First thing’s first: Louisiana recently overhauled quite a bit of its mechanics lien statute. The vast majority of those changes won’t go into effect until January 1, 2020 – but it’s still vitally important that construction businesses are prepared. For more information: Louisiana Mechanics Lien Rules Updated by Passing HB 203.
Contractors & suppliers have strong lien rights in Louisiana. If a contractor or supplier isn’t paid on an Louisiana job, they can turn to filing a lien to speed up payment and protect themselves. However, there are specific requirements and rules that must be followed. Here are 5 essential things you need to know about Louisiana’s mechanics lien law.
1) Louisiana Mechanics Lien Protection Extends To Many Project Participants
Louisiana mechanics lien law extends protection to many different parties. Not only are general contractors and subcontractors able to file a mechanics lien, but laborers or employees, material suppliers, equipment lessors (if leased to owner, contractor or subcontractor by written lease), architects, engineers, and surveyors also qualify. Even parties that supply fuel for machinery have mechanics lien rights in Louisiana. Out of luck however, are suppliers to suppliers who do not have the right to lien.
2) The Deadline to File a Louisiana Mechanics Lien Varies
The deadline to file a Statement of Claim and Privilege, (a Louisiana mechanics lien) depends on the party’s role in the project as well as whether or not a Notice of Contract or Notice of Termination has been filed.
– If a Notice of Termination has been filed, the general contractor has 60 days from the date the notice was filed
– If a Notice of Termination had not been filed, the general contractor has 60 days from the date the project was considered completed
All Other Parties:
– If a Notice of Contract was filed, project participants not in contact with the property owner are required to file the lien 30 days from the date that the Notice of Termination was filed
– If a Notice of Contract was not filed, project participants not in contact with the property owner have 60 days from the date the Notice of Termination was filed, or 60 days from the date of substantial completion of the work, if no notice of termination is filed.
– For material suppliers specifically, if a Notice of Contract was not filed on a residential project, the project participant has 70 days to file a mechanics lien. The 70 days will either begin on the date notice of termination was filed, or, if no notice of termination was filed, from abandonment or substantial completion of the work.
3) Preliminary Notice is Only Required for Some Project Participants
Preliminary notice in Louisiana is very specific to the project participant and their role. Specifically, general contractors must file a Notice of Contract in the office of the recorder of mortgages in the property’s parish before beginning to work on a project valued at over $25,000. In the event that a general contractor is working on an owner-occupied existing residence, a Notice of Lien Rights is required to be given to the property owner prior to beginning any work on the property. Failure to provide the appropriate preliminary notice could prevent the project participant from lien rights.
Material suppliers have a different set of requirements. If working on a residential project, material suppliers are required to provide a Notice of Non-Payment via certified mail with return receipt requested to the property owner and general contractor 10 days prior to filing a mechanics lien.
Even further, equipment lessors must also provide preliminary notice if not directly in contact with the property owner. A copy of the lease must be sent to the property owner via certified mail with return receipt requested to the property owner and general contractor at least 10 days prior to the first date of providing materials for a project.
Though preliminary notice is not required of any other project participants, it is always a good idea to provide notification. Additionally, project participants are allowed to request notification of the filing of a Notice of Termination, or of abandonment/substantial completion of the project. If this preliminary notice is given and the owner fails to notify the claimant of the filing of a Notice of Termination/abandonment/substantial completion, the owner will be liable for the claimant’s attorney’s fees.
4) Working Unlicensed Could Effect How Much A Project Participant Gets Paid
Licensing laws in Louisiana are unique. While it is not required that project participants are licensed, it is recommended. If project participants are unlicensed, the licensing board may only recover the “minimum value” of work completed on the project.
5) Notary is No Longer Required in Louisiana
Unlike many states, Louisiana mechanics lien law has been amended and no longer requires a mechanics lien be notarized. It does require, however, that after being filed, a copy of the lien statement is sent to both the property owner and general contractor (if applicable).
Is your customer a property owner? Are you doing a $25,000+ job? You need to send a notice