Louisiana’s lien and notice laws changed on January 1, 2020, so some information in this post might be outdated.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.
Recently, a new amendment to Louisiana mechanics lien law has been enacted that may change the preliminary notice landscape for equipment lessors. Unfortunately, though, while the idea behind the recent change may be solid, not only may the amendment itself not have any real practical effect, it may also generate confusion.
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Wording Change to Louisiana Equipment Lessor Notice Requirement
Previously, an equipment lessor in Louisiana was required to provide a copy of the lease to the property owner and the prime contractor within 10 days of the date on which the leased equipment was first placed at the project site. The delivery of a copy of the lease, by itself, to those parties within the 10-day time period fulfilled that preliminary notice requirement.
Now, after the recent revision, the text of LA RS 9:4802 (G)(1) has been altered such that a “notice” form must be sent, rather than just sending a copy of the lease itself. The statute now states that:
…the lessor of movables shall deliver notice 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. The notice shall contain the name and mailing address of the lessor and lessee and a description sufficient to identify the movable property placed at the site of the immovable for use in a work. The notice shall state the term of rental and terms of payment and shall be signed by the lessor and lessee.
This change appears to bring the preliminary notice requirements for equipment lessors more in line with traditional notice laws around the country, and for other parties in Louisiana, by requiring that the equipment lessor deliver a simple notice. But, what does it really change?
Is There Really Any Change Here?
Technically, the answer is obviously “yes”.
Practically, however, the answer may not be so simple. Notice the last line of the amended statute, above: “The notice shall state the term of rental and terms of payment and shall be signed by the lessor and lessee” (emphasis added).
To me, a document that contains the contact information of a lessor and lessee, states the term of a rental agreement and it payment terms, and is signed by both parties looks an awful lot like a lease. If a notice is sent to which the lease is attached, or if the lease contains all of the statutorily required information and is sent by itself, does that comply with the new notice requirement? Since this revision is brand new, there is no way to determine how it will be interpreted by the courts, but by the text of the statutory revision, those methods should work.
This would actually be a benefit to equipment lessors, who could continue on sending a copy of the lease within 10 days, as they have been, and just attach a “notice document” to it. It is likely this would be easier than attempting to get the lessee to sign another document so the lessor could provide proper notice to the other parties.
We have contacted Senator Cortez, the author of the bill, and will keep you updated if any new information is obtained.