Construction projects can be risky for anyone. Contractors, subcontractors, and suppliers all need assurances that the work will get done and that everyone will get paid. Unfortunately, there are virtually no guarantees that each party will live up to their contractual obligations.
Mechanics liens and bond claims are two legal mechanisms to ensure that the work gets done and everyone gets paid what they are owed. Here at Smiley Law, we want you to understand what this means and how that might affect your project, especially in Louisiana.
What Do Liens Do?
The Louisiana Private Works Act codifies lien laws in La. R.S. 9:4801. Generally, a lien creates a claim against the property, giving third parties a legal right to proceeds from any sale of the property. Typically, subcontractors and suppliers will file a mechanics lien to cover time, labor and resources committed to construction jobs.
This is a powerful option for third parties because even if the homeowner pays the general contractor, the subcontractors and suppliers can still file the lien if the general doesn’t pay them. Owners must take immediate action once a lien is filed on their property to prevent the lien holder from trying to force a sale of the property.
Bond Claims in Louisiana
The Public Works Act governs Bond claims in Louisiana – most other states follow the U.S. Miller Act. A bond involves three parties: (1) the surety promises that (2) the owner or general contractor will receive the successful fulfillment of any contractual obligations by (3) the principal (usually the contractor or subcontractor). The bond helps prequalify the principle, allowing the owner to rely on promises made in the contract.
Construction projects typically involve three kinds of bonds:
Bid bonds guarantee that contractors and subcontractors will fulfill their work in the contract for the amount they bid to win the contract.
Performance bonds guarantee the third party will perform their work as promised in the contract.
Payment bonds guarantee that the general contractor will pay subcontractors and suppliers to prevent a lien from being entered on the property.
The Smiley Law Group has assisted many clients with liens and bond claims in Louisiana. We understand the processes involved and can work to ensure your rights are protected. Contact the Smiley Law Group for a free consultation today.