Louisiana Construction Contracts
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Lien Rights Can't Be Waived by Contract
Lien rights can't be waived by contract in Louisiana as the right doesn't exist at the time of contracting.
Pay-If-Paid is Enforceable
Pay-if-paid clauses are enforceable in LA if the clause contains clear and unequivocal language.
Pay-When-Paid is Enforceable
Pay-when-paid clauses are enforceable in LA as a timing mechanism setting a reasonable time for payment.
Payment Timing May Not Be Modified By Contract
Payments to GC on private projects in Louisiana are unregulated, but payments to subs and suppliers must be made within 14 days of receipt of payment.
Retainage Mostly Unregulated
Louisiana doesn't regulate the amount of retainage allowed on private projects. The terms of the contract will apply.
Pay-If-Paid is Enforceable
Pay-if-paid clauses are enforceable in LA if the clause contains clear and unequivocal language.
Pay-When-Paid is Enforceable
Pay-when-paid clauses are enforceable in LA as a timing mechanism setting a reasonable time for payment.
Payment Timing May Not Be Modified By Contract
On Lousiana public works projects, prime contractors must be paid within 45 days of submitting a pay app/completion of the project. All other payments must be made within 14 days of receipt of funds.
Maximum Retainage Cannot Be Modified
Retainage on public projects in Louisiana cannot exceed the statutory limits of 10% or 5%; depending on the total project cost.
A construction contract outlines each party’s obligations, rights, and remedies on a project. But although the language in specific contract clauses is typically negotiable, Louisiana has certain rules that govern what the agreement must include — and what is prohibited.
Keep in mind that, while Louisiana’s rules for construction contract terms are written into state law, the courts determine how strictly those laws should be interpreted — and those interpretations can change.
On this page, you’ll find resources, legal information, and answers to frequently asked questions about construction contracts and payment terms in Louisiana.
Construction contract provisions in LA
While Louisiana generally allows construction parties to set the terms of their agreement, there are some laws that regulate specific types of contract provisions. Any contract clause that contradicts the law is invalid and unenforceable.
“No lien” clauses
The Louisiana courts have held that a waiver of lien rights by contract (no-lien clauses) is not enforceable. The rationale being that in order to be able to waive rights, the rights must already exist. Since no lien rights exist at the time of contracting, they cannot be waived in advance.
Contingent payment clauses
There are two types of contingent payment clauses: pay-if-paid and pay-when-paid, both of which are enforceable provisions under Louisiana law. A pay-if-paid clause is only enforceable if the language clearly and unequivocally expresses an intent to make the receipt of payment from a third party as a condition precedent to payment. If not, the clause will be treated as setting a reasonable time for payment.
Payment timing clauses
On private projects (with the exception of residential projects), the Louisiana prompt payment laws only regulate the timing of payments to subcontractors. Payments to the prime contractor will be determined by the terms of the contract. As for all other payments down the contracting chain, once payment is received, payments must be released within 14 days.
All payments on public projects are governed by Lousiana’s prompt payment statutes. Payments to the prime contractor must be made within 45 days after the public entity’s receipt of a pay application or completion of the project. All other payments must be made within 14 days of receipt of funds. None of these payment deadlines may be modified by the terms of the contract.
• See: Louisiana Prompt Payment Guide & FAQs
Retainage limits
Louisiana does not regulate the amount of retainage on private construction projects. The terms of the contract between the parties will dictate the amount to be withheld and the timing of its release. On public projects, no more than 10% may be withheld on projects costing less than $500K, and no more than 5% may be withheld on projects that exceed $500K.
LA construction contract requirements
Any contractor that is licensed or registered with the Louisiana State Contractor Licensing Board must provide in their contract the contractor’s name, contractor licensing number, classification, and certificates evidencing the amount of liability insurance carried, and proof of workers’ compensation coverage.
Other types of construction contract requirements
In addition to the requirements listed above, if the project involves a home improvement contract whose total price falls in the $1,500 to $75,000 range, the contract must also contain the complete agreement between the parties, a clear description of any other contract documents, a detailed description of the work to be performed and the materials to be used on the project, and the total amount to be paid under the contract. If the agreement is a time and materials or a cost-plus contract, then the contract should provide an estimated approximation of the costs. Also, the contract must be signed by both parties.
Lastly, if the home improvement contract involves roof repair or replacement to be paid by the owner’s property or casualty insurance provider, the contract must also include a notice in 10pt, boldface type informing the owner of the right to cancel the contract if all or part of the repairs won’t be covered by the insurer within 72 hours. The contract should also include a Notice of Cancellation that may be detached and used by the homeowner.
