Do I need to send a preliminary notice for individual properties if I have an MSA in place?

4 months ago

I am a factor, and my client has an MSA in place to perform work upon receipt of a purchase order. Each PO issued has been specific to a different address, so do I need to send preliminary notice each time my client receives a PO or is notice sent for the MSA sufficient?

Chief Legal Officer Levelset

To the extent that a preliminary (or monthly) notice is required in Louisiana, the notice should likely be given with respect to each individual property address to which materials are delivered.

While the MSA may be the “contract” overall, each purchase order may be more properly treated as an individual contract for lien purposes. Since a lien encumbers the specific property to which the labor or materials were furnished to be improved, each property would generally require a different notice. This is especially true if the underlying owner of a property is different with respect to some of the properties.

Something else to consider, however, is whether lien rights attach in the first place – and for whom. While mechanics lien protection can be expansive in Louisiana, companies that provide solely monetary assistance or otherwise do not furnish labor or materials for the improvement of real property do not generally qualify for mechanics lien protection. Other “voluntary” security interest may be more applicable. Accordingly, a factoring company may need to have the client who is actually supplying the material protect its own lien rights under an agreement to assign the lien right to the factoring company.

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