Payment issues are prevalent in the construction industry. Too many construction industry participants know the feeling of still waiting for the payment they’ve earned on a project long after their work was successfully completed (in some cases, a payment that may not come at all).
The credit-heavy nature of construction payment, the sheer number of parties through whom payment must flow, and difficult practical aspects like complex pay apps, risk-shifting contractual clauses, and workmanship disputes routinely lead to slow payment. Fortunately for construction participants, though, there are specific legal tools built into the laws of every state that can virtually guarantee payment on every project, and improve cash-flow.
Mechanics liens (and bond claims) – are powerful, and work in many ways to get construction companies get paid fairly, but the most importantly they work. Mechanics liens give the claimant an interest in the actual improved property, which empowers construction participants to recover the money they’ve rightfully earned.
If you are unpaid on a Louisiana construction project and have decided to pursue payment through filing a mechanics lien, this step-by-step guide (starting in the next paragraph, below) will provide an outline for how to go about it. However, before you make that decision, it’s important to note that there may be preliminary notice requirements, (and there are always timing requirements) that must be met prior to filing a valid Louisiana mechanics lien. Filing a lien by yourself can be a complicated and time consuming task, but if you’re ready and willing to go it alone, just follow the steps below.
Make Sure Your Louisiana Mechanics Lien Has the Required Information
It is crucial to make sure your Louisiana mechanics lien is complete, and contains all of the information required by statute. Mechanics liens laws require that liens strictly comply with the technical and formal statutory requirements in order to be valid. This means that failing to include certain specific information on the lien claim is more than just a small problem – it can invalidate the entire lien.
A Louisiana statement of claim or privilege (lien):
1) Must be in writing;
2) Must be signed by the person asserting the same or his representative NOTE Louisiana liens do not need to be notarized;
3) Must reasonably identify the immovable with respect to which the work was performed or movables or services were supplied or rendered;
4) Must identify the property owner;
5) Must identify the person for whom or to whom the contract was performed, material supplied, or services rendered; and
6) Must set forth the amount and nature of the obligation giving rise to the claim or privilege (and reasonably itemize the elements comprising it). NOTE: This does not require claimant to attach copies of unpaid invoices unless the statement of claim or privilege specifically states that the invoices are attached.
Special Note Regarding Louisiana and Paper Size
While pretty mush every other state requires (or at least allows) recorded documents to be provided on 8 1/2″ x 11″ letter-size paper – some parishes in Louisiana require that recorded documents be presented on 8 1/2″ x 14″ legal-size paper. This can be a hassle for claimants who are unaware of this requirement. It pays to keep it in mind, though, because Orleans parish (home to New Orleans) is one of the parishes that requires legal paper, and it’s no fun to need to re-print all of your documents and re-sign just because you used the wrong paper.
How To File an Louisiana Mechanics Lien
Now it’s time to get your Louisiana mechanics lien filed with the recorder of mortgages of the parish in which the work is to be performed.
- Prepare lien form, taking care to include the necessary information as set forth above, and sign the document.
- Check to make sure the paper size you use is the correct paper size for recording with the parish recorder of mortgages for the parish in which the property is located.
- Send the original copy to the office of the recorder of mortgages for the parish in which the building or improvement is situated.
– Louisiana recently passed legislation to mandate the ability to electronically file documents, so e-recording is (or will soon be) an option to streamline to recording process.
– The lien may be delivered to the proper parish recorder via mail or FedEx, or personally “walked in” to be recorded (either by you or a courier).
– Make sure to include the proper recording fees with the lien. Lien are often rejected for improper fees (and this can be true even if you provide too much money). Any delay caused by needing to resubmit the lien for recording takes time – and since liens are time sensitive documents, it can possibly result in a missed deadline. Recording fees vary from parish to parish and can be determined by calling the parish recorder, checking on the recorder’s website, or asking in person if you physically bring the lien for filing. The fees are often set at one amount for the first page with an additional, smaller, amount for each additional page. This issue can be avoided if electronic recording is used, as your card will be charged the required amount upon presentation for filing.
– Note that your lien document must also comply with any specific margin requirements that particular parish may have (including paper size), as well as potentially requiring a county-specific cover page – these can also be determined by calling the recorders office.
- Note that if you mailed your lien to the parish for recording, or sent it via a courier, along with the proper fees for recording with the document, you must include a self-addressed stamped envelope with return instructions to receive a copy of the recorded lien for your records.
- Serve a copy of the mechanics lien – see more below.
How To Serve a Louisiana Mechanics Lien
The process to obtain a valid Louisiana mechanics lien does not end with the filing the lien document with the clerk – a copy of the lien must be served on (at least) the property owner.
Louisiana law requires that the lien claimant send a copy of the lien statement to the property owner, and, if the potential lien claimant is supplying a subcontractor, notice must be given to the general contractor as well. If the property owner’s address is not included in the Notice of Contract, the lien claimant is not required to notify the owner, but best practice would be to always notify the owner of the filing of a lien claim.
Congratulations! Once the lien document has been filed and served – your Louisiana mechanics lien is ready to get you paid what you’ve earned. While liens are very powerful, this may not be the final step before you get paid. Even a valid lien can be challenged, and if there was a slight problem in compliance with the notice or lien requirements or deadlines, it may even be determined invalid. It’s also possible that you may be forced to enforce your lien claim through a foreclosure action (filing a lawsuit) in order to ultimately get paid. And like most any lawsuit, this can be a long and expensive process.
Remember that just because a lien is recorded doesn’t necessarily make it valid, and likewise, just because a property owner (or their attorney) may make a claim that it is improper and needs to be removed doesn’t make it invalid.
Finally, a Louisiana mechanics lien stays effective for 1 year from the date the lien was filed.
Recording a mechanics lien can be a powerful tool in making sure you are paid what you earned. The How-To guide above can empower you to take that step when and if it becomes necessary, and make sure you are treated fairly.