Note: Louisiana’s lien and notice laws changed on January 1, 2020, so some information in this post might be outdated. You can learn what changed and what rules apply here: Louisiana Mechanics Lien FAQs and Louisiana Notice FAQs.
I practice law in Louisiana, and I had another equipment rental company call my offices last week to discuss their options in collecting a debt for some leased equipment. Whenever I’m contacted to help collect a debt, I immediately discuss the potential client’s lien rights. Bar none, filing a mechanic’s lien is the absolute best first-step to collect a debt.
This particular potential client had leased equipment, the equipment was used on a construction project, and this company was within the statutory lien period. Everything was in line for them to file a mechanic’s lien…except for one little, but massively important thing: they didn’t send a Notice of Lease.
“A notice of what?” they asked. And rightly so.
Typically, Louisiana a non-notice state, meaning that folks can file mechanics liens without delivering any preliminary notices. There are two small exceptions: (1) Prime contractors must file a Notice of Contract when starting work; and (2) Equipment rental companies must deliver a Notice of Lease within 10 days of renting equipment or machinery.
To put it lightly, these two exceptions aren’t well known in Louisiana.
In fact, this particular client had leased heavy construction machinery for about twenty years, and had never heard of the requirement. The requirement, however, is certainly there, nestled within La. R.S. 9:4802(G)(1), mandating as follows:
G.(1) For the privilege under this Section to arise, the lessor of the movables shall deliver a copy of the lease to the owner and to the contractor not more than ten days after the movables are first placed at the site of the immovable for use in a work.
We wrote about this “Notice of Lease” requirement on this blog before, and you can take a look at the Notice of Lease tag.
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Since the Notice of Lease must contain certain information, the best practice is to simply sent the written lease itself to the receiving party. According to the statute, the lease must be delivered “to the owner and to the contractor,” but another best practice is to send the notice along to any and everyone up your contracting chain. The lease must be sent along to the required parties by certified or registered mail.
The notice must be sent within 10 days of when the equipment or machinery is first placed at the jobsite. If it’s a day too late, or if it’s not sent properly or to the correct parties, it could spell game over for your lien rights. In other words, don’t overlook or underestimate this requirement!