night. Anyway, I talked to him and I said, here's what I'll do. And we worked it out. I said on the new order, I'll order another 500 doors because I need doors bad at the new higher price, but I didn't sell those yet. So I can raise the price. But it was great. It's crazy. I mean, that's what you need to put in your service agreement too, that price escalation, but I didn't sell those yet so I could raise the price. But it was great. It's crazy. I mean, that's why you need to put in your service agreement too, that price escalation. Because at the end of the day,

if an owner is going to go forward with building at this time, they should be the one who takes the risk. And I'll tell you, most of the time- You just can't do it though, retroactively. You can't say, hey, I gave you this price for this. You know what happened with a lot of the builders? I saw them saying, we don't know when your house is going to get done, but they weren't able to reverse it on them because wood went up 10 times.

And they're going, man, we can't build it for this. But they said, we're not sure when the wood's going to come in. So this could take a way, way, way lot longer. And we'll refund your money because they know the house is halfway built. And some of the people, so all they could do is say, because of the supply chain, and that's legal, they could say it's going to take an extra year and a half. But we'll refund your money now. And you've been through this. I don't know how you do it.

Because quite honestly, I dated a lawyer for a little bit. And she was the prosecutor for the municipality. And she'd come home. She'd be just so overwhelmed and stressed out. And I'm like... In that instance, you're dealing with people's lives. I'm dealing with people's money

and their livelihood too, but it's not their freedom. It's not their... You know what I'm saying? Yeah. Plus the victims of... That's just a whole different... Yeah.

Oh, man. All of wax. One day she's like, I felt so bad for this guy because he sold 60 vehicles. He never transferred the title. So he'd take the title from this seller and never take it into possession.

So he wasn't paying dealer fees. And she's like, I really feel like he didn't do anything wrong. And I was like, shoot, I did that. I've done that a lot. But I think it's out of, what do you have, seven years? So well before the last seven years, I'm like indicting myself right now.

So what are typical mistakes and misconceptions that people have about subcontracts? That there's some set of rules that protect them somehow, that there's a form that they can't get screwed by signing them. They don't need to bother reading them because it's just part of the job. We're just going to sign it. And not realizing the horrible crap that's in these things.

And they've just gotten worse over the years and worse and worse. And until we start pushing back and saying, no, I'm not going to sign this. That's the way it's going to be. And it's too bad because all the risk now falls on the backbone, the people who actually do things and get shit done. So explain to me exactly, because I don't know if the audience is following, what am I not signing? So when you get a subcontract from a general contractor,

it's full of all these horrible things, right? And then still we start saying, no, I'm not going to sign it this way. I'm negotiating it. It's going to continue to be this way. So like, for example, I'm the garage guy. I have a plumber, something happened with the plumber.

I can't collect my money in my net 90. It's crazy with these contractors. I don't know if it's Shea homes or Pulte homes or these masterminds, but if the HVAC guy does a perfect install and the concrete guy shits the bed, we don't get paid. Correct. And now who would want to do,

this is why I don't do new home construction rarely and you know to those that do and if you're in the garage industry call me i got some good ideas no it's just signing somebody else's contract like that whether it's an owner or whether it's the gc's you got to read it and understand it because there are some things you take one wrong misstep like if you sign one of their contracts right now and you don't put a material escalation clause in there, you will eat the increased cost of materials. And if you walk the job and say, no, I'm not going to do it, they can come after you for the difference. So it just doesn't go away. These are serious things that you're signing and you need to understand.

And that's the main thing. You know, now I understand when guys say look i'm happy making my 500 grand a year i'm not going to get any bigger because at this point how do you squeeze blood out of a turnip right no one's going to come after me what are they going to get and that like i said it's all a risk and reward whether you're willing to take it or not what you're willing to do it or not these are the things you need to scale you need a good contract that somebody can understand you need to have somebody read your contract and help you understand it if you're signing somebody else's. And you need a collection strategy. I mean, that's just to top it off. But I mean, those are the things that

if you want to make business in business that are essential, there's just no doubt about it. And you know what? That costs money. It does. And I love this so much because it's just building a case of a true business that runs, has the money to do all these things and still is able to make a profit. You know, these guys that are coming away saying, I made a hundred grand this year. How much did your business make? Well, zero. I made a hundred grand. I told you that.

Let me see your contracts. Well, I don't have a contract. I went to legal zoom. What's your take on places like that? Man, you get what you pay for. And here's the thing is that, you know, like my firm is, and there's more firms coming out where if you call me, you want a home service contract, it's 1500 bucks. It's for your state. That's what, you know, and I'll draft it up and we'll have an interview and specifically for your business because the legal world cannot exist where it is right now that there's just no... There's no end price tag for things.

Especially when there's people like me coming out. Okay, you want this? Here's how much it's going to cost. Litigation, I can't. But contracts and contract reviews, I can give you a flat fee price on that. It's going to be more than LegalZoom. But it's going to be, number one, in plain English. Both you and your customer can understand it.

It's going to be easy to use. It's going to be built specifically towards your business and what you do. Whether you're a garage door installer or a remodeler or a roofer, all of those businesses have different requirements and different things that are important, right? Like the roofer, when he tears off the shingles and happens to have all this bad plywood or whatever,

he needs to have in his contract, yeah, I don't have x-ray vision, so this could cost more. There's just different things for different businesses that need to be addressed. And if you could get it at a flat rate, like that's the whole idea behind LegalZoom.

The problem with that is that it's not one size fits all. Every state is different and every business is different. And it definitely matters whether you're residential or not. Because residential, like homeowner in a house

has a whole other level. And every state has a different requirement of what needs to be in your contract. Because every state has built-in protections for homeowners that you as a contractor, who you don't have in your contract, could suffer if you don't have it in there. There's these things in Florida and California

called the PACE program, where you could upgrade anything energy efficient, whether it's solar, your HVAC unit, and you can borrow against your mortgage, pay it off over 30 years. And guys started attacking that, selling $60,000, $70,000 worth of stuff. And they're getting cracked down and arrested. I mean, you just got to be careful. Sometimes things just seem too good to be true. And they're out there making a bunch of money and then all of a sudden it's just this is a good one here what is a pay when paid clause and how does one negotiate that okay so paid when paid clause and normally where you see that is where an owner hires the general and a general hires the sub and what we're talking about is

the contract between the general and the sub oh it, it's the flow. It's the contract that keeps the money between the subcontractor. Well, it's basically that the contractor has no obligation to pay the subcontractor until they get paid by the owner, which you as a subcontractor, the plumber, you're going to do a good job doing the plumbing. You pay for everything. And now the owner and the general get in a fight. You're basically screwed now. You put all the material and the labor and because they got in a fight, you're not going to get paid. And so at Subcontractor Institute, I have some different ways to split the risk because now right under a pay when paid clause, 100% of non-payment is on the subcontractor or the material supplier, whatever it is. And there's some ways you can

split the difference. If they're not paid in 30 days and it's not your fault, they'll pay you half. There's just some different ideas. Because here's the thing is that with a pay-one-pay clause, you could have to finance the entire project before you ever get paid. And it's just... Imagine the cash flow that that would cause. You put out all the labor, all the material and then you can't do a damn thing about it because they're not in breach of the contract they're not in violation of the contract don't be wrong you can file a lien which will secure your right to get paid eventually but that's a long one what are the stuff are there like special courts you know

like those courts under a thousand dollars that they just want to judge judy that crap does this stuff get figured out pretty quick? Or is this a really exhaustive? Look, most states have justice of the peace course for like $10,000 or under. But still, that takes a while and does not anything fast. And that's why when you sign one of these things, you're tied in for however long it takes. And if you can't float the whole contract amount, you could be hurting.

You keep mentioning the Subcontractor Institute. Now I want to know more. Okay. I'm sorry. It's a great resource because the Subcontractor Institute, there's so much there is free. There's 20 chapters that I teach free on all the dangers of signing a subcontract. And there's like 80 different forms that are all free. And then in September, I'm launching the 50 state lien laws on subcontractor Institute and all that information will be free as well. So just tap into Google subcontractor Institute.

It's my gift of the information of I've learned to hopefully help businesses run better business and realize that there's dangers out there that they need help with. Like I said, I've just seen too many businesses go out of business because they didn't realize the risk. And then I know most of these things are mom and pops, married couples that have been a couple generations. And this is what they do. This is what they love to do. And not knowing about all these other things out there is risky. I love that you did that for us. and everybody should go there and find out more.

I've had to sign personal guarantees. I literally have signed personal guarantees on, typically when I take a loan out for the building, maybe personal guarantee it's from my house and other things like that. I mean, I had to give blood and get an insurance policy against the loan. If anything happens to me, they're the first, I mean, I had to give blood and get an insurance policy against the loan. If anything happens to me, they're the first. I mean, look, the deal is, here's what I want to explain to some of the business owners out there. Some of the non-business owners out there is don't expect to be on the good side if you never sign up for the bad side. Because nine out of 10 businesses fail.

And I have a good buddy of mine who's working with me now. And he said, were there houses on the line? The worst case scenario, they go find another job. But if you're a personal guarantor and you're doing all these things, if they never had those risks, why would they expect any of the upside? When the chances, quite honestly, are not in our favor that we make it. No. What did you say? I mean, are the chances good of a contractor going and making it big? I don't think they are. I think that workers all the time go, I could go do this. And they, it's the E-myth, right? By Michael Gerber. They go out there and

they say, I know how to bake pies. I could bake, I could do this, but they don't understand. It's not about baking pies. It's about transaction taxes. How do you do sales? How do you market? All these other things. I mean, I mean, what was your what was your business? You said you started really paying attention to it three years ago. I know what that feels like because that's relatively new to me. But what was it before that? It was something you did every day to pay the bills. It never had any focus, drive, direction, you know what I'm saying? And that's what so many are. But when you're that way, it's just so easy to get taken out and there's no plan of anything else. Well, I thought I said, man, a lot of people, and I know this is a lot of people

said this, I see these guys getting rich. I'm doing the job for them. I'm the one collecting the paycheck from the customer. I'm going to go out and I'm going to go do this on my own. And then they realized they switched a 40 hour job to an 80 hour job. They don't get to take vacations. They still walk away with the same amount of money and they're not paying their taxes right.

Exactly. And they're not doing it right. And one fall swoop, you take your business and your personal assets because you signed personal guarantees for all this stuff. And that's the thing with some of the employees, realizing that it's so much more than what meets the eye to run a success. You start a business because you're so good at that one thing. And then when you're in it, you want to run a successful business. you're so far removed from that one thing in order to make it keep happening. You understand? It takes so much more planning. I mean, even at the practice of law, I mean, I have meetings on my files all the time, but I'm not drafting things. I'm not attending court hearings. I'm running the business side

of it. It's the same for any other business. I'm good at what I do, but I don't do that thing all the time. Do you know who Ben Shapiro is? Ben Shapiro in this one, you might've seen it. This guy stands up and he goes, we're the workers,

we deserve equity in the business. And he goes, well, what kind of business? Why don't you give me an example? He goes, well, for pencils, for example, you've got wood, you've got lead, you've got the metal, and then you've got the business. And he goes, well, what kind of business? Why don't you give me an example? He goes, well, for pencils, for example, you've got wood, you've got lead, you've got the metal, and then you've got the rubber. He goes, without all of the workers, those pencils could never be made. And he goes, your work is alienable. First of all, you volunteered to come to this job to get paid, number one, number two. And he just, if anybody's listening to this, go right now to Google and search Ben Shapiro destroys guy on a pencil and eraser because

he goes, did you buy the factory? Did you take the personal guarantee? Did you hire the marketing department? Did you get the insurance? All these different things. And he goes, what happens if he gets sued? Are you taking the lawsuit too? So you only want the good side of the contract.

You don't want to take anything on the negative side. That's what capitalism is yeah well you know this is the one that i kind of skipped and i'm afraid of it but it says can you share subcontract horror stories from your clients that our listeners should learn a lot from so is there some horror stories or maybe a couple that you want to share here the next five minutes. There is a lot. And it's like, how do I start? It ranges from small to big, right? I'll tell you, I have one client that has both at the same time.

So we filed a lien for him. And he was not very truthful with me about when the materials were supplied. And here in the state of Texas, that's a huge thing. And so it came out during the course of the case that he was a month behind. His lien was a month late. Okay. So when you file a lien that's invalid like that, you not only lose your lien, which his lien was for like, I don't know, 150,000. So he lost that. And then they tagged him with everybody's attorney's fees, which was $100,000. So now he's negative 100, plus he's got to pay them $100,000. That's one.

But on the other side, at the same time, he had a case that went to arbitration against a general contractor. And I would not recommend this because they've changed the contract. They were in negotiations about a price. He never signed the contract and he went to work. And they were saying it was a lower price. He was saying it's a higher price and it cost him, let's see, he had to put up $85,000 in attorney fees, but we went to arbitration and he won because he did not sign their contract. But then yesterday I read a contract that says, hey, even if you don't sign this, if you start working, you're agreeing to all the terms of it. So if it was that contract, you would have been screwed. You would have been at the lesser price. So there's just so many things. So collections is a huge thing. what is the most recent one the guy that's being sued for 150 000 over his bid that's going to be an interesting one he's probably going to end up having to pay that you know a termination clause

another client that i had was terminated they hired another contractor to finish his plumbing work it was 50 000 over they sued him they got a judgment against him i mean he basically had to change businesses so hey that's one of the things is do not avoid that letter when it comes in the mail because you can get in front of this stuff but after the time lapse there's already been a decision made so i wasn't doing my taxes right in 2010. It's me and a guy running in a truck. We just avoided this damn city of Mesa just kept sending us this letter about taxes. And I'm like, what do you mean? Like, dude, we're like making a hundred grand a year total. Like we're barely even scraping by.

Well, a year later, they took the largest fraudster company in Arizona and applied what they paid in the city of Mesa and said, we owe that. We owe the city of Mesa $54,000 for personal property taxes. Well, it was $54,000 that we owed on the sales tax or whatever it was that the city taxes, just a city, just one city out of the municipality. And I went back and I said, we didn't even make this amount of money. And, and they said, well, it's already happened.

And then here's what happened. There was another incident that happened that we were idiots. And three years after he's out of the business, guess what they did. It was something about the yellow book, something or other. They levied his account. They literally took all the money out of his account.

And he's in another state. He calls me up and he, he hasn't been part of the business three years. He goes, they just took all my money out of his account and he's in another state. He calls me up and he hasn't been part of the business three years. He goes, they just took all my money. And I go like this at 2013, I'm semi considered successful. I mean, by all means, anything we are today, but I was not like not making money. And I'm like, well, I'm like, how much was in your account? And he's like, it was like 15 grand.

And I'm like, yeah, I'll give you 15 grand. And then I need to get a lawyer. And it's crazy because they can just go in and levy it if you ignore it. One day you can wake up with no money in your account. Your account frozen. Go to use your debit card at the grocery and it won't go through because somebody got a judgment of you. Now they're garnishing your bank account.

They can come take your assets at your business. And it depends on the state. They can garnish your wages in some states. If you're a debtor, the best state to be in... I've had someone take charge of those with trial support, for example. We get a letter in the mail. They tracked them down and they wonder why there's $400 missing out of their check. Exactly.

It's crazy. And they go, oh, you want to go start a business? Oh, you want this? Go ahead. So glamorous. Oh, God. You see, a lot of times on this podcast, we talk about the awesome things, marketing, sales, recruiting, training. Yeah. Go get it. And this is one of the most important podcasts I've had because it's not that easy. Okay. There's a lot of things to think about. There's a lot of things to be worried about. And I'm a big fan of anybody going into business and being successful. But I'll just tell you, the odds are way against them. It's like, I hate to say it,

but the day you start running the business correctly and hiring the right people and getting the right CPA and paying the right amount of taxes. Listen, I'm a big fan of paying Uncle Sam the least amount he needs to be it legally. Because I'd rather put the money into my own philanthropy. I know that word you're trying to say. I'm with you there, too. I'll pick my own charity. Thank you very much.

Philanthropy. Dang it. Anyways. But yeah, I agree. I agree. say i'm with you there too i'll pick my own charity thank you very much philanthropy dang it anyways but yeah i agree i agree and here the thing is i don't want to make to make biden trump or clinton or whoever it is a millionaire i don't need them to go through their bureaucracy and take all the money don't give it to people that they think but earned it or deserve it more than i do exactly Exactly. That's what I did. Oh, I got it. Two of them.

One for my HR gal. It was only $13.33. So tell me about, I bought two of your books, Quit Getting Screwed. And I'm really sorry. I should have read it before you came on, but I will read it.

And I got one for Jen, the HR. And I love buying people books. That podcast. I'll get a book and I'll get really motivated. I'll buy one for Jen, the HR. And I love buying people books that are supposed to be podcasts. I do that too. Like, I'll get a book and I'll get really motivated. I'll buy one for everybody. But then they never read it. And I'm like, well, I guess they haven't. And I've done this several times. I pay them $100 to read it. And I don't know why I gotta pay

people to read. But you do. Because then you have a book club meeting on it. Yeah, then we have a book club and I'm like, dude, did you just read the Cliff Notes? Like the Cliff Notes? You just read the i don't even care if you listen into it on audible at least you get it well there's this other thing called blinkist have you ever heard of it it's like they should be down to 15 minutes 15 minutes and it's really high overview but you know like there's certain books that i'll just go through the blinkist that i like it i I think what I learned from his stories, like I want to hear a story and how it applies.

Like I love books like who moved my cheese or the one minute manager, or even, you know, your customers are like one of my favorites. What is it? Oh, your customers. Oh,

I didn't read that one. That's a classic. It's a, I can't remember the guy's name. It's a yellow book. You can Google it's on Amazon, but I'm buying it. You know what?

You got to read a book for me. It's another yellow book that you said. Double your profits in six months or less by Bob Pfeiffer. And it came out in the nineties. Okay. And the guy's place that I was at, he's actually 400 million. His name's Leland Smith.

He said, when I read this book over the weekend, I came back, I fired seven people. It changed my life. This book is a lot more about more of savings, but tell me a little bit about quick getting screwed. So it's my gift. So you don't get screwed. Cause here's the thing is that whatever you sign in a contract will be used against you. And those are all the things that if you're going to sign somebody else's contract, that you need to change before you sign. And here's my thing is, I know that you're in the construction industry and they're like, well, they're just going to hire somebody else. So number one, know your worth and know what the risks are. Know what your tolerance is.

And then you can negotiate in between that. But if you learn what's in there and what the risks are, you'll know what you can agree with and what you can't. I actually had a really good idea that I haven't had anybody use yet. So if anybody wants help getting this done, is that if you're a subcontractor and you put a bid in to get a project, that as part of your bid, you put in a contract that's easy to read, understandable, and say, hey, you can discount my contract to my bid price by 10% if you'll sign my subcontract instead of me signing yours, just because these things are so horrible. And the one that I have is pretty fair, so.

You know, another thing is right now with real estate the way it is, one thing that I always, always do is go through that fricking bid, go through that lease clause, because you might have to replace the AC unit. You might have to replace some big things that you didn't know about. Plus, if you grew out of that building, you're still stuck for another two years, unless you get a sub lease agreement. So you can sublease it. And there's all these, let me just tell you this,

the way I've learned is through failure. I've learned because I replaced an AC unit. I've learned because I've been stuck in a building an extra year and literally left it empty. And this is the thing is that if you know those things up front, how much time and money could you have saved? Oh man. And I will tell you pretty much everything except a bank and a credit card contract can be negotiated right a real estate contract any kind of contract or agreement is negotiable well i want to talk about negotiations but i bought a house recently a year ago when it was listed for 2.5 million and i negotiated that i said i want all the furniture and it's very sticky because no one can get in it because the lady had leased it out to a lady that did airbnbs and she goes you got one hour to look at because i told the lady

i'll continue to airbnb it as long as it's profitable she goes okay you're gonna come in and see it then okay so i negotiated for 2.1 and that was a steal and so first of all i called her up and i said i want you to sell to me at 2.5 and I want $400,000 given back at closing. She says, why do you want to do that? I said, well, number one, it's got to appraise at that value, but that way I could take all the money I'm putting in and I can take 80% out of it. And the 80% is more at 22.5 and 2.1. And it still needs to appraise that.

So it's not illegal. It's not like I'm doing anything that's like illegal. It's stillraise that. So it's not illegal. It's not like I'm doing anything that's like illegal. It's still valued at that. And I didn't have to take any money out of the loan, but when she signed, she signed this house is not able to be bought from anybody else. Well, the lease contract with this Airbnb chick, she had a right to purchase the home at 2.3 and a half.

In February, this was in September. In February, she activated her agreement to do it, to buy, put the money in the, she'd like 30 grand in escrow. And I had to pay her 75 grand. I don't even know I'm supposed to be talking about it, but oh well. But I'm suing the lady, I'm suing the lady. I'm suing the lady and I'm like,

look, and then they're going to get me. And then, so I got to go do, what's the thing where you got to swear and they get the deposition. And I was going to say,

literally, I had no idea she had the right to buy the house. They're going to say, well, why did you change the price to 2.5? Because I wanted to pull money out.

Plus the house was, that's what it was for sale for. I negotiated that. I don't know how I could lose this thing, but it just scares me because I wanted to pull money out. Plus the house was, that's what it was for sale for. I negotiated that. I don't know how I could lose this thing, but it just scares me. Cause I'm like, I don't do anything wrong. The lady screwed up,

but you know, who's going to have pain is the seller broker. Yeah. Cause she, she overlooked it. And then the broker has insurance for that. Anyways, this is what I'm talking about with contracts.

It's so fickle. Sometimes it's the littlest things. And little did I know, I thought I was talking about with contracts. Exactly. It's so fickle sometimes. It's the littlest things. And little did I know, I thought I was moving in last September. You're still fighting about it. And I just got in there a month ago. I guess when I'm selling it, I don't... It's not... It's too big.

But I wanted to ask you, so you said a book, Hug Your Customers. Do you got three books that really just kick ass in and stand out to you? Hug Your Customers. Do you got three books that really just kick ass and stand out to you? Hug Your Customers, one, Dare to Lead by Brene Brown is another one that I thought was very influential about being a leader of people and being vulnerable and all the things that you need to do that. What's another one that I'm trying to think? I'm almost finished it, The Alchemist. I've heard of that. I'm more into personal development, self-help,

and it's kind of off the beaten path for me, but it was very insightful and more of a, just a, a view of the universe, I guess, and the world in general. You know, I could dig books like that every now and then, you know,

you can read, you know, it's not very long, but just those are probably the three I'd recommend. There's a bunch more I've read. I'd have to... Three more questions for you. I'll get you out of here.

I may have three more answers. I don't know. So, what is your favorite negotiation strategy? Or what are some of your favorite negotiations? There's a book called Never Split the Difference, and the guy had a lot of insight. I know. And he's like, don't ever negotiate. And I'm like, I don't know. The main thing that you got to know where you stand, right? Is it worth it to you? Is it not worth it to you? What is your risk tolerance? And then

I'm like, okay, you got a contract, let's mark it up, send it back and we'll do this whole negotiation. And you got to decide at what point it's worth it to you or not besides that if they send it in pdf just edit it and make it what you want well the thing that i've always learned is shoot for the stars of atlanta when you're still doing good i met a lady that on friday and saturday of this week and it already showed up in the mail it says negotiate like you matter and it's funny that this is on my desk and re Rebecca's young I haven't read it yet but she's sitting in a round table with me and I said look at least I could do and I told her I got your book she's like oh my god and I'm like look better be good but uh but I'm a big fan

of negotiations I've always negotiated and and I think the first thing you got to do is if you're on the buyer's side you need to throw out a really low offer, like almost unsaltful. But because here's the thing is, let me ask you, Carolyn, what are you looking to get out of that? If you tell me 5,000 and I come back at 2,000, you're going to be like, dude, you're a jerk. Get the hell out of my face. But if I say, Carolyn, here's the thing. You look at this, it's going to need CB joints, new tires. The interior looks like crap. I'm just using a car, for example. at this, it's going to need CB joints, new tires. The interior looks like crap. I'm just using a car, for example.

This is what it's going to cost me. I'm not really interested in it. I got two more to look at. I'll give you two grand right now, cash. Now you're like, I feel like dealing with anybody else. But when you said five grand, it's like five's the lowest I'll take. And then I insult you. So I think throwing the first one out there, negotiations are weird. I like the art of the deal too. That's up there is

how do you make most people feel like they walked away with a win? And sometimes they have totally different goals. Like for example, I know this guy that really does a lot of motivated seller leads. And he went to these older people, they were like 65 years old this is 70 because 65 i'm getting older 75 and uh he goes let me ask you guys this what do you do in your spare time what do you guys love to do and the old lady grabs his hand and she goes we go and see a matinee almost every day and he goes what do you do you like popcorn is that what you guys did she's like yeah sometimes juju bean is talking about different things and he's like listen what do you do? Do you like popcorn? Is that what you guys do? She's like, yeah, sometimes. Jujubee, they're talking about different things. He's like, listen, what do you say if we make a deal

on this house? I'll get you guys in here. You said six more months. You take my price, but for the next year, I'll get you guys three movie tickets to your favorite matinee, and it'll come with candy, and I'll take care of all of it, and I'll set it up, and you guys will enjoy it. freaking knit. They were like, are you kidding? That's what we love. We're done.

It was all taken care of. And it's funny how that little things work. Is it, there was, he got his way and they got what they wanted. No. And the more you know about the situation is obviously the more, you know, I mean, the homeowner side is, is different than the commercial side and commercial side is different than the commercial side. And the commercial side is just cutthroat. And at that point, you got to decide if it's your throat or somebody else's that's going to be cut. And you got to be willing to walk away and take the next job because you don't have to take every job you're offered. And that goes true on the residential side, man. I can't tell you how many customers have come into my office and said, man, I knew from the beginning I shouldn't take this job. They just don't match with the homeowner.

They just, and trust your gut when it comes to that one and move on to the next one. Save yourself some heartache because there are situations that you're just not meant to be. And it's going to cost you more time and money than it's worth.

You know, we almost doubled our prices since January and we went from a 60% conversion rate to 49. We won, we won. We went down 11%, but we doubled our prices 100%. I mean, at the end of the day, that's what it's about, right? It's called winning. It's working less for more. It's the 80-20 rule.

Exactly. And I wanted to ask you, if I want to get a hold of you, I want to reach out. And you're coming out with the book. So you got Quit Getting Screwed and you're coming out with Quit Getting Stiffed. Yep. All about collections. And the Subcontractor Institute will launch the rules for liens in all 50 states, which if you're in construction industry and you're working on credit, which most people in the construction industry do, knowing your lien rights is essential because you can lien a property and that basically gives you a security interest in the property, like a mortgage

that you can enforce and force the sale to make sure you're paid. The problem is the rule to do it correctly is different in all 50 states. And if you do it wrong, you can get hurt. So you got to do it right. But once you do it right, just imagine securing the amount that you're owed by the property. It's huge. Without that, you just have, you have a contract claim against whoever hired you, especially in situations when you're not hired directly by the owner. It's a priceless remedy. So like if the general contractor goes out of business or files bankruptcy, you're still secured because your lien is against the property. I think it's an underutilized tool in the construction industry, especially for subcontractors and material suppliers to make sure they get paid. And let me ask you this. Is there an easy way for me to make it so simple?

So say, like, look, I'd have a hard time telling you, Carolyn. I'd be like, Carolyn, we do this lean until then you need to lift the lean. Is there a simple way to just automatically do it and just put it into the contract? I just, I would say anything over $10,000 or something, I'd have a rule. And I'd love just a software, like my CRM to just hit a button and say, this is going to automatically do it when I hit fulfill to automatically lift it. Because worst thing that this person wants to do is say, I'm going to sell my house as a lien when the work was fulfilled and there's still the mechanics lien on it. It just seems like a lot of work sometimes for... No. And here's the thing is you only file liens when you've done the work in your own money.

It's not on every project. It's just on the projects you have a hard time getting paid. So you could do that after the work is completed? Correct. Correct. You just need to know the timeframes of when to send notice. Like in Texas, if you're a subcontractor, you need to send a certified letter to the owner on the 15th day of the third month after work. Most every state has a notice required before you file a lien. And even if they don't, you can still send a notice, say, hey, I'm going to file a lien if I'm not paid. That's pretty effective at getting paid. So you're telling me that the 15th day of the third month is 75 days, roughly. Yeah. Why does it have to go that day?

It can go sooner. It just can't go later oh okay here's the thing is like the sooner you send notice the better because the whole point notices across the board are trying to prevent the owner from paying twice so if you give the owner notice and like when you're working directly with the owner and they stiff you that's a whole other thing you just need to file your lead but if you're a material supplier or somebody who's not working directly with the owner give them notice as soon as you know the payment's going to be an issue to give them time to pay you out of their contractor's money. So that's going to be super powerful. I'm telling you guys right now, anybody listening, when you learn on how not to get

stiffed, quit getting stiffed. Mechanic liens are just the most amazing. They're our friend. Keeps consumers accountable. And here's how I close everything out, Carolyn. I want to give you several minutes. We talked about a ton of stuff. I mean, we hit everything I wanted to plus some, and I love it when we do this. But maybe we didn't talk about something.

Maybe there's something that we missed. Maybe there's something like a take to action today on quick getting screwed and stiffed. But I'll leave it to you to spend a few minutes talking to the audience on things that they could do and maybe something we didn't hit. Yeah. No, thank you again for giving me this opportunity. And I want to say the most important thing, especially for your home service guys, a contract that explains the terms of what you're going to do, your payment terms, your payment schedule, and then having at that same time, having a consistent collection strategy that's like, I send an invoice. If I'm not paid in X days, I'm going to do Y. That's consistent,

the same over and over every situation. Because it'll hugely... If you have a problem with cash flow, that is why. You don't have a consistent collection strategy or you're not invoicing properly or something. And so once you streamline that, it's just a huge help to help cash flow that you can put back into your business. And so those are all something that you need to have. And getting that done is just essential. And then, like you said, dealing with issues when they happen. Hide it. Don't not deal with it. Whether it's a homeowner with a letter from an attorney, a letter about taxes, whatever it is, just dive in and deal with it. I promise you, if you don't, the ramifications be way worse. And so the collection strategy and the contract, I offer all that on flat fee

for all 50 states. I have unlimited lien subscription pricing. Everything's as much as I can be upfront about how much things are going to cost. That's what I do. And so at the Chromings Law Firm and Subcontractor Institute, again, I'm here to help because I know how hard it is to do the thing you're good at and still run a successful business. It takes a lot of time and energy and effort. You know, Carolyn, those of you that aren't looking at Carolyn, she's very serious about what she's talking about.

I believe she's come from the industry. She's not bullshitting us. I do believe she's offering something out there to help us. It's not like something that's greedy. It's literally here to protect us. And I really think that you've seen the worst of the worst and you're just out there going, I don't want to see this again. Obviously you're running a business. There's no such thing as a free lunch. So I think it's a very economical fee, $1,500 to protect yourself. And if you're not using these things, I'm just telling you, spend the $1,500. God, if you don't have a very good contract that's been looked at by an attorney who knows what the hell they're doing, then call Carolyn. That's all I can say, because if not, you're an idiot. Seriously, you really are. If you think $1,500, you're just going to fly, keep flying, keep flying. It just takes once. It just

takes once. I agree. So thank you so much for coming on. I want to read your book, then I'm going to give you a call. Perfect. Thank you so much for having me. Hey guys, I just wanted to thank you real quick for listening to the podcast from the bottom of my heart means a lot to me. And I hope you're getting as much as I am out of this podcast. Our goal is to enrich your lives and enrich your businesses and your internal customers, which is your staff. And if you get a chance, please, please, please subscribe. You're going to find out all the new podcasts. You're going to be able to ask me questions to ask the next guest coming on. And do me a quick favor, leave a quick review. It really helps us out

when you like the podcast and you leave a review. Make it four or five sentences. Tell us how we're doing. And I just wanted to mention real quick, we started a membership. It's homeservicemillionaire.com forward slash club. You get a ton of inside look at what we're going to do to become a billion dollar company. And we're telling everybody our secrets basically and people say why do you give your secrets away all the time and I'm like you know the hardest part about giving away my secrets is actually trying to get people to do them so we also create a lot of accountability within this program so check it out it's home service million or com for slash club

it's cheap it's a monthly payment I'm not making any money on it to be completely frank with you guys, but I think it will enrich your lives even further. So thank you once again for listening to the podcast. I really appreciate it.