Note: Louisiana’s lien and notice laws changed on January 1, 2020, so some information in this post might be outdated.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.
As always a general rule of thumb for all lien law nation wide is that the requirements to file are technical. This post deals with Louisiana, and shows how timing can be used for (by the legally savvy) or against a party.
Most all contractors either know that they should or that they are required to file a notice/certificate of “substantial completion” at the end of a project. This document is typically signed by owner and general contractor and filed in the local mortgage office of the parish where the work was performed. This substantial completion notifies third parties that the work on the project is now complete with the exception of some punch-list items and that the owner has accepted the work. It signifies that the project is now capable to be put to its intended use.
The significance regarding filing liens is very important. This substantial completion document is the most concrete way to determine when a statutory lien period has commenced and when it terminates. A contractor, equipment lessor, owner and/or supplier would reasonably and logically think that both the Private Works Act and Public Works statutes in Louisiana would treat the filing of this document similarly. To some extent this is true but there are some very important differences as explained below.
Louisiana Lien Deadline on Public Works Projects
Deep in Chapter 10 of the Louisiana Revised Statutes lies the Public Contracts section. La. R.S. 38:2242, spells out the timing mechanism for substantial competition of a project. It is described in subsection (B) as follows:
B. Any claimant may after the maturity of his claim and within forty-five days after the recordation of acceptance of the work by the governing authority…”
This provision basically says that the claimant (entity filing the lien) has forty-five (45) days from when the acceptance of work (notice of substantial completion) is recorded to file a public lien. So in theory here, the job can reach substantial completion and/or the owner accept the work on a particular date, but that actual date is useless. The only date that is worthwhile is the date of recording, not the substantial completion date. There could be a few to many days difference in these.
This timing mechanism is very exact and lets contractors, laborers, suppliers and equipment lessors know exactly when they need to file a lien to preserve rights. There is not much gray area here. Owners and General Contractors need to be aware of this so that they get the acceptance of the work filed quickly.
Louisiana Lien Deadline on Private Works Projects
To the contrary, the Louisiana Private Works Act as codified in La. R.S. 9:4822, does not start the lien period based off a recording date of the substantial completion. Subsection (B), (C) and (D) only mention the “substantial completion” of the work. This revised statute is very technical but from a plain reading it does not require the notice of substantial completion to be filed at all. If nothing is filed then the parties have to go and look at other circumstances such as putting the project to its ordinary use and/or public documents such as a certificate of occupancy to determine a substantial completion date, then the lien deadline is calculated retroactively.
A smart and savvy owner or general contractor can have a date of substantial completion which is agreed upon, and then either not file it in the public record or wait to file it later on so as to almost trip up any possible lien claimants. The date of substantial completion on the notice is the date that will be used to calculate the lien deadline, not the date of recording.
Let it be noted that the Private Works Act does require a “Notice of Termination” to be filed and the recording date on this document will start the lien period. A notice of termination is complicated in itself and the subject of a future blog post.
Important: These deadlines will change on January 1, 2020
Louisiana Mechanics Lien Rules Updated by Passing HB 203
Conclusion
Lien laws are complex and complicated. Its important to know all relevant dates for construction projects, such as when work was performed, when it was completed, when materials were first delivered, last delivered and so on. These dates are important so that liens can be filed and enforced. Levelset has mechanisms and software to help guide you when you have the right dates.
