Louisianans are proud of this resilient reputation, and as a Cajun myself, it’s inspiring to see how communities have come together during this trying time. Property owners and volunteers won’t be able to complete all of the recovery work themselves, though. Contractors, laborers, and suppliers will be in hot demand. Unfortunately relief efforts can attract bad actors in the construction industry. For this reason and many others, it’s important to be cautious in the race back to normalcy. Here are some of the issues property owners and members to the construction industry should keep in mind during the Louisiana flood recovery.
Rebuilding the flooded areas will be a serious undertaking. What’s more, many of the homes and businesses that flooded were not in the floodplain, so they did not hold flood insurance. With so much work to be done, construction companies will flock to the area in search of work. The influx of contractors and suppliers will be imperative to rebuilding, but with unfamiliar contractors it is even more important that property owners adequately protect themselves.
In a recent post, we discussed a Florida contractor scamming homeowners who suffered storm damage. This Jacksonville contractor was using homeowners’ eagerness to their disadvantage. Posing as a roofing contractor, Juan Carlos Gonzales accepted insurance checks and left the actual roofers and suppliers unpaid. As a result, liens were filed on the properties. With the insurance money spent, homeowners had to dip into their own funds for their legal battles.
Mishaps like this seem absurd, but when a number of contractors and subs are working on a property it’s easy to lose track of who is doing what. The best way to combat potential issues like this is to require contractors to provide a list of parties working on the project. Prioritizing communication on a job site is a great way to limit liability. Otherwise, a property owner may be forced to pay for construction work twice.
Another way property owners can limit their exposure is to require lien waivers when payments are made. By using conditional lien waivers, property owners and subcontractors are both protected. Payment is almost always a condition of a conditional lien waiver. By pairing such a waiver with payment, a subcontractor only gives up lien rights when they can safely do so. Here are some things to keep in mind when requesting a lien waiver.
Contractors, Subs, and Suppliers
Property owners aren’t the only ones who will have to be on the lookout in the aftermath of the flood. The rebuilding effort will take lots of manpower, and those providing it will have to protect their own interests. We have addressed issues that arise in rebuilding efforts several times before, so here are some things to pay attention to.
For those storm chasers looking to aid in the Louisiana flood recovery effort, it is important to be familiar with the state’s mechanics lien laws. We cover Louisiana mechanics lien law regularly on the blog, and our Louisiana Mechanics Lien FAQs should also be valuable in this effort.
Contractors should also be aware of the unique issues storms can create when it comes to payment from insurance companies. As mentioned before, the vast majority of flood victims did not hold flood insurance. When working on projects that do have insurance, contractors should know that insurance check delays may void lien rights.
Understandably, many contractors and subs do not like to file liens when a promise for payment has been made. Whether payment has been promised out of pocket or in the form of insurance proceeds, it would be wise to file a lien before the deadline passes to do so. It is much safer to file a lien only to release it later than to relinquish lien rights altogether by waiting too late. If you really want to avoid using a mechanics lien, here are some other creative options to secure payment.
Just as property owners should be extra cautious when dealing with contractors in the Louisiana flood recovery, so too should subcontractors and suppliers. This post on managing financial risk serves as a good primer on how subs and suppliers can protect themselves when contractor default may come into play.
In times like these, it’s natural to try and get back to normalcy as quickly as possible. Unfortunately, the less ethical members of the construction industry have a history of using this impulse to their advantage. Property owners, contractors, subs, and suppliers should all be sure to protect themselves while recovering from this disaster. Hopefully the tips and resources in the post make that feat a little bit easier.