Filing a mechanic’s lien is the single most effective way for a construction professional to get paid. This is true whether you are a general contractor, subcontractor, material supplier, or even a lessor of equipment used on a project.
In simplest terms, a mechanic’s lien is a short document filed in the public records of the parish (or county) where your project is located. Filing a mechanic’s lien has a number of legal effects that put pressure on the parties to pay your debt. Although each case is different, most mechanic’s liens, when properly filed, will immediately:
- Prevent the property’s sale, refinancing or transfer
- Allow you to directly sue the property owner
- Freeze the flow of funds on the project
- Secure your debt (like a mortgage) with the property
- Involve lenders, owners and investors in your dispute
Should you File a Mechanic’s Lien?
Louisiana law does not require that you file a mechanic’s lien. Generally, Louisiana is a non-notice state. This means that there are loose requirements, if any, when delivering notice of a lien on a construction project. The general requirements for filing a mechanic’s lien are that you A) furnished labor and/or materials for a construction job or improvement job and B) you have not been paid.
There are a few instances where the laws are stricter regarding notice: (1) General Contractors on projects costing more than $25,000 must record a Notice of Contract before work begins; (2) Material Suppliers must deliver a Notice of Non-Payment to the Owner 10 days before filing the lien; (3) Equipment Lessors must deliver a copy of the lease to the Owner within 10 days of furnishing equipment; and (4) on Residential Improvement Contracts, the party contracting with the Owner-Occupier must deliver a Notice of Lien Rights before work begins.
What must be contained in the Mechanic’s Lien Document?
Although Louisiana has looser notice laws, the requirements for what must be contained in Louisiana’s mechanic’s lien form are very strict.
- It must be in writing, and signed by the person asserting the claim
- It must identify the property being liened. Typically a street address is not acceptable, and a legal property description will be required.
- Identify the amount due, and describe the work or materials furnished that gives rise to the amount due.
Recording the Lien on Time and in the Right Place
Generally, all claimants have 60 days from the substantial completion of the project to file the mechanic’s lien. Under certain circumstances, this period can be shortened to just 30 days (see more on Louisiana’s mechanics lien deadlines) Also, in Louisiana, every Parish has a designated office that records property instruments. In some Parishes, it is the Clerk of Court office, and in others, there is a specific Recorder of Mortgages. Your lien must be recorded in the proper office – here are the recording offices in Louisiana. There are also strict formatting requirements that you must meet to have your document indexed (i.e. the size of the paper, the font, etc.), which varies by parish.
Notice and Filing Suit
After recording your lien, send a copy to the property owner and all other interested parties. Liens remain valid and enforceable in Louisiana for 1 year from the date of filing. At any time within that 1 year period, you can file a lawsuit to “enforce” your lien. If you do not file the suit within that year, your lien will expire.
The attorneys at Smiley Law have extensive experience drafting, filing, and enforcing mechanic’s liens.