If you’re working in the construction industry in Louisiana, there are some important changes that go into effect in 2020 regarding mechanics lien rights. Here’s a quick reminder of what you’ll need to keep an eye on to ensure you get paid what you’ve earned.
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Changes to Louisiana mechanics lien laws
The 2019 Louisiana legislative session introduced and passed HB 203. The purpose and goals of the LA Private Works Act haven’t changed, but some procedural requirements and details have been affected. There are a number of changes that go into effect such as preliminary notices, deadlines, lien priority, challenging filed mechanics liens, and more.
This article is meant to be a short review of some of the more pertinent changes that your company should familiarize themselves with in the new year. To see a full review of the changes that go into effect, you can read our article, Lousiana Mechanics Lien Rules Updated by Passing HB 203.
Louisiana new notice requirements
Under the new mechanics lien laws, there have been some impactful changes to exiting notice requirements, and some new notices that may be useful to secure mechanics lien rights.
Project price threshold for Notice of Contract has increased
The first change that should be noted is the project price threshold for general contractors to file a Notice of Contract has been raised significantly, from $25,000 to a whopping $100,000. This will result in fewer projects where a Notice of Contract will be required. As we’ll discuss below, if there isn’t a Notice of Contract on your project, the lien deadline tends to be shorter – so that’s something to keep in mind heading into the new year.
A new voluntary Final Notice of Non-Payment
This is a new addition to the family of mechanics lien notices in Louisiana, though it does resemble a notice previously required for material suppliers. A Final Notice of Non-Payment is a completely voluntary notice, and it can only be utilized in very specific circumstances. Still, it can be a useful tool for certain project participants who are in a pinch.
If working on a residential project and a Notice of Contract hasn’t been filed, this notice may be sent to the property owner to extend the mechanics lien filing deadline by 10 days (from 60 days to 70 days). This notice must be sent at least 10 days before filing the lien claim, so it takes some planning.
The Final Notice of Non-Payment is available to everyone who wasn’t hired by the property owner. Plus, it’s also available to equipment rental companies and material suppliers hired directly by the owner.
New preliminary notice for design professionals
Lastly, it’s worth noting that Louisiana will now require a specific preliminary notice for design professionals (now known as “professional consultants and subconsultants”). Design professionals include engineers, architects, and surveyors.
This is another brand new notice created by the changes. Any design professionals who weren’t hired directly by the property owner need to send this notice within 30 days of executing the contract. Failure to provide this notice is fatal to a design professional’s mechanics lien rights.
There are other minor changes to notice requirements, for a full breakdown of all the notice changes, check out: Louisiana Preliminary Notice Rules are Changing on January 1, 2020.
Louisiana mechanics lien filing deadlines
One significant change that Louisiana construction companies need to take into account is the mechanics lien filing deadlines. When a lien can be filed depends on both your role on the project, and whether or not certain notices were filed. Specifically, a Notice of Contract and a Notice of Termination.
If a Notice of Contract was filed
For general contractors, the default deadline to file a mechanics lien is 7 months after substantial completion or abandonment of the construction project. However, if a Notice of Termination is filed, the deadline is reduced to a mere 60 days after the Notice of Termination was filed.
For all other potential lien claimants, the default deadline to file a mechanics lien is 6 months after the project has reached substantial completion or the project is abandoned. Again, this deadline can be shortened if a Notice of Termination is filed. If so, the deadline to file a lien is only 30 days from when the notice was filed.
If a Notice of Contract was NOT filed
When a Notice of Contract is not filed on the construction project, the deadline to file a lien is the same for all parties. The timeframe to file will be 60 days. If a Notice of Termination is filed, then 60 days from when it was filed. If the notice is not filed, then the deadline is 60 days from substantial completion or abandonment of the project.
There is one more tweak to the lien filing deadlines if a Notice of Contract wasn’t filed. This is when the aforementioned Final Notice of Nonpayment comes into play. If properly sent, the deadline to file a mechanics lien can be extended by 10 days. This will result in the claimant having 70 days from the Notice of Termination or substantial completion, if no notice was filed.
For more details on the mechanics lien deadline changes check out: New Louisiana Mechanics Lien Deadlines | Not Much Changes.
Be sure to update your processes
As any new year begins, it’s important to stay current on changes that may affect your right to get paid. There are other changes, such as lien priority and procedures for challenging filed liens. But, this is just a friendly reminder to all Louisiana construction companies. Take note of the new notice and lien filing deadlines to ensure your back office procedures have been updated accordingly.