In the construction industry in Louisiana, few things can be more frustrating than trying to get paid. You need to be both efficient and artful in your collection methods. Subcontractors, equipment lessors and material suppliers in particular have it rough as they must wait for payment to trickle down from the property owner through the general contractor and sometimes through even more parties. To help offset some of these complexities, there are various state laws that provide subcontractors and suppliers with “mechanics lien” rights. Mechanics lien is a term of art that is used to label liens on construction projects.
If you’re trying to use a mechanics lien to get paid, here are some facts to keep in mind:
These Rights Go Back Centuries
Mechanics lien rights have existed in the United States for more than 220 years. Thomas Jefferson was the first to introduce such legislation. The law were enacted to protect laborers, so that they would get paid by landowners.
Deadlines and Notice
Companies must comply with the mechanics lien law’s regarding deadline and notice requirements. There’s a strict timetable to be aware of throughout the process. Thus, speaking with a professional or legal counsel can be extremely vital in helping to preserve your rights. Each state has vastly different rules, Louisiana for example has different rules for varying roles on construction projects.
If you do business in one state, you may manage the paperwork just fine. If you’re expanding over into other jurisdictions, however, balancing the paperwork load and differing laws in each jurisdiction may become impossible.
So what should you do? Here are some tips:
Though liens may seem complicated, it’s important not to neglect them. You may feel as though “it just isn’t worth the time” or that these liens ultimately don’t work in order to avoid the threatening task of complying with various states’ rules. Nevertheless, we do believe pursuing your mechanics lien rights can be worth the effort. Many times the only parties who get paid in full on projects are those who secured payment by filing a lien.Adopting a Lien Policy for your company and sticking to it could actually drop your non-collectable debt percentage down to near 0%. This could help make your company millions of dollars in the long-term.
Merely dedicating yourself to lien compliance is not enough. You also must have a way to actually comply. Using Microsoft Excel, Outlook, or a service provider to manually manage your mechanics lien deadlines is a mistake. You probably wouldn’t use a manual process or a spreadsheet to track all your invoices or expenses, so don’t fall short for you mechanics lien deadlines. There are great technologies available now to help companies manage these lien and notice requirements, some of which completely automate the preliminary notice process and manage all mechanics lien and bond claim rights. See, for example, Levelset. It is vital that your company rely on the right technology to help manage the lien compliance process. From there once you have a system in place, then its time to consult with an attorney to verify the system is compliant. Then once payment issues arise, you simply hand off the paper trial to the attorney and his job is much easier, which in itself saves your company money.
Mechanics lien rights are as strong now as they ever have been in the past.The attorneys at Smiley Law are always ready to take all your lien and notice requirements questions.