How to Protect Yourself Before Starting Any Construction Project

The job looks good. The budget is approved, the schedule is set, and the client is ready to go. You are eager to mobilize your crew and start producing. But before you drive a single nail, pour a single yard of concrete, or pull a single wire, there is a checklist you need to complete that could mean the difference between getting paid in full and spending months chasing money you are owed.

Most payment problems in construction are not random bad luck. They are predictable outcomes of preventable oversights. The contractors who consistently get paid are the ones who set up their protections before the work begins, not after a problem surfaces.

Here is your pre-project protection checklist.

1. Get a Written Contract (And Actually Read It)

This is the foundation of everything else. A verbal agreement is nearly impossible to enforce in a payment dispute. Even a simple one-page written agreement is dramatically better than a handshake.

Your contract should specify:

The exact scope of work, described in enough detail to prevent disputes about what was and was not included
The total contract price and how it was calculated (lump sum, time and materials, unit pricing)
A payment schedule with specific milestone dates or triggering events
Change order procedures that require written approval before additional work begins
A retainage percentage if applicable, and the conditions for release
Dispute resolution procedures (mediation, arbitration, or litigation)
Termination rights for both parties with compensation for work completed

Review the contract carefully. Do not just skim the price and scope sections. The termination, indemnification, and dispute resolution clauses matter just as much. If the contract includes language you do not fully understand, tools like ClauseShield can analyze the document and flag risky provisions in plain language. It takes a few minutes and can save you from signing something that puts you at a disadvantage.

2. Verify the Project and the Players

Before you commit time, labor, and materials to a project, verify that the people you are dealing with are legitimate and that the project is real.

For the general contractor or hiring party:

Check their contractor's license (most states have online lookup tools)
Verify their insurance coverage (request a certificate of insurance)
Search for complaints with the state licensing board and Better Business Bureau
Ask for references from recent subcontractors -- not just clients
Check for any outstanding liens or judgments against them

For the property owner:

Verify property ownership through the county assessor's office
Check for existing liens against the property
Confirm that the person authorizing the work has the legal authority to do so

For the project itself:

Verify that building permits have been pulled or will be pulled
Confirm the funding source (bank construction loan, private funds, public funding)
For larger projects, confirm that a payment bond is in place

This due diligence takes an hour or two and can prevent catastrophic losses. A few years in this industry teaches you that the projects that skip steps at the beginning are the ones that fall apart at the end.

3. Send Your Preliminary Notice

In many states, sending a preliminary notice is a legal prerequisite for preserving your mechanics lien rights. Even in states where it is not technically required, sending one is strongly recommended.

What a preliminary notice does: It informs the property owner, the general contractor, and (if applicable) the construction lender that you are providing labor or materials to the project. It puts everyone on notice that you exist and that you expect to be paid.

Why it matters even when not required: Property owners on large projects often do not know which subcontractors are working on their property. When a payment dispute arises, the owner may genuinely not know you were involved. A preliminary notice establishes your presence and your rights from day one.

Timing: In states that require preliminary notice, the deadline is typically 20-30 days from the date you first furnish labor or materials. Send it as early as possible. Late preliminary notices can reduce or eliminate your lien rights depending on the state.

How LienShield helps: LienShield generates state-specific preliminary notices based on your project details, tracks the sending deadlines, and ensures you include all the information your state requires. You answer a few questions about the project, and the notice is generated automatically.

4. Understand Your Lien Rights and Deadlines

Before you start work, you should know exactly what your mechanics lien rights are in the state where the project is located. This is not something to figure out after a payment problem arises, because by then it may be too late.

What to know before starting:

Whether your state requires preliminary notice to preserve lien rights
The deadline for filing a mechanics lien after your last day of work
Whether different deadlines apply to general contractors versus subcontractors
Whether the project is on public property (where different rules apply)
Whether the property is homestead (residential), which may have additional requirements

The cost of not knowing: A contractor who does excellent work, sends proper invoices, and does everything right can still lose their lien rights simply by not knowing the filing deadline in their state. Once that deadline passes, it is gone. There is no extension, no exception, and no appeal. Knowing your deadlines before day one means you can plan your recovery strategy from a position of strength.

LienShield tracks lien deadlines for all 56 jurisdictions and sends automated reminders as deadlines approach so you never miss a critical date.

5. Set Up Proper Documentation Practices

In any construction payment dispute, the party with better documentation wins. Start your documentation on day one, not when a problem surfaces.

What to document:

Daily logs recording work performed, crew size, weather conditions, and hours worked
Progress photos with timestamps showing work completed at each stage
Material receipts documenting what was delivered and when
Communications with the general contractor and property owner (email is better than phone calls because it creates a written record)
Change orders documenting any scope changes, who authorized them, and the agreed cost
Delivery tickets signed by someone at the job site

Storage: Keep digital copies of everything in cloud storage so they are accessible from anywhere and protected from loss. A phone full of job site photos that gets damaged or lost is a documentation disaster.

6. Verify Insurance Coverage

Before starting work, confirm that all parties have appropriate insurance coverage:

Your insurance: Make sure your general liability insurance, workers' compensation insurance, and any required bonds are current and provide adequate coverage for the project.

The general contractor's insurance: Request a certificate of insurance from the GC showing general liability coverage, workers' compensation, and any applicable umbrella policies. Verify that the coverage amounts are adequate and that the policy dates cover the project timeline.

Builder's risk insurance: For larger projects, confirm that builder's risk insurance is in place to cover damage to the work in progress. Know who is responsible for this coverage under the contract.

7. Establish Your Payment Tracking System

From the moment you start work, track every dollar you are owed with precision. This means:

Submitting invoices on a regular schedule (monthly applications for payment are standard)
Tracking which invoices are outstanding and for how long
Monitoring retainage amounts and the conditions for their release
Recording partial payments and reconciling them against outstanding invoices
Following up on overdue invoices within days, not weeks

A systematic approach to payment tracking makes it much easier to identify problems early and take action before your options narrow.

The Pre-Project Protection Checklist

Use this checklist before every project:

Written contract signed by both parties with detailed scope, payment schedule, and change order procedures
Preliminary notice prepared and sent within the required timeframe
Lien deadlines researched and calendared for this state and project type
General contractor license and insurance verified
Property ownership confirmed
Documentation practices established (daily logs, photos, communications)
Your own insurance coverage confirmed and adequate for the project
Payment tracking system in place
Retainage terms understood and documented

Every item on this list takes minutes to complete and can save you months of problems and thousands of dollars in lost payment. The contractors who treat pre-project protection as seriously as they treat the construction itself are the ones who consistently get paid.

Set up your project protections with LienShield. Preliminary notices, deadline tracking, and lien filing for all 50 states.