One of the most difficult aspects of being a contractor in Louisiana is securing final payment when work is complete. In Louisiana, there are a number of tools contractors can deploy to help protect themselves and ensure they receive full payment for the labor and materials they supplied to a project.
Here at Smiley Law, we have written about both the Public Works Act and Private Works Act extensively on our blog, www.constructionlawmonitor.com. Unfortunately for the average contractor or subcontractor, these statutes are cumbersome, unclear, and full of legal language that can be difficult to understand. These laws also have specific requirements, and failure to follow all the requirements can result in a loss of rights. But, we help clients deal with the requirements of these statutes everyday – we learn the ins and outs of the relevant laws so that our clients don’t have to.
What Law Applies? Categorizing Your Project
Louisiana law generally classifies construction projects as either “private” or “public.” If a private citizen or entity owns the property where work is performed, the project will fall under the Private Works Act.
If, on the other hand, the work is performed on land owned by the state or a political subdivision (like a city or parish), it will be governed by the Public Works Act. There is also a special set of rules for public jobs involving the Department of Transportation and Development (DOTD), though these rules closely mirror the rules in the Public Works Act. (If the project in on federal government land, Louisiana law does not apply at all, and separate federal law governs such a project. That’s a whole other topic best saved for another day and another post).
It is essential to know what type of job you are working on, in order to know which set of rules govern your security and lien rights. Knowing the owner of the property and classifying the property correctly is paramount.
Louisiana Private Works Act
The Louisiana Private Works Act is codified in La. R.S. 9:4801, et seq. This section sets out the rules that govern private projects. In simplest terms, the Private Works Act allows a contractor, subcontractor, material supplier, or equipment lessor to file a “Statement of Claim and Privilege” (commonly referred to as a “lien”) to secure payment of sums owed. In other words, if a company provides labor and/or materials to a private construction project, but don’t get paid, they can file a lien.
The lien operates as a security interest to ensure payment. If a party files a valid lien, and still doesn’t get paid, they can seize and sell the property where they performed the work in order to recover what is owed.
While this is a simple concept, in practice there are intricate rules, deadlines, and procedures that must be followed to ensure a lien is valid and enforceable. A strong understanding of the Private Works Act is essential to securing payment on a private construction job.
Louisiana Public Works Act
All Louisiana public works (other than federally owned projects, and DOTD projects, as mentioned above) fall under the Louisiana Public Works Act. These rules can be found in La. R.S. 38:2241, et seq. If the job is solicited by an arm of the state or municipal government, then the Public Works Act will govern. To secure claims for payment on a public job, contractors will file a document called a “Sworn Statement of Amount Due” against the bond taken out by the contractor securing the project.
Since it is impossible to foreclose on land owned by the state, the bond takes the place of the normal security (land). Much like the Private Works Act, the requirements to preserve lien rights in these statutes are onerous. A smart contractor, subcontractor, supplier, or equipment lessor will have an attorney on its side who knows how to navigate these rules and procedures.
Here at Smiley Law Firm, my colleagues and I deal with construction payment issues on a daily basis. We file liens, enforce liens, and help cancel liens that are filed improperly. We know these laws because our clients need security – they need to know that they will be paid when the work is complete. Fill out the intake form on the side of this page to let us help you collect payment or aid in securing your hard work.